DITTON PARK, UK and IRELAND, 12 SEPTEMBER 2007; New research from CA, conducted by independent research company Loudhouse of 100 IT Directors across the UK and Ireland , reveals that poor visibility of IT project status and a lack of management control over them is costing the UK over a quarter of a billion pounds each year. A third of all projects implemented each year end up over budget with the typical over-spend between 10% and 20% of the original budget. The survey also highlighted the increased complexity of IT projects, with a typical company running 29 projects at any one time and an average IT budget of between £1m and £5m.
The primary reasons for the budget over-spend is as a result of poor forecasting (50%), project scope increasing during implementation (39%) and issues of interdependencies and conflicts between multiple projects (36%). This isn’t helped by the lack of visibility and control that CIOs have over their project portfolios - 40% of IT directors don’t have complete visibility over the initiatives they are running, so cannot see when projects are threatening to run over budget.
One of the most prominent reasons for lack of visibility and control over project portfolios is the use of inadequate tools to manage and measure them. The survey found that half of all enterprise companies are still using spreadsheets to manage IT initiatives. Combined with the added complexity of project portfolios, it becomes increasingly difficult for CIOs to get a grasp of which projects are strategic or not. Indeed, for 60% of the companies surveyed, less than half of the projects they run are considered strategic.
The survey also showed that half of all companies use delivery on budget as the key measure when evaluating project success. Only a third measure success in terms of alignment with business objectives and only a quarter carry out an ROI calculation based on business value delivered.
David Groves, Unit Director, Clarity, Northern EMEA, CA commented: “What this survey tells us is that CIOs are still principally being judged on whether they deliver within budget rather than delivering strategic value to the business. IT need not be the victim here - it must be able to control its own destiny in a way that creates focus on initiatives that deliver the most value to the business, not just on those that keep the lights on. Until IT can make this transition CIOs will only ever be judged on cost”.
Groves continued: “As project complexity deepens over time, and demand on IT increases, it is crucial that CIOs invest in the tools and training to focus budget and resources on projects that deliver business value. For instance, our survey shows that high skilled people are often assigned to projects purely on an ad hoc basis, meaning that almost two-thirds of companies complain of being short of critical skills on the most strategic projects. This, with other factors is causing schedules to over-run, means that budget is wasted on non-core projects and not spent on those that drive innovation and business value.”
“One of the key ways of controlling project portfolios over the past five years and trying to ensure that overspend is kept in check has been to invest heavily in project management training. This latest research suggests that this investment CIOs have made in training is not enough on its own, but must be combined with investment in strategic management tools to allow fact-based visibility into spend, timelines and business value,” said Groves.
*Based on a typical project budget of £380,000 and 15% overspend.
About CA
CA (NYSE: CA), one of the world's largest information technology (IT) management software companies, unifies and simplifies the management of enterprise-wide IT. Founded in 1976, CA is headquartered in Islandia, N.Y., and serves customers in more than 140 countries. For more information, please visit http://www.ca.com.
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