Auditors pass the buck on project failures

Information technology shops across Australian companies remain the scapegoat for poorly conceived projects that originate in the boardroom.

Two corporate benchmarking studies have identified serious deficiencies in senior executive management skills when it comes to dealing with IT projects. According to KPMG's Global IT Project Management Survey, a lack of project management skills cut the benefits of IT projects by 25 percent - easily enough to see most projects sent to the corporate dog house.

"Project governance practices today tend to focus on making commitments, not keeping them. That is, executives are often involved in selecting and approving projects, but rarely involved in delivering them. Inadequate management processes are preventing the articulation of program and project success in most cases," the report states, noting 49 percent of respondents experienced at least one project failure in the past 12 months.

Mark Tims, KPMG IT advisory partner, said much IT project pain stems from an ongoing disconnect between business and IT where the CIO becomes the whipping boy of last resort. Business also often pressures the CIO into agreeing to project costs which they know are too low or inadequately scoped. "If I know an ERP replacement will cost $50 million but am told to do it for $30 million: what do you do?" Tims asked.

A more disturbing aspect from the survey is the source of many of the flakey corporate IT projects currently doing the rounds originate: the burgeoning compliance and governance industry.

According to Tims, around 25 percent of the growth in current IT projects is compliance and governance driven: projects that succeed technically, but don't deliver black ink to the balance sheet.

"If staying in business is a required business outcome, well yes, they are necessary projects. But the benefits are not necessarily explicit or tangible," he said.

The scale of the compliance and governance IT binge is borne out by IDC research subsidiary Financial Insights, whose latest Asia-Pacific report card notes at least 30 percent of current business process management spend in the financial sector - which translates directly to transactional systems, rules engines and IT-enabled workflow management - is driven by the need to become compliant with International Financial Reporting Standards (IFRS).

The consequence is a corporate mentality bent on cost savings rather than satisfied customers says Financial Insights' Asia-Pacific research manager, Michael Araneta.

He also found that paper and printing costs are rising in line with the volume of escalating compliance work and offered a partial if slightly depressing explanation.

"Audit departments still want to handle paper," he said, noting many enterprises are now seeing printing and paper costs starting to total 5 or more percent of their operational processing costs.

"It's becoming a very big issue."

Whether the audit department confesses to blowing the IT budget for this year remains to be seen. But at least IT managers will know to where they can legitimately shift the costs.

IT manager compliance survival kit

  • Identify compliance costs, and costs to IT up front
  • Question and document who drives the project
  • Enter decision-making processes early
  • Stand up for IT
What do you think? Is IT the scapegoat for boardroom failures? Feedback to

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