Talk may be cheap, but technology projects are not. No wonder companies are so eager to discuss their IT spending pain.
Although I could swear HP came out with nearly identical research earlier this year, Computer Associates on Thursday published a study in which those surveyed said one third of their projects run between 10 to 20 percent over budget and that one in four projects costs 50 percent more than it was supposed to. Most large companies have at least 29 projects on the go, the survey said, and 39 percent do not have clear visibility on the projects they're working on.
Nothing surprising here, and the reasons behind the overspending wouldn't be much of a challenge, either. Automating business processes tends to cost more than you think it will. Just ask the business managers.
In fact, wouldn't it be better (and more original) to study the attitudes of department heads towards IT projects whose budgets escalate? CA concluded that part of the problem is CIOs being judged on project costs vs. the value they bring to the business. That logic doesn't quite ring true, given the blather we've been told about aligning technology to the needs of the organization. If projects get any funding at all today, it's probably because the person in charge of marketing, finance or HR has complained loudly enough that someone upstairs realizes something has to be done.
We all know about scope creep, but budget creep should be looked at on its own. If a company ends up investing more in a new system because the initial requirements aren't understood, is that IT's fault for failing to grasp the situation or the line of business's fault for failing to communicate it properly? In charge-back situations, this would be more clearly spelled out, but that's not always the most popular way of managing IT expenses. Budget creep can also happen because a project is so big and phased so cautiously that new technology or product updates become available over the course of a pilot. The extra money you spend on Exchange 2007 may be worth what you might otherwise pay in support for Exchange 2003.
Budget creep is also easier to bear if the business needs change over the course of a project -- if finance is suddenly hit with a new compliance requirement, for example, or an online marketing campaign requires a different set of measurement capabilities. On paper, it could look like the money spiralled out of control, but in many cases sitting on your wallet isn't going to be an option.
Hopefully as business managers take on more of a partnership with IT departments the stigma around budget creep won't be quite as bad. That's not to say you should spend recklessly, but if it's important enough to the business, shouldn't you spend whatever it takes? Nicholas Carr once wondered whether IT matters. The next question may be whether IT budgets matter.