IT projects on rise but fail to deliver

Stan Beer
Monday, 26 September 2005 11:00

IT Industry - Market

Organisations around the world are losing more than a quarter of the benefits of their IT projects because of failure to manage projects throughout their lifecycle while new projects are on the rise, according to a new global survey.

The KPMG survey Global IT Project Management Survey of more than 600 organisations across 22 countries found that many are failing to deliver the value expected from their large IT projects, with nearly half of the respondents experiencing at least one project failure in the past year.  This is an improvement over KPMG’s 2003 survey where 57% experienced one or more project failures in the prior year.  However, a key finding is that 86% of respondents report losses of up to 25% of targeted benefits across their project portfolio.

The loss of benefits is particularly important in the context of the changing definition of success according to KPMG’s global partner in charge of information risk management, Egidio Zarrella.

“Success is increasingly being defined as achieving the promised benefits, as opposed to the traditional focus on time and budget measures,” he said.

“At a time where boards and executives are increasing their commitment to delivering business benefits through projects, it is surprising to find that 59% of organisations have no management process to measure benefits, or at best have an informal process. 

“The loss of benefits, and therefore lack of success of projects, may well be higher,” said Zarrella.

According to Zarrella, a robust governance framework is the key to reducing project failures. “This includes; having a project management office that actively manages projects; reporting to the board regularly on projects; having a very formal benefits process; having formally qualified project managers and always performing a rigorous risk analysis during planning.”

According to the survey, in the past year, there has been an increase in the number of new projects in 81% of organisations, an increase in the complexity of projects in 88% of responses and total project budgets have risen in 79% of organisations.

There are three things are driving this demand, according to KPMG’s Asia Pacific partner in charge, IT project advisory, Mark Tims.

“New products and services and business process improvements accounted for 74% of project activity, technology refreshes accounted for increased activity in 48% of organisations, and compliance and regulatory changes contributed to increased project activity in 24% of organisations,” he said.

“This increased project activity should result in a corresponding increase in value being delivered back to an organisation. 

“Our results indicate that while organisations are delivering some value back to the organisation, benefits are being leaked away. 

“Worse still, no one is being held accountable for these leakages; it’s almost as if ‘near enough is good enough’ for many of our respondents,” Tims said.

In many areas of the research, Australia illustrates many similarities when compared to the rest of the world, and appears to be following most of the trends. 

Strategically, Australian organisations are behind their global counterparts with 12% lower level of board visibility, 11% fewer linking project performance to executive performance incentives and 9% fewer considering the project management office strategically important to achieving commitments.  A positive indicator is that Australian organisations are ahead of global averages with 5% more claiming higher competency of the majority of their project managers with formal qualifications and 15% more mostly use project reviews.