The cost of IT failure

The worldwide cost of IT failure is $6.2 trillion, according to Roger Sessions. His numbers are based on a set of assumptions which he outlines in a white paper, but as ZDNet’s Michael Krigsman points out, the details are unimportant. It’s the scale that’s scary. Last year, Krigsman reported that 68% of IT projects fail, another scary statistic.

My own experience is that when it comes to social media, IT departments range from reluctant to obstructive. And some IT decisions defy sense. In one case, £14 million had been earmarked for a Sharepoint installation, whilst a wiki project costing £4,000 was having to ‘prove its worth’. I’ve seen IT departments point blank refuse to install any social media, even when asked by the CEO.

When, I wonder, did IT become the problem?

And yes, I’m fully aware of the fact that some very good people work in IT, and that they have to deal with a lot of problems of their own, and that not all IT departments are short-sighted idiots.

But given that, how is it that, generally speaking, they are busy losing $6.2 trillion and that 66% of their projects fail? IT needs a radical rethink, part of which has to be to answer the question, “What is IT for?” Is it just about maintaining network integrity? Or is it to solve business problems with the appropriate technology, if such technology exists?

4 thoughts on “The cost of IT failure

  1. What Krigsman actually said was” “68% of companies are more likely to have a marginal project or outright failure than a success due to the way they approach business analysis.” There’s a big difference between that and the headline title.
    It”s easy to understand why socmed projects get a hard time in IT. It’s one more silo to worry about often with products that don’t match corp governance requirements.
    IT departments that are telling CEO’s what they will and will not use should be reamed. Who runs the show?

  2. I sense that what happens is the “endowment effect” i.e. People own their choices and won’t move from them despite massive evidence supporting the simpler and cheaper alternative.
    The Sharepoint choice is illogically endowed with immunity from any responsibility for the chooser [and continued employment as the failure unfolds slowly in the path of the business]. After all my boss chose MS before me…
    If understanding Social Networking in a business context runs counter to my continued employment, then I will not understand it until it doesn’t threaten me any more.
    Positive self-interest and the endowment effect might be the reasons why rational choice, and governance of projects have failed to halt the failure rate, and change this behaviour.
    IT to blame? – No – IT a knowling accomplice? – Yes.

  3. @dennis: You’re right, I should have quoted that instead of the headline. However, given that companies have more than one IT project, if 68% of them are experiencing failure, the rate of failure on a per project basis could be worse – if you’re not good at IT projects because of fundamental issues such as poor business analysis, that’s likely to affect all your projects, not just one.
    @chris: yes, I think there are cognitive biases in play here, for sure, and they play into the politics of the thing. It’s easier to go with the choice of the person who promoted you than to turn it on its head not just because of the endowment effect, but also because of the social effect of being seen as ‘ungrateful’, perhaps.

  4. Suw
    “What is IT for?” Is it just about maintaining network integrity? Or is it to solve business problems with the appropriate technology, if such technology exists?
    Now we are getting to the core problem. “IT” has confused the two quite separate issues. This suits large vendors and maintains such complexity that failure is an odds on favourite. In reality business logic never changes its people doing something to achieve an outcome. What has changed are the delivery mechanisms such as operating systems, browsers application servers – the internet – all these are huge technological advances and this is where “IT” deliver.
    So you ask the question does an technology exist that focuses on the business problems. The answer is yes and pioneered by a UK company Procession that challenges the status quo. How by separating business logic from delivery. By recognising that People create all source information and there are less than 13 work tasks, including the user interface that can address any business requirement without custom coding. The consequences of this are quite disruptive to the vendor supply chain. No more offshoring code development- in built agility to change quickly, the spec is in simple business logic language and one tool handles all requirements. A real breakthrough that had government for example been a more intelligent buyer they could have avoided the shocking loss of tax payers’ money estimated in recent article in The Independent at £26bn and no doubt double that if you take into account the wasted internal resources.
    I think a debate is needed focusing on your question …..? Put industry leaders, vendors users and analysts, on the spot….

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