For more than one third of companies surveyed worldwide, 25% or more of IT projects are delivered late, finds global survey.
Further, in 57% of surveyed firms, no more than one in two of IT projects produce intended positive business outcomes over the last three years, according to a global survey of 1,125 senior IT executives in organizations with a turnover greater than $500 million. Project failure rate in the Europe, Middle East and Africa (EMEA) was higher compared to the Americas region.
The survey, which was conducted by the Economist Intelligence Unit (EIU) and commissioned by HP, also found there was a direct correlation between slower delivery of IT projects and services and lower business profitability. Some 60 percent of UK companies surveyed said that faster IT delivery meant higher profits.
The main consequences of project delays include delayed product launches for 41%, 47% losing anticipated revenues and 27% witnessing delays to planned cost savings – all of which impact company profitability.
CIOs were also asked to chose two most common measures they would resort to if an IT project is late. In the UK, companies indicated they would deal with the pressure to deliver by compromising in three ways: reducing the scope of the IT project (63%), increasing the IT spend (45%) and decreasing the application quality by speeding up performance testing (31%).
While companies in the US and America region would also reduce the scope of the IT project (40%), interestingly companies would tend to increase automation of manual IT processes (41%) rather than decrease application quality (24%). This indicates that the UK companies were more willing to compromise on application quality and shorten development cycles in order to deliver a project on time.
"The commercial benefit to be on time outweighs other factors. Companies will spend more to not damage timing in order to get profit from faster delivery," said Dave Clarke, presales business consulting manager for HP Software. Clarke added these IT tradeoffs put the business outcomes at risk.
The most profitable companies, those with a 25% or greater profit growth since 2005, tended to have faster development times with an average of 68% faster IT, said the survey.
Yet the study showed that one in four IT projects are delivered late, and the majority of those surveyed said no more than one in two IT initiatives produced positive business outcomes.
Lack of coordination between IT and the line of business was cited as the most common cause of IT project delay, according to 45% of those surveyed in the UK. Use of external outsourcing was another major factor for delay, said 40%.
"With outsourcing, there is a trade-off between efficiency and agility," said Clarke. "The ability to change quickly is becoming more important. But when you outsource, you lose the ability to change quickly. That's the hypothesis. It's a conundrum, as the more outsourcing partners and tiers of outsourcing, the higher the levels of complexity."
"Within the UK, a lot of companies have outsourced to multiple system providers. While you are hyper efficient, you remove the ability to change quickly. It's an issue that is going to come up for those that outsourced too much," added David Quantrell, vice president and general manager at HP Software EMEA.
In the UK, nearly a quarter (24%) of UK respondents understood the need to have better requirements definition upfront, whilst 40% agreed that more automation would help accelerate the delivery of IT projects and services.
On the back of this survey launch, HP also announced an expansion of its Business Technology Optimisation (BTO) portfolio, which it claims can help IT organisations improve efficiencies to assist project delivery. The expansion includes software updates and new services in HP's quality management and service management offerings, as well as further integration across its software product line.