A new survey reveals a clear link between slower delivery of IT projects and services and lower business profitability.
The study, conducted by The Economist Intelligence Unit on behalf of HP, polled 1 125 information technology professionals based in the Americas, Europe, the Middle East and Asia-Pacific. It found that, in nearly half of companies, 25% or more of IT projects are delivered late; and, in 57%surveyed, no more than one in two IT initiatives produces positive business outcomes.
The primary consequences of such delays include delayed product launches, loss of anticipated revenues and delays to planned cost savings – all of which impact company profitability.
“In business, speed is increasingly of the essence. It is cause for alarm then that so many of those surveyed deliver IT projects late,” says Denis McCauley, director: Global Technology Research at The Economist Intelligence Unit. “Companies that succeed in accelerating IT project and service delivery have a significant advantage, while those that do not may suffer at the hand of the competition.”
In those surveyed firms where 75% or more of IT initiatives in the past three years have had a positive business outcome, improvement in the speed of service delivery has been considerably higher than the average. In high-performance firms – those reporting a rise in profit of 25% or more over the same period – speed of service delivery has also improved more than in others.
The survey showed that accelerating speed of delivery does not have to adversely affect quality or positive business results. When project overruns do occur the culprits are usually midstream changes to business priorities and poor coordination between IT and business managers. Better definition of business requirements, greater investment in IT process automation and more collaboration across IT functions are the primary solutions for accelerating time to delivery.
“The new reality is that technology doesn’t just support the business – technology powers the business. IT risks are now business risks,” says Lenore Kerrigan, Software Business Unit Manager at HP. “Today, CIOs are measured on overall business outcomes such as how fast they can help the company launch new products and bring new distribution channels online. It’s no longer just about delivering only on technology service-level agreements.”