IT Simplicity Needed To Meet Business Plans, Report Says
- By Kurt Mackie
- October 2, 2007
The high failure rates of IT departments to meet businesses' evolving needs are not exactly news in the IT community. Still, studies chronicling this situation never fail to shock. And so it is with a new study on IT effectiveness from business consulting firm Bain & Co.
The study, "IT Effectiveness and Growth Study," found that 85 percent of IT and business executives surveyed felt that "their IT operations are ineffective."
Bain & Co. surveyed and analyzed 453 publicly traded companies, following up with interviews of more than 30 business executives and CIOs.
The consulting firm defined effectiveness as "the ability to get things done as specified, on budget, and on schedule, in a way that achieves project objectives."
The study found a high failure rate for IT projects according to this definition of effectiveness. Nearly one in two IT projects was considered a failure on completion, according to the survey. However, instead of blaming IT, Baines & Co. pointed toward business executives and their poor understanding of how to align IT with business needs.
Executives allot IT resources to various business segments, thinking that's the way to align IT with business objectives, "but the result is often counter to the expectation -- less alignment, less effectiveness, and a group of disappointed business executives. It's truly a downward spiral," stated Rudy Puryear, head of Bain & Co.'s global IT practice and one of the study's authors, in a press release.
The solution, according to the consulting company, is to simplify IT complexity before trying to align it with business objectives. Eliminate overlapping systems and centralize IT organizations. Tighten the screws on IT when it comes to delivering projects on time and on budget.
The bottom line is for companies to invest in IT effectiveness first. However, as a long-range plan, companies should also allocate a minimum of 20 percent of their IT budgets toward growth initiatives, the report recommends.
"IT organizations can alleviate more problems and help their companies achieve greater sales growth by investing in IT effectiveness first before pursuing alignment," explained Sachin Shah, a Bain global IT practice partner and study coauthor.
Kurt Mackie is online news editor, Enterprise Group, at 1105 Media Inc.