IT projects not worth the risk?

Bloor Research is warning companies to carefully consider launching IT projects. It notes that the failure rate for such projects has consistently remained at 30% despite technological advances.

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By  Neil Denslow Published  July 9, 2002

Bloor Research is warning companies to carefully consider launching IT projects. The analyst house notes that the failure rate for such projects has consistently remained at 30% despite technological advances.

The analyst house argues that given the high failure rate, the expected benefits of a project need to be 9 to 10 times higher than the cost to produce a positive Return On Investment (ROI). As such, the business risks of a large scale IT project are very high.

"The issue of business risk and its connection with ROI is something that is rarely considered when project feasibility work is done, when such necessary work is done at all — which it often is not", says Robin Bloor, CEO of Bloor Research.

"In the current business climate, IT departments are increasingly being asked to focus IT investment on products and services that will provide a fast and low risk payback. In IT there are a number of products, which can, if deployed appropriately, yield very fast returns - sometimes within a year of purchase. It is usually relatively easy for IT Departments to get approval for such investments,” he adds.

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