The Business Impact of Failed IT Projects

By Michael Vizard  |  Posted 09-23-2013 Email Print this article Print

It's hard to think of a single significant business process these days that is not dependent on IT. As a result, any time there is a problem with IT, the cascading effects on the business can be catastrophic. A recent global survey of 304 executives conducted by Intellitrends on behalf of Compuware finds that the average cost of an IT failure from a business perspective is $10.8 million, which doesn't include longer term effects that could include loss of market share and damaged brand equity. Most telling of all, there is a sharp difference in the perception between CIOs and line of business executives when it comes to the amount of time it takes to recover from an IT failure. IT leaders pegged the recovery time at 11 days, but line of business executives put the recovery time at 24 days. Worse yet, almost half of the respondents say they are coping with IT downtime either every day or a few times a week, which suggests that most organizations’ IT infrastructure is very fragile. Amazingly, however, while 51 percent of respondents blame their hardware or software provider for their problems, only 12 percent say they switched vendors because of an IT failure. This fact suggests that far too many organizations may have too high a tolerance for IT failure than is actually good for them.

  • Top Three Goals Driving IT Investments

    Not everyone is on the same page when it comes to the business value of IT., Increase speed of manufacturing and production , Increase speed to market , Ensure product service and quality
    1-Top Three Goals Driving IT Investments
  • Most Perceived Technology-Critical Areas

    Not as high as it should be across the board., Customer service: 67%, Financials: 63%, Sales and marketing: 50%, Distribution: 47%, Supply chain: 39%
    2-Most Perceived Technology-Critical Areas
  • How Often Are There IT Issues That Affect Performance or Productivity?

    Almost half report they are consistently dealing with downtime., Every day or a few times a week: 48%, Few times each month: 28%, Few times each year: 21%
    3-How Often Are There IT Issues That Affect Performance or Productivity?
  • The Frequency of Technology Failures

    75 percent report that IT failures are staying the same or increasing. Staying the same: 49%, Increasing: 26%, Decreasing: 25%
    4-The Frequency of Technology Failures
  • Last Significant IT Failure

    More than 80 percent report that the same failure occurred multiple times. In the last year: 28%, Within the last few months: 26%, Within the last few weeks: 25%, More than six times: 12%, Don't know: 5%
    5-Last Significant IT Failure
  • Which Areas Suffer From Tech Performance Issues?

    Customer service bears the brunt of most IT failures., Customer service: 69%, Staff time and resources: 41%, Sales: 34%, Customer traffic: 34%, Production time: 32%
    6-Which Areas Suffer From Tech Performance Issues?
  • Causes of IT Failures

    Products are by far the leading source of problems. Software and hardware provider: 51%, Utility failure: 22%, Unforeseen security threat: 16%, Don't know: 16%, User error: 11%, Weather and environment: 10%
    7-Causes of IT Failures
  • Action Taken in Response to IT Failure

    Most organizations wind up throwing time and money at the problem. Purchased or upgraded hardware or software: 42%, Increased staff training: 33%, Alerted customers about issue: 24%, Increased IT staffing: 20%, Hired consultants: 17%, Switched vendors: 12%
    8-Action Taken in Response to IT Failure
  • Length of Time to Return to Normal Operations

    The average length of time is 21 days, but perceptions vary widely. Line of business executives: 24 days, IT executives: 11 days
    9-Length of Time to Return to Normal Operations
  • Does Your Company Collect and Quantify the Impact of IT Failures?

    One in four says rarely, never or don't know., Sometimes: 41%, Always: 33%, Rarely: 13%, Don't know: 8%, Never: 5%
    10-Does Your Company Collect and Quantify the Impact of IT Failures?
  • Cost Impacts That Are Quantified

    Costs go way beyond just IT issues., Lost productivity: 71%, Lost sales revenue: 49%, Not meeting service level agreements: 46%, Temporary systems or processes: 44%, Additional staffing: 40%, Wasted product: 23%
    11-Cost Impacts That Are Quantified
  • Long-Term Business Impact

    Loss of market share: 24%, Loss of brand equity: 21%, Reorganization: 15%, Legal costs and issues: 9%, Don't know: 9%
    12-Long-Term Business Impact
Mike Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWeek, Baseline, CRN, ComputerWorld and Digital Review.


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