Posted by : bpburnwal on Oct 09, 2003 - 11:46 AM General

Few IT projects are founded on any economic or commercial justification, according to UK analyst Butler Group.
Martin Butler, president of the analyst organisation, warned that suppliers will struggle if they fail to change the way they justify investments.

Attracting more IT spend will increasingly depend on demonstrating how value can be extracted and associated risk reduced, he said.

"If diminishing returns, technological maturity or competitive irrelevancy cannot explain the current slowdown in spending, what then is the reason?" Butler asked.

Blaming a basic flaw in the ways that IT is planned, acquired and then managed, he said: "We see large organisations investing £20m to £30m on enterprise resource planning systems and they have no method for measuring the value of that investment.

"Many commentators agree that two out of three of those projects will fail. If large organisations don't sort out the issues of cost and value, we will see even dafter investments in IT."

Although most organisations measure the cost of their IT, only 12 to 17 per cent measure the benefits, according to Butler Group figures.

Mike Lynch, chief executive of Autonomy and the UK's first internet billionaire, said: "Surely [measuring value] is in the interest of customers and the IT industry?

"The reason it doesn't happen is because it's something that scares the IT industry. Chief information officers and chief executives are starting to understand that IT isn't necessarily delivering anything of value."

Tony Heyward, chief operating officer for business intelligence company Hummingbird, added: "[Vendors] have to be more focused on what systems can provide in terms of support of the key indicators for the business."

But Peter Matthews, technology strategist at Computer Associates, said: "People who buy technology think of it as a silver bullet. This is not just an IT vendor's problem: this is a general business problem."

VNUNet.com
By Rachel Fielding