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What is the ROI for IT Project Governance?
         Establishing a benchmark

  Raymond Young (PhD, MBA, BBSc, DipEd)
    ...
Presentation Overview

• The problem with best practice …
• Estimating ROI for IT project governance
  – Reported success ...
The problem with best practice
divide tasks, requirements scrubbing, KISS, reduce scope,
   simulation/scenarios, prototyp...
The problem with best practice

• Best practice
   –   Project Management: PMBOK, PRINCE2
   –   IT Services: BS15000, ITI...
Project vs. Project Management success
(De Wit 1985)
•   project management success is less important (Baccarini 1999)
•  ...
Inconsistent criteria for success

    EDP Success:      MIS Success:                         SIS Success:
   Technical fo...
Reported Success Rates

                                        4–10x (Brynjolfsson & Hitt 1998)
                         ...
Project Governance Assumptions



                                                                             ROI
       ...
Case Study: Large Aust Organisation
                       Current                                 Better IT Project
     ...
IT Project Governance
 Benchmarks

Annual IT spend                                          Assumption: some - all
Estimat...
Conclusion

• Further research – ARC linkage grant, five
  collaboration partners contributing $550,000
  over 3 years ($1...
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Value of IT Project Governance

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An estimate of the value of IT Project Governance based on the best available research data. The suggestion is that between performance can be improved by 4-8 times which is the equivalent to 1-3% of GDP at a national level.

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Transcript of "Value of IT Project Governance"

  1. 1. What is the ROI for IT Project Governance? Establishing a benchmark Raymond Young (PhD, MBA, BBSc, DipEd) Division of Economics and Financial Studies Macquarie University © Raymond Young IT Project Governance: What is the ROI? No 1
  2. 2. Presentation Overview • The problem with best practice … • Estimating ROI for IT project governance – Reported success rates – Cost of failure – Assumptions – Benchmark ROI for IT project governance • Conclusion © Raymond Young IT Project Governance: What is the ROI? No 2
  3. 3. The problem with best practice divide tasks, requirements scrubbing, KISS, reduce scope, simulation/scenarios, prototyping, pilots, testing, user participation, user • Best practiceandparticipation“Iresults,user managed decisionsand they surveys, publicising team meetings, user led teams, have checked with ISACA user committees good relationships, and agree with your and promote about [lack – Project Management: PMBOK, PRINCE2 development, user commitment, monitor progress conclusion open – IT Services: BS15000, ITILof] supporting evidence.” discussion, critical task focus, project organisation, external contracts and – S/W development: ISO/IEC 12207, ISO/IEC 12207 outsourcing, formal procedures, cost allocation structures, pre-scheduling, costIT Security: 17799, NIST handbookapproach, lack of evidence but “I am surprised re path-analysis, risk- – and schedule estimation, incremental driven Governance: COBIT, AS8015, AS8016 experience supports – IT project planning, physicalmy own personal with top talent, seek arrangements, staff champions, cross training, morale building, manage expectations, • Challenges games, training, the benefits study and screen potential implementation role playing, of best practice.” – “Little practical standards and methods, and “no consistent impact actors, specification utility” (Lyytinen 1987) task and organisational on success” (Kraemer and King 1986) analysis techniques, information hiding/abstraction and modelling, bench – Overemphasise technical & project management considerations marking, flexible governance structures, task matching, contingency models, managing Sauer 1999, Young 2005) (Lucas 1975, technology options, adapt authority and decision structure, modify process model, technical analysis, service assessment, – Untested against objective criteria (Checkland 1981, Strassman 1995, Young & Jordan 2005) gain management support, appropriate leadership, change authority or workflow, adopt/configure new organisational technologies (Lyytinen, Mathiassen et al) © Raymond Young IT Project Governance: What is the ROI? No 3
  4. 4. The problem with best practice • Best practice – Project Management: PMBOK, PRINCE2 – IT Services: BS15000, ITIL – S/W development: ISO/IEC 12207, ISO/IEC 12207 – IT Security: 17799, NIST handbook – IT Governance: COBIT, AS8015, AS8016 • Challenges – “Little practical utility” (Lyytinen 1987) and “no consistent impact on success” (Kraemer and King 1986) – Overemphasise technical & project management considerations (Lucas 1975, Sauer 1999, Young 2005) – Untested against objective criteria (Checkland 1981, Strassman 1995, Young & Jordan 2005) © Raymond Young IT Project Governance: What is the ROI? No 4
  5. 5. Project vs. Project Management success (De Wit 1985) • project management success is less important (Baccarini 1999) • “benefits are not delivered or realised by the project manager and project team, they require the actions of operations management.” (Cooke-Davis 2002) • there is not a strong relationship between project management success and project success or between project management failure and project failure (Markus et. al. 2000) Scope of project success Scope of project management success 1 2 3 4 5 6 1 2 3 4 5 6 Initiation Planning Development Implementation Benefit Closedown © Raymond Young IT Project Governance: What is the ROI? No 5
  6. 6. Inconsistent criteria for success EDP Success: MIS Success: SIS Success: Technical focus User focus Organisational focus Information Quality Intention Use to use System Net Benefits Quality User Satisfaction Service Quality Delone, W. H. and McLean, E. R. (2003) The Delone and McLean Model of Information Systems Success: a ten-year update Journal of Management Information Systems, 19:4, 9-30. © Raymond Young IT Project Governance: What is the ROI? No 6
  7. 7. Reported Success Rates 4–10x (Brynjolfsson & Hitt 1998) or ROI 30% (Garrity 1963) 30% Some OK 10-20% (Clegg et al 1997) 35% 2/3 of projects 30-40% No (Willcocks and Margetts 1994) deliver no benefits whatsoever Fail 15% (Standish 1999,2003) © Raymond Young IT Project Governance: What is the ROI? No 7
  8. 8. Project Governance Assumptions ROI ROI 240% ROI 135% 30% OK OK Some OK Current Better Excellent Performance Performance Performance Some Cancel (68% under) (43% under) (15% cancelled) Fail No Fail © Raymond Young IT Project Governance: What is the ROI? No 8
  9. 9. Case Study: Large Aust Organisation Current Better IT Project Performance Governance Total IT $ $160M $160M % Projects 15% $24M ? Terminated 15% $3.6M 15% $3.6M No benefits 35% $8.4M 0% $0.0M Deliver – 35% $8.4M 52.5% $12.6M part 17.5 % Deliver – 15% $3.6M 32.5% $7.8M all Estimated 30% $31.2M 135% $56.4M Benefits © Raymond Young IT Project Governance: What is the ROI? No 9
  10. 10. IT Project Governance Benchmarks Annual IT spend Assumption: some - all Estimated amount on IT projects 30% 50% Current Better Project Excellent Project Performance Governance Governance Terminated 15% 15% 15% No Benefits 35% 0% 0% Some Benefits 35% 53% 0% All Benefits 15% 33% 85% Estimated ROI 30% 135% 240% © Raymond Young IT Project Governance: What is the ROI? No 10
  11. 11. Conclusion • Further research – ARC linkage grant, five collaboration partners contributing $550,000 over 3 years ($100,000 in cash) • National Implications – additional $10.5B-$21B pa (1.6 - 3.1% GDP) • Implications for governance and assurance – Business value creation – Audit measures – Accountability measures © Raymond Young IT Project Governance: What is the ROI? No 11
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