Why IT Has A Credibility ProblemHow can every project save money? Our first-ever IT Spending Priorities Survey shows that is IT's expectation, and that it needs to ground rosy projections in reality.
How are you feeling about your team's IT project portfolio? Optimistic? Will some of your top projects save the company money along the way? Will all of them? When it comes to budgeting and setting expectations, IT managers are an upbeat lot. That was the overarching finding of our IT Spending Priorities Survey, where 453 IT pros answered questions on their project portfolio and funding methodologies.
It's hard not to read the survey data and think of anything but unbridled optimism. But it's not grounded in reality.
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Our survey shows that IT pros are looking to spend money they won't likely have. Furthermore, there's a disconnect between the business process innovation that business units want and the basics that IT is getting ready to deliver--and that's troubling.
Our IT Spending Priorities Survey was spawned from previous InformationWeek research that showed IT teams typically are getting a slight bump in budget this year, but they're expecting to do far more projects than the anticipated increase should allow. So we decided to dig deeper into project expectations to see if we could determine how IT teams could pull off all those projects with such limited funds.
We came up with a list of 16 popular projects and asked IT pros to identify the two topping their to-do lists, telling us how they'd pay for them, and size up the short- and long-term impact on both IT and the company as a whole. What we got back was a whole lot more wishful thinking and a prioritized list that probably doesn't reflect the needs and desires of most line-of-business partners.
Everyone's going to spend in the short run but save in the long run, according to our research. And almost to a person, the data indicates that everyone is expecting to pay for IT projects with new budget allocations rather than savings or funds reassigned from other projects.
We ran comparisons of funding sources across all of the "top priority" projects listed by our survey respondents, and "new money" outweighed every other funding source. In fact, the intent to use new money dwarfs the intent to use savings and other funding sources. (See the full report for details.)
Most of our survey findings aren't going to fly with CEOs and CFOs. They've lived through plenty of IT projects that overpromised and underdelivered. There's the ERP system that took twice the planned time frame to implement while costing three times as much as budgeted. There's the software-as-a-service app no one used, or the one everyone did use that required a bunch of related apps to be customized and integrated.
IT executives who haul out the same old technique of promising savings when none is likely will end up with a credibility problem. Was all that Y2K spending really necessary? CFOs and CEOs have long memories, and they didn't see anyone's systems melting down on that Jan. 1.
Then there was the lofty claim of the dot-com era. "Brick and mortar is dead; everything's different now!" Sure, what's different is that customers have a new way to find and order your company's products, and while that's great, it's hardly the revolution promised by the bubblerazzi. Certainly, we could have figured that out without creating and then destroying a few trillion dollars of market cap and spending hundreds of billions of dollars in the process. Now it's virtualization, mobile apps, big data, cloud, and mobile device management (ranking 2, 5, 7, 8, and 10 in our survey's project list for 2012). Do you really want to stand in front of your CEO and claim that all of those initiatives will save the company money over the long run?
You might, and if you do, psychologists have a name for what you have: "unique invulnerability." It's the same phenomenon that causes 20-somethings to skip buying health insurance so they can go heli-skiing in the Grand Tetons--what could possibly go wrong? One study, by Neil Weinstein of Rutgers, showed that optimistic biases are more likely to emerge when an individual feels that the event is controllable and feels emotionally invested in the outcome. Both factors apply to most IT pros.
Therefore, someone in charge needs to apply some common sense and statistical analysis to IT budgeting.