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Consultant Report: 33% of IT Investment is Wasted

IAG Consulting says that its research has found that one third of IT investment in North American companies is wasted, due to poor requirements definition and management.

IAG Consulting (New Castle, Del.) announced today that it has released the results of its 2009 Business Analysis Benchmark Report, in which the firm surveyed over 400 businesses across North America. IAG says that, according to the report, one in every three dollars invested in IT is wasted due to poorly defined requirements and ineffective management.

The study compared companies at 5 different levels of requirements maturity -- ad-hoc, defined, implemented, institutionalized and optimizing -- and found that low maturity companies did not meet business objectives on nearly half of their projects. Companies with higher levels of requirements maturity reported a 10 percent higher return on assets, compared to publicly traded peers in their industries, according to the report.

Just over 74 percent of the companies surveyed fell into the lowest two categories of requirements maturity, according to the report. IAG found that those in lowest level wasted 39 percent of their development budget due to poorly defined requirements, while those in the second lowest group lost 34 percent.

"Companies and governments who rely on IT projects to execute their strategy need to commit to focused development of requirements definition and management capabilities if they are to improve business performance," Keith Ellis, author of the study and vice president at IAG Consulting, said in a press release.

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