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Technology / AI and automation

33% of money spent on IT development is wasted, says IAG Consulting

Poor requirements definition and management consumes over one in every three dollars of the application development budget, according to a report by IAG Consulting.

IAG Consulting has unveiled the results of its 2009 Business Analysis Benchmark report, in which the firm surveyed over 400 businesses across North America.

The survey showed that when companies move from using ad-hoc requirements processes to institutionalising a well-constructed requirements definition and management capability, on budget performance for technology projects improved by over 95%, budget overruns were reduced almost 75%, on time performance of technology projects increased 161%, time overruns on projects were reduced 87% and percentage of projects that deliver the functionality needed by the business rose by over 75%.

The study compared companies at 5 different levels of requirements maturity: ad-hoc, defined, implemented, institutionalised and optimising, found that low maturity companies failed to achieve their business objectives on almost half their projects, while taking 35% more time to complete them. High level maturity companies, however, turned their greater management efficiency into fiscal results with return on assets- on average – 10% higher than comparable publicly traded firms in their industry.

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The report stated that CIOs cannot attempt to hire great analysts and expect the problem of poor requirements to go away. In fact, lower skilled people in a high requirements maturity company significantly outperform highly skilled people in a low requirements maturity company. Only organisations who improved all areas of requirements maturity competency dramatically improved overall performance.

In the past year, 86.5% of respondents tried to improve requirements discovery and management and almost two thirds of those successfully increased both stakeholder satisfaction and on-time/on-budget performance, according to the study.

The study showed that companies which pursued transformation with a clear assessment of the current maturity level and identifying the strength of a company’s requirements processes, techniques, staff skills, technologies and organisation virtually eliminated project failure, delivering over 90% of projects successfully.

Keith Ellis, author of the study and vice president of IAG Consulting, said: CIOs need a step-by-step path that predictably delivers performance improvement. Focusing on requirements maturity not only shows the long term gains of doubling productivity, but short term results are also immediate and tangible.

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.
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CBR Staff Writer

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