A Survey of Information Systems Development Project Performance (Report‪)‬

CURRENT INFORMATION TECHNOLOGY (IT) ISSUES The rate of information systems development project failure in the 1980s and 1990s was routinely documented to be above 50%, the larger the development; the more likely it was unsuccessful (SIMPL & NZIER, 2000). A 1994 study of IS development projects in the British public sector estimated that 20% of expenditures were wasted, and a further 30% to 40% did not produce perceivable benefits (Wilcocks, 1994). Also in 1994, the U.S. General Accounting Office reported that spending of more than US$200 billion in the previous twelve years had led to few meaningful returns. A 1995 study of over 8,000 IS projects by Johnson revealed that only 16% were completed on time and within budget (Johnson, 1995). The U.S. Internal Revenue Service, with an annual computer budget of US$8 billion, managed "a string of project failures that have cost taxpayers $50 billion a year [mainly defined as revenue forgone]--roughly as much as the yearly net profit of the entire computer industry" (James, 1997). Collins and Bicknell (1997) estimated that public sector failures in the United Kingdom cost 5 billion [pounds sterling]. The Wessex Health Authority's Regional Information Systems Plan was cancelled after more than 43 million [pounds sterling] had already been spent, with little achieved (Collins et al., 1997). The New Zealand Police abandoned an IS development in 1999, at a cost of more than NZ$100 million, after years of development provided little more than an e-mail system and a number of terminals run by a 1970s-era mainframe. A study by SIMPL & NZIER (2000) found that the success rate was only 55% for projects under US$750,000; however, for those with budgets over US$10 million, no projects were successful. A 2001 U.S. Standish Group survey of IS projects found success rates were as follows: 59% in the retail sector, 32% in the financial sector, 27% in manufacturing, and 18% in government. Overall, the average success rate was 26%. In all, 46% of the projects had problems, including being over budget, behind schedule, or delivered incomplete. Another 28% failed altogether or were cancelled, and cost overruns averaged nearly 200% (SIMPL & NZIER, 2000).