Tarnished Image: The State of IT Credibility

By Gary H. Anthes and Thomas Hoffman

May 12, 2003 12:00 PM ET

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Computerworld - It was budget time at Allied Building Products Corp., and the CEO wanted to know how the company could increase sales and profits in the coming year. "How much money do you need?" he asked his senior managers. "How many people do you need?"
"I said, 'Whatever extra dollars you would give to me, give to Jamie,' " recalls Brian Reilly, chief financial officer at Allied. "I get a better return out of money spent in Jamie's world than in mine."
Jamie Kutzer is CIO at the East Rutherford, N.J.-based company, where the CFO's extraordinary generosity with his budget is testimony to the extraordinary reputation of IT there.
Sadly, that type of relationship between IT managers and business managers is uncommon. Budget overruns and return on investment underruns have plagued IT and tarnished its reputation for decades. IT's performance has been poor in completing projects on time and within budget.


Credit: David Hollenbach

And it has grown worse during the past few years, according to research conducted by The Hackett Group in Atlanta, which regularly benchmarks the performance of nearly 2,000 companies, including 97% of the Dow Jones Industrial companies and 81% of the Fortune 100. According to Hackett, average-performing companies reported an IT project completion rate of 67% in 2002, down from 72% in 1999. The decline is more striking for the completion of one-year IT projects, which dropped from 58% in 1999 to 51% in 2002.
The Y2k nonevent, the dot-com bomb and disappointment over the cost and performance of complex systems have diminished the stature of some IT shops. Many IT leaders acknowledge that there's a credibility problem in IT. At Computerworld's Premier 100 IT Leaders conference in February, 45% of 135 survey respondents said that IT had an image problem, which they attributed mostly to IT being too slow and too expensive.
IT is a "joke" in many boardrooms, says Joe Noga, a partner at Tatum CFO Partners LLP, an Atlanta-based CFO placement company. "What I hear is, 'Holy Christmas, they told me it was only going to cost 1% of sales, and it's 4%.' Or, 'They told me this thing was going to be installed and working in 18 months, and here we are 30 months into it, and we don't have the first part working,' " Noga says. And the explanations from IT managers often aren't helpful or particularly clear, he says.
Some IT executives acknowledge that IT faces cyclical reputation and credibility problems. For example, they point to the massive amount of money and

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