Working out IT value tough, say banks

Over two-thirds of banks admit they don't know if their IT investments have delivered a return on investment, according to new research.

The study of 165 large IT projects at leading European financial services companies found 70 per cent were not able to quantify the benefits of their IT investments due to a lack of data and metrics.

The banks also admitted that a third of projects run over time, one-fifth run over budget and one-fifth fall short of the functionality originally planned.

IBM Business Consulting Services, which sponsored the research, said that too many banks don't even know which IT projects are paying dividends and which are losing money.

Key failings are over-optimistic business cases and a lack of risk and contingency planning for unseen internal factors, according to IBM.

Tim Blaxall, managing consultant at IBM Consulting's Institute for Business Value, said: "You can get into a view within a project of looking at the most optimistic view."

He advised banks to stand back and assess their risk exposure and contingency funding for unforeseen events across their whole portfolio of IT investment instead of focusing on individual projects independently.

Better IT governance and measurement of IT investment were two of the key issues for 2005 highlighted by a panel of silicon.com CIOs at the end of last year.