Elevating technology on the boardroom agenda

Businesses are becoming increasingly digital and it’s not just a matter of process automation or resource-planning systems. Technology trends such as big data, cloud computing, mobility, and social media are giving rise to new marketing and operational capabilities. Indeed, technology has become too embedded in the fabric of the business—and too critical for competitive performance—to be left to the IT function alone.

As a result, many senior-executive teams have been called upon to get involved in technology issues. Boards are also beginning to take a strategic view of how technology trends are shaping their companies’ future. More boards than ever before are asking questions that ensure executives focus on the right issues. Deeper board involvement is also serving as a mechanism to cut through company politics and achieve endorsement of larger, integrated technology investments.

Read more on the McKinsey website (October 2012) or a summary in the Financial Times (September 2012) -- with Brad Brown and Johnson Sikes

Delivering large-scale IT projects on time, on budget, and on value

Large IT efforts often cost much more than planned; some can put the whole organization in jeopardy. The companies that defy these odds are the ones that master key dimensions that align IT and business value.

As IT systems become an important competitive element in many industries, technology projects are getting larger, touching more parts of the organization, and posing a risk to the company if something goes wrong. Unfortunately, things often do go wrong. Our research, conducted in collaboration with the University of Oxford, suggests that half of all large IT projects—defined as those with initial price tags exceeding $15 million—massively blow their budgets. On average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted. Software projects run the highest risk of cost and schedule overruns.

These findings—consistent across industries—emerged from research recently conducted on more than 5,400 IT projects by McKinsey and the BT Centre for Major Programme Management at the University of Oxford. After comparing budgets, schedules, and predicted performance benefits with the actual costs and results, we found that these IT projects, in total, had a cost overrun of $66 billion, more than the GDP of Luxembourg. We also found that the longer a project is scheduled to last, the more likely it is that it will run over time and budget, with every additional year spent on the project increasing cost overruns by 15 percent.

Read the rest on the McKinsey website (October 2012) or a summary in the Financial Times (August 2012) -- with Sven Blumberg and Juergen Laartz