Technology projects have a far from perfect record for delivering value to the business. Just ask Vivek Kundra, the new CIO of the US government, who recently completed a review of the $70 billion it spends annually on IT projects. "Everyone knows that there are these spectacular failures when it comes to information technology investment," he said at the late-June launch of a dashboard designed to track project status.

"Across the board, we see system after system [where failure is] reflected in changes around requirements, vendors over-promising what their technologies are going to be able to do, budgets that have run away in terms of excessive spending." Last year, the list of US federal government  IT projects "in trouble" had a $30 billion total at its base, he highlighted.

Even in good times, such levels of waste have a huge impact on business value - not to mention the career prospects of those involved - but in today's changed economic environment any tolerance for that multi-decade pattern of failure has evaporated.

"One of [our] biggest challenges in this economic climate is how do we make sure that the investment we are making in information technology actually produces the dividends that are promised," said Kundra, echoing the words of many CEOs and boards who have despaired at IT's track record.

Such calls for action have not gone unanswered. The last 18 months has seen concerted efforts to tackle IT's most fundamental problem - once and for all. IT governance initiatives such as the Innovation Value Institute's IT Capability Maturity Framework (IT-CMF) or the Information Systems Audit and Control Association's (ISACA) Risk IT and Val IT are all about ensuring IT projects come in on time, within budget and are tightly aligned to business requirements - in other words, consistently creating business value.

Getting more for your investment

Across the Atlantic, the UK government has also been trying to end its chequered history of IT project delivery. Its agency-wide CIO, John Suffolk, has seconded the head of criminal justice IT, Stephen Jenner (the "rottweiler of benefits management", in Suffolk's own words) to tame weaknesses in the pan-government project portfolio.

"We have agonised over how to get more from our investment," says Jenner. "We have looked at the way decisions were taken, and at how budgets were being managed. Benefits management has to be led through portfolio management. What we find is that people confuse benefits management with investment justification, and often the investment case will contain benefits that were not part of the original reasons for proposing a project."

In one survey, by Professor John Ward of Cranfield School of Management, 38% of respondents admitted to "often or always" overstating benefits to obtain funding, with the traditional investment appraisal process being seen "as a ritual that must be overcome before any project can begin". Such behaviour has been referred to as "the delusional optimism of enterprise IT" - the habit of over-emphasising potential benefits, under-estimating likely costs and spinning success scenarios while ignoring the possibility of errors.

This is one reason why IT investment value is constantly being challenged, confirms John Thorp, an internationally recognised consultant in the area of enterprise benefits assurance and chair of ISACA's Val IT development team. Most decisions in this area, he says, are "subjective, and all too often are based on perception and emotion rather than on facts."

In a mid-2009, nine-country survey by ISACA, fewer than half of the 1,217 companies questioned demonstrated a common understanding of IT value across the enterprise and two-thirds failed fully to measure it. Half of the respondents believed they were only realising between 50% and 74% of the expected investment value. Moreover, half measure actual value only "to some extent" and one in 10 do not measure it at all.

Whose project is it, anyway?

At least some of this trouble stems from misplaced ownership and shortcomings in - or even an absence of - active value management. Half of the respondents reported that accountability for measurement is delegated to the IT function itself, instead of remaining with the business, where it arguably belongs.

"Most enterprises feel they are realising value from IT, but few have a clear understanding of what value means, and even fewer measure it," says Thorp. "This raises the question: on what basis are spending decisions made?" Enterprises that do not fully measure value are likely to "miss out on revenue-generating opportunities, pursue unsuccessful investments and neglect competitive advantage."

Before Val IT, Thorp was instrumental in the creation of the Demand and Value Assessment Methodology, a Fujitsu-backed initiative for the Australian government dating back to 2004 and designed to drive transparent and auditable customer-driven assessments of demand and value for specific programmes.

On a broader level, Fujitsu also developed TRIOLE, a process for creating industrialised IT infrastructures and services, making them more efficient, more reliable, quicker to implement and easier to change. Companies such as online bookseller Maruzen Co have used TRIOLE templates and products to build a highly scalable internet shopping site - quickly and cost-effectively.

Maturing models

With similar goals of reducing risk, complexity and cost, the Val IT governance framework focuses squarely on the investment decision and the realisation of the benefits, and builds on earlier ISACA initiatives such as Cobit which is more attuned to project execution.

The value framework is being used to promote enterprise-wide IT investment governance, and to link accountability to the responsibility of key project stakeholders. Thorp insists that a business will not even come close to realising the full value of its technology investments until it does two things. First, it needs to use effective value management practices; second, it should assign accountability for the realisation of value from investments in IT to the CEO and board, rather than abdicating it to the CIO (see Strategic Thinker: On board IT, page 44).

Kevin Cooney, Global CIO at Xilinx, a $1.8 billion San Jose-based semiconductor company, agrees whole-heartedly with both of these observations. He believes IT investments can be managed successfully only if they are managed in partnership with other business executives. He is also a proponent of another fast-emerging value management approach, IVI's IT-CMF.

IT-critical processes

Stacy Smith, CFO of Intel - and a former CIO - characterises the IT-CMF as "an integrated and standardised framework for systematically improving IT capability and making IT investment decisions strategically from a holistic perspective." Backed by other IT leaders at Chevron, Lloyds, Microsoft, BP, Northrop Grumman, AXA, Chevron and others, the IT-CMF identifies 36 IT-critical processes - from Sourcing and Service Provisioning to Enterprise Architecture Management and Investment Analysis & Performance.

By drawing on shared member experience and industry expertise, it seeks to define best practice in each of these. IT departments can score their maturity for the different processes across five levels, setting targets and defining approaches, with the aim of optimising processes for value creation.

Others express equal enthusiasm. Says Louie Ehrlich, CIO of Chevron: "I can't emphasise enough the value of the IT-CMF and how it can enable an IT organisation to have intelligent, data-driven discussions with leadership and help solidify future plans."

A practical example comes from insurance company AXA. Fabrice Lock, head of innovation at AXA's technology services unit, says his organisation identified shortcomings in its Technical Infrastructure Management process. It found provisioning practices for new servers were in many cases at the lowest maturity level, with some parts of the company taking half a day to bring a new server on-stream. By focusing on raising that standard, AXA has vastly increased the efficiency of new server provisioning, reducing the task in many cases to 10 minutes.

"The IT-CMF doesn't de-risk IT, but it does help develop a better vision of IT in the corporate entity," offers Cooney. Such frameworks are emerging as a means of taking IT delivery to a higher plane, through a common understanding of investment risk and value. They may even insure against the kind of career-damaging events that can occur when major projects go awry.