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New Study Finds 33% of Money Spent on IT Development Is Wasted: Good Requirements are Key to Success
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Posted by: Keith_Ellis on Wednesday, October 7, 2009

Business Analysis Benchmark 2009: quantifies costs of poor requirements definition and management, examines and disproves common assumptions about development methodologies and uncovers path for CEOs and CIOs to improve business performance.

New Castle, Delaware, September 23, 2009 – IAG Consulting today unveiled the results of its 2009 Business Analysis Benchmark report – subtitled Path to Success – that surveyed over 400 businesses across North America.  For the second year in a row, IAG found poor requirements definition and management consumes over one dollar in three of the application development budget.  Yet, when companies move from using ad-hoc requirements processes to institutionalizing a well-constructed requirements definition and management capability:

  • On budget performance for technology projects improved by over 95%.
  • Budget overruns were reduced almost 75%.
  • On time performance of technology projects increased 161%.
  • Time overruns on projects were reduced 87%.
  • Percentage of projects that deliver the functionality needed by the business rose by over 75%.
  • Requirements Quality Impacts Corporate Competitiveness

The study compared companies at 5 different levels of requirements maturity: ad-hoc, defined, implemented, institutionalized and optimizing.  Low maturity companies failed to achieve their business objectives on almost half their projects, while taking 35% more time to complete them.  High level maturity companies, however, turned their greater management efficiency into fiscal results with a return on assets - on average - ten per cent higher than comparable publicly traded firms in their industry.

Report Examined and Busted Commonly-Held IT Productivity Myths

The study examined and busted a number of commonly held beliefs about IT development effectiveness.  Significant findings include:

  • CIOs cannot simply attempt to hire great analysts and expect the problem of poor requirements to go away.  In fact, lower skilled people in a high requirements maturity company significantly outperform highly skilled people in a low requirements maturity company.  Only organizations who improved all areas of requirements maturity competency dramatically improved overall performance.
  • CIOs cannot gain productivity by just switching development methodologies (e.g., Waterfall to Agile, Iterative, or Prototyping/Visualization-centric approaches).  Switching methods offers improvement only if overall requirements maturity also improves during the adoption process.

Getting on the Path to Success

“CIOs need a step-by-step path that predictably delivers performance improvement,” said Keith Ellis, author of the study and Vice President at IAG Consulting.  “Focusing on requirements maturity not only shows the long term gains of doubling productivity, but short term results are also immediate and tangible.”  In the past year, 86.5 % of respondents tried to improve requirements discovery & management.  Almost two thirds of those successfully increased both stakeholder satisfaction and on-time/on-budget performance through this improvement strategy. 

The report lays out a clear framework for requirements maturity and documents how the optimal path changes as maturity level increases.  Transformation begins with a clear assessment of the current maturity level and identifying the strength of a company’s requirements processes, techniques, staff skills, technologies, organization and deliverables.  Companies that pursued this transformation virtually eliminated project failure, delivering over 90% of projects successfully.

Report’s Most Basic Finding Has Important Implications for CEOs, CFOs and CIOs.

The report’s most basic finding is that without a commitment to requirements definition and management, IT projects will fail.  "Companies and governments who rely on IT projects to execute their strategy," says Ellis, "need to commit to focused development of requirements definition and management capabilities if they are to improve business performance.”

More Information

For more information, or a copy of the full study, please visit

For key findings data, or a 10 minute micro-cast of results, please visit

About IAG Consulting

IAG Consulting is a market leading professional services firm specializing in requirements definition and management.  Established in 1997, IAG has over 40 senior consultants, has worked with a majority of the F500 companies, trained over 20,000 Business Analysts, and written over 1,200 requirement specs.  IAG helps US and international organizations define their business and system requirements for IT projects and organizational change initiatives. IAG provides consulting expertise, best practices, maturity assessment, and transformational programs to the IT and business community.  Based in New Castle, Delaware, IAG is privately held with offices in the US and Canada.        1.800.209.3616.


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