No ! It just means the guy who wrote the white paper, and the guy who comments on it, are both incompetent.
A large number of these will eventually fail. I assume the failure rate of an "at risk" project is between 50% and 80%. For this analysis, I'll use the average: 65%.
Using the same kind of bullshit reasoning here is what I found: A large number of human beings will eventually die. I assume that human beings live between 0 and 100 years. For this analysis, I'll use the average: 50 years. Except that the average life expectancy is not 50 years but actually much higher. Taking the mean of the minimum and the maximum is not at all the same as taking an average, you may as well be pulling the numbers right out of your ass.
To find the predicted cost of annual IT failure, we then multiply these numbers together: .0275 (fraction of GDP on IT) X .66 (fraction of IT at risk) X .65 (failure rate of at risk projects) X 7.5 (indirect costs) = .089. To predict the cost of IT failure on any country, multiply its GDP by .089.
You're trying to introduce a global economic indicator using only 1st grade calculus, that's certainly an interesting approach. So the basic reasoning is that 65% of all IT projects fail, and when they fail, not only do we lose everything that was invested in this particular project, but because of the indirect costs, we are actually going to lose 7.5 times more money ! There is so much bullshit in this sentence I don't even know where to start ! First of all, is the project a failure because it was delivered late, because it is not completely satisfactory, because there are bugs ? In any case, there is almost no chance that the project is such a failure that we can't get anything out of it. What's more there is no way it is going to cost 7.5 times more money than that, which leads me to all the stupid assumptions.
- explicit assumption: 66% of all Federal IT dollars are invested in projects that are "at risk". I assume this number is representative of the rest of the world
=> It's not. The US is not even remotely representative of the rest of the world - explicit assumption: I assume the failure rate of an "at risk" project is between 50% and 80%.
=> Maybe you could have looked up the real number included in the definition of an "at risk" project. For all we know it could be 10% of 90%, assuming you know the number when you actually don't doesn't make it right. - implicit assumption: I assume that the average of the minimum and the maximum is the same thing as the average over all projects.
=> It's not, come back when you understand basic statistics. - explicit assumption: I will assume that the ratio of indirect to direct costs is between 5:1 and 10:1. For this analysis, I'll take the average: 7.5:1
=> Same thing as above, you don't actually know the number, it could be anything. Plus you make an average on minimum and maximum values which makes no sense at all.
Now the worst part is that Michael Krigsman seems to find the study interesting:
Although not precise, the numbers demonstrate the seriousness of IT failure around the world.
No, they don't ! We don't have a clue how precise they are, which means we don't have a clue how far they are from the truth. All the assumptions are completely wrong, and not just a little.
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures.
I propose we make a study on how much money is lost to software and consulting companies dedicated to reducing software implementation failures. Assuming one fifth are incompetent frauds like Krigsman, and the number of projects involving consulting companies is between 20% and 70% (we take the "average" 45%), and making the same dumb assumption as Krigsman himself, the workdwide cost would be .0275 (fraction of GDP on IT) X .45 (fraction of projects involving consulting companies) X .20 (fraction of frauds among consulting companies) X 7.5 (indirect costs) = .0185
That's a cost of 256 Billions USD for the US alone !! Even though the number is "imprecise", I think it clearly highlights the danger of listening to idiots like Michael Krigsman or Roger Sessions.
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Thank you for ruining my day with your bullshit.
