Why IT Budgets Blow Out and Where the Money Goes

Nobody sets out to overspend on an IT programme. But the budget overrun statistics are brutal. The majority of large IT programmes exceed their original budget, and many do so significantly. Understanding where the money actually goes is the first step to preventing it.

The biggest culprit is scope creep. Not the dramatic kind where someone adds a major new requirement. The insidious kind where small changes accumulate over months until the programme is delivering something fundamentally different from what was originally approved. Each individual change seems reasonable. In aggregate, they transform the programme.

The second biggest culprit is vendor overruns. Contracts that were not specific enough about deliverables. Change requests that were approved without proper commercial assessment. Extensions that were agreed because the alternative, finding a new vendor mid programme, was too disruptive to contemplate. All of this adds up. I explore how to address this in more detail in what to do when the supplier relationship breaks down.

The third culprit is inadequate financial governance. Programmes where the budget is tracked monthly rather than weekly. Where actuals are not reconciled against forecasts until it is too late to course correct. Where nobody has a clear picture of the committed spend versus the available budget. This is ultimately a governance problem at its core.

Good financial management in IT programmes is not about being cheap. It is about knowing where every pound is going and making deliberate choices about how to spend it. That requires structured programme governance from day one, not as an afterthought when the money starts running out. In one engagement, disciplined financial controls were central to rescuing a major enterprise ERP programme that had already exceeded its original budget.

Talk to Elisabeth about bringing financial discipline to your programme.