Computerworld says IT failure costs NZ$5.4 billion annually

Rob O’Neill’s front page story on today’s Computerworld New Zealand draws on research by US-based Objectwatch saying the total cost of IT failure in this country is $5.4 billion a year. The Computerworld story is not online at the time of writing.

Objectwatch’s CTO, Roger Sessions calculated the cost globally, for the US and for New Zealand saying the total includes the indirect costs of IT failure as well as direct costs.

The number seems unusually large and implausible for two reasons:

• First. For a country with around 4.3 million people, Sessions’ waste amounts to around $1280 per person or roughly three percent of GDP* – in plain English that means IT failure wastes one out of every 20 dollars earned in New Zealand.
• Second. According to IDC numbers in a press release issued in August 2009, New Zealand’s total IT market was worth $5.911 million in 2008 and is growing at 3.6 percent. So Sessions’ statement could be interpreted as saying almost all the money spent on IT is wasted.

This may well be the case, but surely not every penny spent on technology leads to failure. Or perhaps it does?

On this basis of these estimates we’d be better offer dumping computers and switching back to trusty old adding machines or abacuses.

• That’s my calculation. I used the Investment New Zealand estimate of GDP.