The cost of a failed project is only the tip of the iceberg. Every project failure incurs both direct costs (the cost of the IT investment itself) and indirect costs (the lost opportunity costs).
I have seen some very large expensive failed IT projects. A certain SAP implementation project at a multi-national subsidiary I worked at over 10 years ago comes to mind. I have also seen smaller IT project failures as well - a poor choice of CRM software which subsequently had to be re-written by internal coders for example.
Sometimes these failed projects bring successes later, as the second version of the product may be much improved by the problems encountered in the first. Other times I think the money spend was just a wash out - and no use throwing good money after bad.
Seeing IT failures on large and small scales might make C level leaders afraid to spend money on big IT projects. However, not doing anything has a cost as well. Sometimes a very large cost. If you wait until your systems are outgrown, no longer supported, or putting you at a competitive disadvantage you run the risk of being left behind.
This is where opportunity costs come in. If your company is standing still you can rest assured that their is someone else out there with a vision that would be quite happy to pass you by on their way to capturing profits and new market sectors.
The number one thing that companies can do to limit stellar sized project failures is to use good project management methodology. The PMP certification program, for example, is a great way for a company to guarantee that their project managers are well trained and experienced. The American Management Association training classes in Project Management are very valuable for managers who will be also managing projects.
Some of the key ideas presented in these courses are, making sure the project has high level sponsors, gathering requirements properly, setting measurable (SMART) goals, keeping project communication open and flowing at all times, and making sure the critical path is swept clear of any and all obstacles.
Using good project management can help a company protect themselves from the risks of failed projects. But there is more to being successful that pure IT.
There are some old fashioned precepts that may be more important to your bottom line that just looking at what IT can do for you. I am thinking of knowing your market sector and what people want from you, keeping the quality of your products consistently outstanding, making sure your customers are treated with great service, and treating your employees like the truly important resources that they are.