Gartner pegs global IT 'debt' at $500 billion and growing

Summary:'IT debt' - the amount of money needed to clear out backlogged projects and deferred maintenance - is now estimated at $500 billion globally, and is expected to double over the next five years.

Analysts often come up with some interesting -- if not eyebrow-raising -- analogies to make a point or to get us all excited about something, and here's one to ponder. Gartner has just issued a statement that says IT departments have accumulated a massive 'debt,' defined as the amount of money it will take to collectively clear out backlogged projects.

$1 trillion in backlogged IT projects within five years

This IT debt will total approximately $500 billion in 2010, with the potential to rise to $1 trillion by 2015, says the consultancy.

So what?  How is this supposed to enlighten anyone?  How about a bailout for the IT sector?

According to Gartner, what organizations have is a "backlog of deferred liability," which can be looked upon as a debt, incurred over a period of years, that will need to be paid off at some time. The recent economic downturn has exacerbated this debt, since projects and maintenance have been deferred. "This 'IT debt' is a hidden risk for many organizations, and given continued tight economic conditions, this IT debt is growing, and the associated business risk is growing," the consultancy warns.

"There is little problem [maintenance is deferred] in one year, or even in two years, but year after year of deferred maintenance means that the application portfolio risks getting dangerously out of date," says Andy Kyte, vice president and Gartner fellow.

And what happens when an application portfolio gets "dangerously out of date"?  Air traffic control system, understandable. But how "dangerous" is a 2005-vintage procurement system?  Isn't it cheaper (and less debt-incurring) just to let it chug along than lay out money for upgrades?

The solution, Gartner analysts say, is for IT leaders to "produce an annual report on the status of the application portfolio," detailing its status "in terms that the rest of the business can readily absorb, detailing the number of applications in use, the number acquired, the number decommissioned, and the current and projected costs of both operating and sustaining or improving the integrity of the application assets."

Sounds like good advice for any well-managed IT shop, debt or no debt.

Topics: CXO, IT Priorities

About

Joe McKendrick is an author and independent analyst who tracks the impact of information technology on management and markets. Joe is co-author, along with 16 leading industry leaders and thinkers, of the SOA Manifesto, which outlines the values and guiding principles of service orientation. He speaks frequently on cloud, SOA, data, and... Full Bio

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