Is there really a global 'IT debt' of $500 billion?

Is there really a global 'IT debt' of $500 billion?

Summary: Gartner is arguing that there's a $500 billion global IT debt that's about to mushroom to $1 trillion by 2015. The big question is whether enterprises will buy the argument and upgrade applications.

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TOPICS: CXO, IT Priorities
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Gartner is arguing that there's a $500 billion global IT debt that's about to mushroom to $1 trillion by 2015. The big question is whether enterprises will buy the argument and upgrade applications.

On Thursday, Gartner touted this IT debt concept. In a nutshell, Gartner defines IT debt "as the cost of clearing the backlog of maintenance that would be required to bring the corporate applications portfolio to a fully supported current release state." In other words, more of your budget goes to maintenance for old applications.

Gartner analyst Andy Kyte will highlight the issue at the firm's IT powwow next month. "The application portfolio risks getting dangerously out of date," argued Kyte. The strong hint here is that companies will have to pay this IT debt at some point and upgrade.

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

I was a bit skeptical about the IT debt concept, which could be used as an excuse to scare you into an upgrade you don't want. To get a little more clarity I consulted the Enterprise Irregulars mailing list and came away with the following:

  • "Technical debt" is a well-developed concept for start-ups, but I think this Gartner approach to valuing it is not so good.  When we say "technical debt," we don't mean "this is the amount of money it will cost to fix things," we mean "this is the list of things we deferred because they were too big for right now, or we don't have a concept to deal with it, or because our architecture is not compatible with a solution, or whatever."

  • Technical Debt consists of bad design decisions and shortcuts you take in order to ship. You know that some day you will either fix it, or wake up to a bowl of spaghetti code that can't be maintained or enhanced. It is not some mythical thing that accrues line by line and can be accurately measured.

  • The problem is real, but the solution is not for buyers to spend more but for vendors to come up with more SaaS-like background upgrades and not charge that much for routine/regulatory fixes. The burden of the upgrades and the cost are gating factors.

  • Vendors have conditioned buyers to select and live with "good enough" software. They've made their beds and now they have to live with it.

Others argued that core enterprise IT is about putting out fires and upkeep. The real innovation is handled at the department level where people are buying SaaS.

Speaking of innovation, one EI noted:

You have to ask, what causes upgrades? The happy answer is you upgrade because such great new innovation comes along that you can pay for the upgrade and still come out economically miles ahead by taking advantage of all that shiny new goodness.

Yeah right.

Imagine the hapless IT guy.  The app is installed and running.  It works well and they actually don't even have to call Tech Support very often.  But, there have been one or two times when something BAD happened and they did.  Now he gets a note telling him the release they are on is being sunset.  Support for it will no longer be available.  He thinks back to those BAD incidents (and upgrades).

And.

I have a problem with the term debt. It creates a mindset of an obligation to the vendors. The SaaS model has found an optimal solution to keep majority of customers in sync and on latest version without needing months of rehearsal, testing and chaos.

In reality, IT debt is a concept worth pondering---whether you buy it or not---just to highlight where you've cut technical corners. But if everything works good enough you may just scrap the IT debt concept and ponder a third party support provider like Rimini Street or moving more to a SaaS model.

Topics: CXO, IT Priorities

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9 comments
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  • just use the latest OSS code

    and there will be no debt.
    Linux Geek
  • For those who still have any lingering doubt...

    ...that IT has become a racket, there ya go. Not mindlessly upgrading every time something new comes out is now regarded as incurring "debt"? The money still in my pocket says otherwise.
    JohnMcGrew@...
  • This is not debt but savings!

    This amount is the amount of money saved by NOT upgrading.
    It shows how worth it is to keep your IT the same as much as you can.
    Thanks Gartner! :-)
    alan0012@...
  • Sounds Like Task Debt, and It's Costly

    It sounds like a measure of a labor commodity--or really just task debt--and it DOES have a cost. There are costs in efficiency, security, morale, branding and in opportunities lost.
    tomogden
  • Is it YOUR debt or SOME ELSES?

    The debt is only yours (and your business) if you have the responsibility for developing the application and failed to manage the process to add new features or fix bugs. How many C-level executives can point to their process for managing the $10M worthy of applications and the $500M of data that those application are playing with.

    It is interesting that the Enterprise Irregulars blog posts do not talk about Data Management, Information Management and Application Management as have similar patterns of management that involve accountability and responsibility for the business, technology (TCP/IP, PHP, OAuth, etc..), Policy/Rules, data/information and applications.

    If you fail to manage your assets your go into debt, you may even fail and lose the company.
    ronald.warden@...
  • Gartner = Hot Air

    They serve very little purpose other than to constantly <i>Cry Wolf</i> and stoke sales calls for vendors. <b>Robert X. Cringely</b> wrote about them in 2008:<br><br><a href="http://www.pbs.org/cringely/pulpit/2008/pulpit_20080516_004925.html" target="_blank" rel="nofollow"><a href="http://www.pbs.org/cringely/pulpit/2008/pulpit_20080516_004925.html" target="_blank" rel="nofollow"><a href="http://www.pbs.org/cringely/pulpit/2008/pulpit_20080516_004925.html" target="_blank" rel="nofollow">http://www.pbs.org/cringely/pulpit/2008/pulpit_20080516_004925.html</a></a></a><br><br>I completely agree.<br><br>-M
    betelgeuse68
  • RE: Is there really a global 'IT debt' of $500 billion?

    When I stop gagging, I will remember that 99% of all software upgrades are solely to enhance the revenue stream of the software vendor. If their software is broken as shipped, or as patched, they DAMN WELL should eat the cost of the fix(es), not the hapless customer on whom they foisted a bum product in the first place. Otherwise, if it ain't broke...DON'T MESS WITH IT!
    decryobliviots
    • RE: Is there really a global 'IT debt' of $500 billion?

      @decryobliv Well that assumes staying the status quo is good for forever more. In general, not a good approach. Given enough time upgrades can be justified. For example, 10 years ago you would never hear the word "virtualization" but VMWare et al have made deprecating various legacy boxes possible. You can eliminate lots of physical systems in a data center that are considered "critical" to the business but aren't transactionally intense, i.e. they're mostly idle computationally (less than 10% CPU utilization). What I'm talking about is consolidation. <b>You can make images of 4 to 6 systems then run those machine images on one contemporary physical server</b>. Your power draw just dropped off dramatically. Power is a major cost in operating a data center.<br><br>That's just one scenario of several I can think of where purchasing (new) software makes sense.<br><br>The problem with Gartner is they sensationalize everything to the benefit of vendors but specifically to fan the flames of yearly upgrades.<br><br>-M
      betelgeuse68
  • RE: Is there really a global 'IT debt' of $500 billion?

    When I stop gagging, I will remember that 99% of all software upgrades are solely to enhance the revenue stream of the software vendor.
    <a href="http://www.nocreditcardebt.com" rel="dofollow">Debt Management Plan</a>
    joepierce1988