IT debt rising as businesses bury heads in sand over application management

Business are unaware of a mountain of IT debt that is hampering the ability to meet growing customer demand on applications, a lack of knowledge which affecting their bottom line.

According to a survey commissioned by MicroFocus almost half of all IT managers asked do not know the value of their IT debt.

IT debt is essentially a summary of all the work that needs to be done to clear a backlog of application maintenance, with an estimated value, and the cost has been growing steadily.

590 CIOs and IT directors around the world estimated that IT debt is at an average of $10.9 million, with $8.5 million attributed to mainframe applications.  It is expected that this will grow by nine percent over the next five years.

“It is climbing year in year out,” Micro Focus CTO Stuart McGill told ChannelBiz. “The fact that it continues to climb year in year out is worrying,” he says.

“What it is really saying is that the level of demand from users continues to increase but the IT’s ability to respond isn’t keeping up.”

Part of the reason for this is that 46 percent of those responding do not know the full extent of their IT debt, and this is impacting business.  44 percent said that they don’t have a structured process for measuring and managing their IT debt.

Consequently perhaps, five percent said that their application portfolio was in a “confusing mess”.

“It is very difficult to manage the requirements that are  being placed on IT,” McGill tell us, “therefore it is much harder for a business to make the right prioritisation decision, deciding what the level of investment should be and what options are available.”

Without a clear application portfolio management process McGill says that this is having a direct effect on business.  According to McGill the companies which do in fact track the process effectively are by and large performing “much better” financially.

“It would imply that if you have got great management and governance process, and you are managing these issues, then that can drive revenue and business capability to the overall benefit of the company.”

“That should not come as a big shock,” he says, “IT systems today often ARE the business.  If you are an internet business, that’s all you are.”

He says that although it might sound like a strictly technical issue, it is actually more of a strategic one.  IT is “intrinsic” in the future development and growth of the businesses of which they support.

“I was surprised at the high percentage of businesses which had a nominal process which didn’t stretch much further than paper napkin type models.

“Giving the complexity of the work that we do today, it is quite unnerving that companies are not taking advantage of all the best practices out there to really improve this.

At the end of the day we are all here to service the needs of customers, and if you can really get that better understanding then you can do a better job.

“This is something that needs addressing, and can be dealt with.”