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September 23, 2010

Global IT debt to be $500bn in 2010, says Gartner

Expected to rise to $1 trillion by 2015

By CBR Staff Writer

Worldwide IT debt will total approximately $500bn in 2010, with the potential to rise to $1 trillion by 2015, according to IT research and advisory firm Gartner.

IT debt is 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, according to Gartner.

Gartner vice president Andy Kyte said that over the last decade, CIOs had frequently seen IT budgets held tight or even reduced.

"The reaction has been to still deliver quality of service for operational services and to use any potential project spend to deliver new functionality to the rest of the business," Kyte said.

"The bulk of the budget cut has fallen disproportionately on maintenance activities — the upgrades that keep the application portfolio up-to-date and fully supported.

"There is little problem if this is done 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two years, but year after year of deferred maintenance means that the application portfolio risks getting dangerously out of date."

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Kyte further said, the issue is not just that maintenance keeps on getting deferred, it is that the lack of an application inventory and the absence of a structured review process for the application portfolio.

The research firm said, this 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.

"This problem, hidden from sight, is getting bigger every year and more difficult to deal with every year," Kyte said.

As businesses continue to invest in business value-added projects, the size of the IT debt grows as well, because the additional functionality and complexity will need to be maintained and upgraded to a more-reliable state in the future.

Kyte said that while it was true that there had never been an IT organisation without a backlog of maintenance activity, the scale of the problem was significantly greater than it had ever been.

Gartner also suggests companies for the creation of annual reports on the status of the application portfolio, and the report should detail the status of the application portfolio in terms that the rest of the business can readily absorb.

The report should include 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.

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