Last fall, Gartner VP and Fellow Andy Kyte brought significant illumination to a long-known fact in the technology industry – that billions of dollars were being spent on Technical Debt - the cost of fixing the structural quality problems in an application that, if left unchanged, are highly likely to cause major disruption and put the business at serious risk. Kyte said that Technical Debt has exploded in recent years; he set the current value of Technical Debt at approximately a $500 Billion globally and said it was quickly escalating to the $1 Trillion mark by 2015.
Around the time Kyte was announcing his results, we at CAST were announcing the results of our own Worldwide Application Software Quality Study, in which we assessed 288 IT applications from 75 companies throughout a variety of industries and comprising a total of 108 million lines of code. Using a very, almost overly conservative estimate of the maintenance cost per line of code to fix the problems uncovered, we determined that the average company was spending in excess of $1 Million on Application Technical Debt.
In order to evangelize the problem and assist IT departments in making a case to support improving processes, platforms and personnel en route to improving the structural quality of software, CAST has joined forces with Kyte to produce a whitepaper titled, “How to Monetize Application Technical Debt: A Data-Driven Approach to Balance Delivery Agility with Business Risk.”
The research paper illustrates how to calculate technical debt and then set and monitor the right quality threshold for balancing delivery agility with the risk of business disruption. In addition, the paper includes the research report, “Measure and Manage Your IT Debt,” by Kyte, who explains the systemic risk in the application portfolio caused by the accumulation of Technical Debt over the last decade.
The full research paper, including excerpts from “Measure and Manage Your IT Debt,” is available from CAST here.
Erik Oltmans, an Associate Partner from EY, Netherlands, spoke at the Software Intelligence Forum on how the consulting behemoth uses Software Intelligence in its Transaction Advisory services.
Erik describes the changing landscape of M & A. Besides the financial and commercial aspects, PE firms now equally value technical assessments, especially for targets with significant software assets. He goes on to detail how CAST Highlight makes these assessments possible with limited access to the targetâ€™s systems, customized quality metrics, and liability implications of open source components - all three that are critical for an M&A due diligence.