News

Just What Is IT Debt?

• By David Nagel
• September 24, 2010

Is your organization suffering from IT debt? According to research firm Gartner, IT debt is the amount of money it would take to clear the maintenance backlog and bring an organization's application portfolio up to a "fully supported current release state."

In other words, IT debt is the cost of bringing software up to date from where it is now. And it's a figure that's growing substantially, owing, most notably, to tight budgeting that has allowed critical systems to fall into disrepair or obsolescence, Gartner suggested.

The current worldwide IT debt level is $500 billion, according to Gartner. For context, that's more than double the firm's own forecast for total worldwide enterprise software expenditures this year, which Gartner pegged at $232 billion. And the problem is just growing as the maintenance backlog continues to grow, leading to potentially serious consequences.

While Gartner hasn't broken down its assessment of IT debt into specific sectors, the firm said this growing gap between the actual and the ideal state of IT software and systems is a worldwide problem affecting both public sector and private sector organizations, and it could have serious consequences. IT debt poses a "systemic risk, particularly for large organizations," Gartner analysts warned in a report released Thursday.

"A modern enterprise or public sector organization is likely to be critically dependent on a number of business applications. Each one is at a particular point in a complex life cycle; each one is slowly but inevitably diverging from its ideal state toward a suboptimal state, and potentially toward obsolescence or failure," said Gartner Vice President Andy Kyte, in a statement released to coincide with a new Gartner report, "Measure and Manage Your IT Debt." He added that "the scale of the problem is significantly greater than it has ever been."

The firm also noted that the decade-long reality of less-than-adequate IT budgets hasn't been the only factor contributing to maintenance backlog. The size of the IT debt has grown as organizations have invested in a wider range of IT-driven projects, requiring maintenance of increasingly complex systems and an ever-expanding range of functionality.

"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," Kyte said. "This means the IT management team is simply never aware of the true scale of the problem. This problem, hidden from sight, is getting bigger every year and more difficult to deal with every year."

In fact, Gartner has labeled "application overhaul" -- the collective processes for reviewing, managing and rationalizing a software portfolio--as "the critical IT strategy for the next 10 years."

Gartner analysts recommended that IT leaders address the issue in part by producing an annual report. The report should include the following details:

• Number of applications in use;
• Number of new applications;
• Number of applications "decommissioned"; and
• Current and projected costs of maintaining or "improving the integrity of the application assets."

Kyle said such a report would provide an inroad for leaders outside IT to become aware of the problem and begin to address it.

"Producing an annual report will not bring about a galvanized response, but dealing with the huge backlog of application maintenance and upgrade activity is never going to generate galvanic activity -- there will always be more pressing problems that the business will need to deal with," he said. "However, over time, the steady drip of information into the management team will start to bring about changes in attitude and develop a willingness to engage in dealing with IT debt."

Kyte will address the topic of IT debt and application overhaul at the Gartner Symposium/ITxpo, coming in mid-October in in Orlando, Fla. in a session called "Building the Compelling Case for Application Overhaul." Gartner is also providing a variety of free resources for IT professionals related to application overhaul and IT debt. These include research, a strategy guide and a Webinar, all of which can be found at Gartner's site here.