Technology: Global Enterprise Software Slipping Out of Date

Tough times in the economy have hit corporate IT budgets hard, causing many companies to delay upgrading their software.   Postponed IT upgrades and maintenance mean many companies are running on software releases that are often multiple versions behind the current release of their software applications.  Gartner refers the postponed upgrade costs as an IT backlog.

Reports often show that the bulk of most IT budgets go towards maintenance rather than new projects, reduced funding means that some companies are taking the risk of ignoring maintenance of some applications while investing IT dollars in new software applications.

The estimate of the current IT backlog is $500 billion, and Gartner says that the trend is only accelerating and may reach $1 trillion by 2015.

Andy Kyte, vice-president and Gartner fellow, said that “Over the last decade, CIOs have 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.  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two years, but year after year of deferred maintenance means that the application portfolio risks getting dangerously out of date.  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. 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.”

Gartner recommends that IT managers produce an annual report on the state of their company software portfolio.  The report should detail which applications are currently being used, by which groups and for what purpose.  The annual report should include any new applications which have been added and note those that have been dropped, and most importantly it should include estimates for the costs of maintaining and keeping the software current.