IT Debt Increasing, Finds Survey

by CFO Innovation Asia Staff, 19 June 2012

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Despite the concept of IT debt being widely publicised and discussed today, a substantial number of enterprises remain unable to monitor and measure their IT debt. Overall, just 54% report that they know how much it would cost them to bring their entire application portfolio up to date.

While IT debt is routinely measured in the U.S. (80%) and Hong Kong (73%), this happens far less commonly elsewhere. Just 52%% of enterprise organisations in Singapore measure their IT debt, 36% of those in France, and just 31% in the UK.

IT debt is defined as the cost of clearing the backlog of maintenance to bring the corporate applications portfolio up to date. These findings form part of “Mainframe Transformation: the Elephant in the Room”, an independent global research study undertaken by Vanson Bourne and commissioned by Micro Focus.

When asked, 590 CIOs and IT directors from around the globe estimated their IT debt at US$10.8 million on average, with $8.4 million attributed to mainframe applications, and guessed their IT debt would grow on average by 10% over the next five years.

In Hong Kong, 53% of respondents said that the cost of operating, sustaining and improving the integrity of their mainframe applications and their assets is increasing. Over in Singapore, 60% of respondents indicated a rise in cost.

The top contributor to the increase in cost is mainframe licensing, as indicated by 50% of Hong Kong and 67% of Singapore respondents.

The study also found that most Hong Kong and Singapore respondents allocate less than 40% of their annual budget to operating, sustaining, and improving the integrity of their mainframe applications and assets.

Gartner estimates that IT debt will break the trillion dollar mark globally in the next five years.

In its report 2012 “Planning Guide: Application Delivery Strategies”, Gartner advises IT leaders to start a technical debt management programme to understand and tackle the liability. However, 36% of Singapore and 34% of Hong Kong respondents confirmed they don’t have a structured process for measuring and managing their IT debt today or don’t know if they have one.

Of those who indicated their organisations have a structured process for measuring and managing IT debt, all of Hong Kong respondents say they are not planning to implement one, while most (75%) Singapore respondents indicated there are plans to implement one.

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