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Survey: IT leaders in Singapore do not know the value of their IT debt

T.C. Seow | June 19, 2012
New global research confirms IT organisations need a more robust application portfolio management strategy to curb IT debt and inform mainframe investments.

Some 48 percent of Singapore's IT decision makers have admitted they do not know the value of their IT debt, creating a hidden balance sheet liability for those organisations as well as a growing business risk.

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, a leading provider of enterprise application modernisation, testing and management solutions.

Separately, research firm Gartner estimates that IT debt will break the trillion dollar mark globally in the next five years. In its report named "2012 Planning Guide: Application Delivery Strategies", Gartner advises IT leaders to start a technical debt management programme to understand and tackle the liability.

When asked, 590 CIOs and IT directors from around the globe estimated their IT debt at S$13.8 million (US$10.9m) on average, with S$10.7m (US$8.4m) attributed to mainframe applications, and guessed their IT debt would grow on average by 10 percent over the next five years.

However, 36 percent of local survey 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, and 25 percent of those without a process are not planning to implement one.

Despite their IT debt admissions, 88 percent of local Micro Focus research respondents confirmed that they have a structured review process and strategy for their application portfolio, which they review on average every four months. Yet 72 percent of local respondents admitted they lack detailed plans.

Nearly one fourth (24 percent) said it contained legacy applications that no one knew how to update and that they were afraid to touch, while some 13 percent confirmed that they have redundant applications eating up unnecessary MIPS without the means to identify and retire them.

Another 20 percent claimed merger and acquisition activity had created an unclear picture of the applications they have, the relationship between those applications and what should be retired.

"The research results shows that IT organisations in Singapore are tinkering under the bonnet with their application review and updates today rather than installing a new engine, creating a frightening balance sheet liability," said Stuart McGill, chief technology officer at Micro Focus. He cautioned that over this decade, IT organisations would have to move away from being too focused on projects to being more asset-aware, in order to maximise their annual IT budgets "allocated to operating, sustaining and improving the integrity of mainframe applications and their assets," he said.

Application portfolio management will be a strategic imperative, but the challenge is how to attribute an immediate return on investment to APM given it's a mid- to long-term value proposition, he added.


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