BPM FORUM MEMBER BULLETIN
OBSOLETE SOFTWARE COSTS U.S. COMPANIES BILLIONS OF DOLLARS IN UNNECESSARY IT SPENDING, SURVEY FINDS
70 percent of respondents say they have redundant or discarded applications, but lack systematic processes for retiring business solutions.
PALO ALTO, CALIF., December 6, 2022 – Corporate America’s information architecture is replete with obsolete, redundant and unused software applications—so many, in fact, that maintaining them drains tens of billions of dollars per year from the most information-intensive companies alone. However, nearly three quarters of these companies have no process in place for retiring outmoded software and less than half conduct regular software audits to see how much software is on the network.
Those are among the startling findings of a new online survey of business and IT executives conducted by the Business Performance Management (BPM) Forum, a leading executive organization. Titled “Software Drain or Business Gain: Assessing Application Value, Relevance and Cost to Your Company,” the study analyzes the value of business software to corporations today, what companies do to ensure that applications are aligned with business strategies, and what happens to those applications when they’re no longer used.
More than 40 percent of the respondents estimate that unwanted applications drain more than 10 percent of their IT budgets, while 10 percent estimate the real cost to be more than 20 percent. Fully 70 percent say their companies have redundant, deficient or obsolete applications on the network—and the problem is even more serious in larger companies with revenues over $500 million.
To put those numbers into perspective, the average IT budget of companies in the InformationWeek500 (the magazine’s annual ranking of the most IT-savvy companies) is estimated at $334 million a year. Even 10 percent of the overall sum spent by this elite group makes for a waste of $16.7 billion.
Also among the survey findings:
- Software is critical to business. Nearly 77 percent say they are either dependent or extremely dependent on the performance of their software applications
- 64 percent of respondents admit that they are not able to benchmark the value of their software investments
- Software is clearly a management priority, more than half (51.4 percent) of respondents say CEOs specify and determine enterprise-wide business applications
- 63.1 percent say business software helps their companies capture new business, while 61.1 percent rely on it to gain competitive differentiation
- But nearly half of all respondents give their company low marks for the way IT spending is aligned with strategic priorities and business needs
- 40.2 percent conduct company-wide software audits only on an “as-needed basis,” while 13.4 percent never conduct them at all
The study is based on a survey of 226 top IT professionals and C-level executives conducted in the third quarter of 2004 and reached companies ranging from small and mid-market businesses to global corporations with billions of dollars in revenue. Approximately 25 percent of all respondents come from companies with revenues of $500 million or more. The study is part of a thought leadership initiative by the Business Performance Management (BPM) Forum, an elite group of 500 senior executives dedicated to furthering operational visibility and financial accountability at global corporations. The survey was underwritten by Cognizant Technology Solutions, a leading provider of IT services, and Borland Software Corp., the global leader for platform-independent solutions for software delivery optimization.
“Companies are challenged with a two-fold problem: There’s too much obsolete software on the infrastructure, yet no one is officially responsible for removing it,” said Donovan Neale-May, Executive Director of the BPM Forum. “Old software doesn’t stay on the corporate network because someone chooses to keep it there; it stays there because no executive takes the initiative to remove it. That’s why this is an issue management needs to address directly.”
“Obsolete and redundant software is a serious drain on IT budgets,” said Lakshmi Narayanan, CEO and President of Cognizant. “We are seeing strong demand for services that analyze application portfolios and can identify the specific business value of each application. Organizations are also investing in rationalizing systems by re-platforming and eliminating applications and then using the savings to build new systems that can show substantial return on investment .”
“It’s no secret that software drives business today, not just operationally but strategically as well,” said Dale Fuller, president and CEO of Borland Software. “This study illustrates how dependent a company’s growth and competitive advantage are on software performance. Unfortunately, the study also shows the lack of control and visibility that management currently has over this important asset. Borland’s Software Delivery Optimization vision gets to the heart of this issue. By aligning business and IT organizations, we can help transition software development into a more managed process that maximizes the business value of that software.”
To undertake the research, the BPM Forum joined forces with GlobalFluency, the InfoWorld Media Group and eChannelLine. The full report will be made available online at www.bpmforum.org and at www.bitpipe.com.
About the BPM Forum
The BPM Forum is a high-level, invitation-only thought leadership forum that targets senior level executives in operations, finance and information technology, as well as those serving on corporate boards worldwide. The Forum helps advance the understanding of business performance management techniques, technologies, and processes in global enterprises. Heightened concerns with corporate governance and accountability have created growth opportunities in the market for BPM solutions — expected to grow to $20 billion by 2005. The ability for enterprises to collectively engage in the process of embracing business performance management practices and solutions has become a critical corporate mandate. Driven by demands for improved operational dexterity and corporate governance, the BPM Forum helps research, develop and promote cutting-edge methods to strengthen financial management disciplines, drive performance accountability, tighten budgeting and planning practices, strengthen operational visibility and insight, and ensure performance improvements across large organizations.
More than 500 companies are currently represented as members of the BPM Forum which is sponsored by Hyperion, accounting for well over $400 billion in aggregated annual revenues. These include: ACL Services, Accenture, Ameritrade, Bank of America, BearingPoint, Inc, Biz360, Booz Allen Hamilton, Canadian Imperial Bank of Commerce, Canon, Chordiant, Citgo, Citrix Systems, Inc., CNL Hotels and Resorts, Commonwealth Bank of Australia, Deloitte Touche, Daimler Chrysler, Fidelity Investments, FileNet, Fujitsu, The Gap, GEAC, General Electric, Harper Collins Publishers, Hewlett Packard, Hitachi, JP Morgan Chase, IBM, ICN Pharmaceuticals, Inc., National Scientific Corporation, Oracle, Phelps Dodge Corporation, Pinnacle Technology Partners, Inc., Porsche, PPG Industries, Inc, Price Waterhouse Coopers, Quest Industries, Inc., Sabre-Holdings, Safeway, Inc., Saks Incorporated, San Jose State University, Siebel, Singapore Power, Southwest Airlines, Staples, Inc., Starwood Hotels & Resorts Worldwide, Inc., Stratascope, Inc., Sun Microsystems, Symantec, T. Rowe Price, TCF National Bank, TD Bank Financial, TEK Digitel, Tickets.com, Toshiba America, Tyco International, Verizon and many more. http://www.bpmforum.org
GlobalFluency is a tightly integrated alliance of “like-minded” independent technology marketing and public relations firms delivering strategic cross-border communications services in the Americas, Europe, Asia-Pacific, Africa and the Middle East. Founded and managed by Silicon Valley-based Neale-May & Partners, GlobalFluency now has 81 offices in 65 countries. Together, these firms represent more than $50 million in combined billings from scores of clients across all information technology, communications, system integration, electronics, infrastructure, and Internet service sectors. GlobalFluency, which is Powered by Principals, specializes in perception management, market demand generation, localized multi-channel communications, affinity group management, conversational marketing, global intelligence, and authority leadership programs for international companies. www.globalfluency.com
Cognizant Technology Solutions
Cognizant (NASDAQ: CTSH) is a leading provider of IT services. Focused on delivering strategic information technology solutions that address the complex business needs of its clients, Cognizant provides applications management, development, integration, and re-engineering, infrastructure management, business process outsourcing, and a number of related services such as enterprise consulting, technology architecture, program management and change management through its onsite/offshore outsourcing model. Cognizant’s more than 14,000 employees are committed to partnerships that sustain long-term, proven value for customers by delivering high-quality, cost-effective solutions through its development centers in India, and onsite client teams. Cognizant maintains P-CMM and SEI-CMM Level 5 assessments from an independent third-party assessor, was recently named Forbes’ Best Small Company in America for the second consecutive year, and ranked as the top information technology company in BusinessWeek’s Hot Growth Companies. http://www.cognizant.com
Borland Software Corp.
Founded in 1983, Borland Software Corporation (NASDAQ: BORL) is the global leader in platform independent solutions for software delivery optimization. The company provides the software and services that align the teams, technology and processes required to maximize the business value of software. To learn more about delivering quality software, on time and within budget, visit: http://www.borland.com
eChannelLine provides the sellers of IT products and services with industry news and analysis, reports on the "Channel Excellence Awards" featuring best products and practices as selected by the channel, views on market direction, expert opinions on how the channel can benefit from the rapid changes in technology, and reports on product-centric solutions. http://www.integratedmar.com/ecl-usa/eclonline.cfm
InfoWorld Media Group
For 25 years, InfoWorld Media Group has provided cutting-edge coverage and evaluation of IT products and services for technology experts in senior management. Through integrated channels including print, online, and events, InfoWorld reaches the most influential senior-level information technologists — those who drive their enterprises’ strategies and technology purchases. Powered by a continued investment in an independent Test Center, InfoWorld analysts and editors provide both hands-on analysis and evaluation, as well as expert commentary on issues surrounding emerging technologies and products. http://www.infoworld.com