PALO ALTO, CALIF--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."
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