IT Debt Crisis Looms

Thanks to a decade of shrinking IT budgets, the global IT debt will total approximately $500 billion in 2010, said a Gartner analyst on Sept. 23. The gap can potentially widen to $1 trillion by 2015, according to the market research firm.

Corporations have a list of maintenance tasks that need to be completed to update all the applications to the most up-to-date version. It includes decommissioning older hardware and updating everyone to the most recent version of a software package. IT debt refers to the cost of clearing out this backlog.

Faced with a tight IT budget, or a reduced one from previous years, CIOs tend to fund the operational activities and put less critical projects on hold. While deferring the tasks for a year or two won’t pose a major risk to the company, it becomes a ticking time bomb if the IT management doesn’t track application inventory or evaluate the portfolio on a regular basis.

Years of delayed IT upgrades combined with the recent economic slowdown have put corporations so far off the maintenance cycle that business risks are looming. Organizations have a set of critically dependent business applications, such as e-mail, financial software, or even the phone system.

While the systems continue to work and the employees get everything done, the applications themselves are “suboptimial” if not updated regularly with security patches, or upgraded to newer versions with added functionality. Over time, they can become obsolete or fail, which can have catastrophic consequences.

For more, read the eWeek article Global IT Debt Hits $500 Billion On its Way to $1 Trillion: Gartner.