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One Expert Pegs Yearly Cost of IT Failure At $6.2 Trillion
blognoggle writes "Roger Sessions, a noted author and expert on complexity, developed a model for calculating the total global cost of IT failure. Roger describes his approach in a white paper titled The IT Complexity Crisis: Danger and Opportunity. He concludes that IT failure costs the global economy a staggering $6.2 trillion per year."
Does this mean that IT people are generally incompetent? Or is it just the IT managers who are incompetent? Or, just maybe, it's all IT people who don't read /. who are. Hmm..
no, I don't have a sig
and it will magically work the way it's supposed to work
The global domestic product is approximately 60 trillion USD. If 6 trillion is lost to IT failure, then on average, every company is losing 10% productivity to IT failures.
This is simply not credible, and this guy should be strung up by his pinkie toes and flogged with ostrich feathers until he admits he eats eggs benedict on Tuesday mornings.
turning it off and on again.
Game: Player 'Donald J Trump' now has AI skill level 'experimental'.
Crap article with no way to substantiate the actual dollar amounts. How much money would be lost if a large company simply had no IT department at all?
World GDP is currently about $60.6 Trillion dollars a year.
I can tell you right now IT failures do not account for 10% of the world economy.
I really can't stand these 'articles' that take the "then multiply by 6 billion" to get a value for the whole planet.
I am going to start a group called the "Floppy Diskers". We will protest the government and tell them to stop wasteful IT spending as it is against our Constitutional rights!!!!
Who's with me!
How much of this is just from good old BSOD's?
His failure to title the report "The IT Complexity Crisis: Epic Fail" saddens the hearts of all good men and patriots.
While it's true that many IT project failures are truly spectacularly expensive, many are also a learning experience. We should strive to eliminate failure, of course, but some inefficiency will always be present in any sufficiently complex undertaking.
If one failed project helps a business prevent similar failure in future projects, has the failed project not produced some value after all?
This is more philosophy than anything else, but things are seldom black and white in this world, are they?
.: Max Romantschuk
There was an ad masquerading as an article by Michael Krigsman the CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures.
If IT failure costs 10 trillion US$ a year, how much does IT success bring in?
I suggest looking closely at the arguments and post -- it is a VERY serious issue.
So let me get this straight... You spend a dollar trying to improve your business process. It doesn't work out. So you're out a dollar. I get it. But then you're out a further $10 because if it HAD worked out, that's what you WOULD have saved. Puh-lease. That's assuming your idea was worth a fuck. NOT ALL IDEAS ARE.
I can easily prove that you personally have lost millions of dollars because there were plenty of things you COULD have done to earn those millions. Why didn't you start a search engine? Why didn't you write the twitter application? Not skilled enough? Heck, you should have bought that winning lottery ticket! And while we're at it, why did you waste your money on fixing your car when it just got wrecked a month later?
My god, you've cost yourself millions of dollars due to your incompetence!
Someone should tell this to our managers when experts are suffering lousy working conditions. Allways people who knows how to do it changes company becouse managenet suxx and they make you work impossible by saving costs everywhere!
How is this money wasted? It's a lot of work to produce a spectacularly failing projet. All those programmers and project managers are not free you know. They have to pay their mortgage like everyone else.
Nobox: Only simple products.
This article, and the guy who wrote it, is a useless waste of space. Anyone can prove anything if they make unfounded assumptions. Hey, I'm going to assume that in 2010 I'll either earn $100,000 or $100,000,000. Let's take the average and call it $550,000. Look, I *CAN* afford a ten-million-dollar mortgage, on those assumptions!
I wonder how much of this IT failure is actually user (non-IT) failure? From experience, the amount of user error that becomes an IT problem is far greater than the actual IT problems. Also, these are user failures that generally cannot be prevented by IT using error catching or better UI by the way.
Adidas To Bring Back Sneakernet
...the cost of web servers put out of service by the slashdot effect. However now he has the opportunity to improve his model.
This article comes from the same universe as the one where drugs (no matter which) cost 1 million per gram, and downloaded music deprives the stakeholders of roughly 200 billion per song.
Religion is what happens when nature strikes and groupthink goes wrong.
Read again , for the US it is only 1.2 trillion, or more like 2% GDP which isn't too far off when I could all the loss of time my colleague and me get with POS windows software breaking down. WORLD is 6.2 trillion USA 1.2 trillion
C. Sagan : A demon haunted world:
http://www.amazon.com/gp/product/0345409469/
visit randi.org
What nonsense. One of the foundations of project falure is built from the top down. Executive leaderships say "make this work" what ever "this" may be. Top leadership runs around then looking for a solution. Many times they go to a vendor and of course the vendor says "Why yes, our product will solve "this" problem". So instead of so good due diligence on the part of analysts to truly see what the specific needs are, the company purchases this cost saving solution; perhaps it is a service, perhaps it is a soup to nuts enterprise system, perhaps it is off the shelf, out of the box software.
Soon into implementation or pilot the upper levels managers finally begin to see what their own IT staff and their customers were trying to tell them
1 - We don't need "this"
2 - "This" does not fit our needs
3 - "We have to use "this?", the current system works.
Even worse, while the company has a qualified in house staff that understands the specific needs, they will hire consultants to tell them how "this" can work for them. It could be that certain decision makers were favored by the vendor to "try it out" only to find later that the trail cost more in lost time, money, effort while the vendor pockets the dough.
Cynical? Not really. Over my long time in the business I have seen this time and time again. Even though there is a good staff structure in place to handle company IT needs top corporate leaders will buy from a vendor because the perception is that the goal will come quicker. Never mind that the product may not fit, IT will make it fit. Never mind the internal customers that need retraining, we'll hire new people...and on and on. All to try and save time. The bottom line is that any failure of an IT project begins with the top leadership not doing their job. The first question they should ask and answer before dropping a dime is "Do we really really need "this". The second, "Is it an emergency?". The third, "Do we have staff to create "this"?, the fourth "how will this effect our internal customers?. In a world where the attitude is "We need it yesterday" there will be more failure, but do not fault just IT, fault corporate leadership.
(yes I rtfa and it was fluff, stupid and providing no insight to why)
Life is a great ride, the vehicle doesn't matter
how about uniform standards and less versions of sql, less browsers, less version of unix/linux, and maybe even standards in linux so that installations and menu additions and gui stuff was easier like windows. Yes linux folk open source 1000 different distros is not helping linux take over the desktop. And must windows really move stuff around each version just to confuse people and make them relearn again? But most of all why must applications be given so much freedom in terms of operating system. Can't the os keep more of these details in the kernel and limit the damage applications and viruses do to the pc. I don't think windows or linux are the future, I think someone has to create a new secure operating system that is easier to use than windows or linux and maybe doesn't let developers and users run free like the wild west. As much as I like all the insane things I can do with C++ memory/pointers , and changing the os and windows start text to anything I like there is no need for this to be open to users. The os needs to be more like a vault with bank security guards controlling it. And do we really need so many programming language, Sun wouldn't give MS java freedom so they create C#; etc. ruby , perl, smalltalk, etc.. is this really helping? And last why is javascript allowed to do stuff like control my back button , etc.. it has been years and no one can deprecate this dangerous behavior??
Basically, a self proclaimed IT efficiency expert writes that "the world is wasting TRILLIONS of dollars a year, because it has bad IT". The subtext is, you must hire an IT efficiency expert, and "um, I happen to be one".
It would be nice if people that publish all these shock numbers were not so transparently self motivated. It almost makes me not trust any number at all. It's like, if Newton were alive today, and published that Earth's gravity acceleration, I'd have to ask, well, what's in it for you, Isaac!
This is my sig.
If it's here you know it's GOT TO BE TRUE !!
http://news.slashdot.org/story/09/12/28/0617206/One-Expert-Pegs-Yearly-Cost-of-IT-Failure-At-62-Trillion
blognoggle writes
Now I'm assuming this is the same "blognoggle" who brought us such gems as :-
"Rush Limbaugh is a Big Fat Evil Racebaiter"
"Vampires and Bloodsucking Liberals"
"Time to Impeach Barack Obama"
"Is Your Boss a Vampire? Or, Maybe, a Shapeshifter?"
Really timothy, perhaps it's time to stop the copypasta from reddit bloggers, before our heads explode ?
I've seen so many of these sorts of articles lately on /.
It's really devaluing /.
It would be nice to have some mod facility to get these nuked. It's disappointing that such a long running resource like /. is now being infected with self promotion. One of the best self promotion FAILS was the one about face book switching to some C++ frame work from php in order to save 10s of thousands of servers resources. I'm still laughing about that one.
I can give you perfect IT systems. It will cost you Infinite Dollars. Or I can give you a totally failing IT system for nothing. Somewhere along that line is the break-even point, and if we assume the market is working the way it is supposed to, we are riding that break-even point.
Live with it.
So how much value does IT generate in a year?
Seriously - this is dumb - IT projects, just like life, will often fail. We know they will and we know why. If it was such a problem then clients and project managers would actually do something about it - but they don't. So in that case all I care about is that I get some of the money - and I work in IT - so I do. Hooray!
Also, failure isn't such a bad thing - my past relationships failed, I didn't regret them (well, ok, I did...) - my latest poem failed to be any good, I didn't regret trying - my last batch of home brew has gone bad (I may still drink it of course) but that's life.
Alright everyone, this Internet thing has officially become Serious Business! Someone tell the Internet Police!
Note: these are composite examples from many sources I have gotten over the years. They are not against any one company. But I think they are indicative of the industry as a whole. And that is sad.
with far less experience. Much of the successful teams have members with DECADES of experience. That is why IBM was willing to pay money (but not salaries) from employees to move to India and China. They know that they need experience, but do not want to be saddled into the long term costs. In time (1-2 decades), China/India will gain that experience and this will change. In the mean time, a western business is better off hiring from the west where Coding was developed and the experience still resides.
I prefer the "u" in honour as it seems to be missing these days.
I'm gonna have to try that much harder in 2010... I know that, through my own personal hard work and dedication, I can get that figure down to $6,199,999,900,000...
The real issue is that companies like IBM, Qwest, Verizon, ATT, etc have been moving their work from Western countries to China and India. These countries do not have the experience. Experience is what keeps projects from failing. Youth, combined with adventuresome and lack of knowledge of what fails is what allows new directions to be taken. A good company needs both. Most of these large companies are gutting their experience, but not taking on those that want to be adventuresome. That is why companies like IBM, HP, Dell, etc are doomed to following the same path as Compaq, Dec, etc. This is also the time for small start-ups through the world. The time to do that is when companies like these monsters are floundering.
I prefer the "u" in honour as it seems to be missing these days.
"According to the 2009 U.S. Budget [02], 66% of all Federal IT dollars are invested in projects that are "at risk". I assume this number is representative of the rest of the world."
"A large number of these will eventually fail. I assume the failure rate of an "at risk" project is between 50% and 80%. For this analysis, I'll use the average: 65%."
"You can see that indirect costs add up quickly. I will assume that the ratio of indirect to direct costs is between 5:1 and 10:1. For this analysis, I'll take the average: 7.5:1."
In summary, if you assume Federal IT expenditures have the same rate of being "at risk" (whatever that means) as every business in the world, and multiply it by the average or two numbers I just made up, then further multiply it by the average of two other numbers I also made up and wouldn't even make sense to use if they were real, then multiply that by a semi-legitimate percentage and the GDP, you get A Large SCARY Number!
You did notice that he's claiming that IT failures cost over 3 times as much as the total spent on IT, right?
"2.75 % of GDP is spent on hardware, software, and services." OK, so that's $1.92 trillion for the world total spent on IT.
"To predict the cost of IT failure on any country, multiply its GDP by .089" Wait, 8.9%? $6.21 trillion in costs on $1.92 trillion spent? Is this the accounting from "the Producers"?
I expected someone would have checked the math before posting this kind of story on Slashdot
This sentence no verb.
...6.2 Million.
I should try acting all “experty” and come up with numbers that support the views of my bosses or myself too. ;)
According to experts, there’s good money in this...
Any sufficiently advanced intelligence is indistinguishable from stupidity.
We have large numbers of smart people working hard to fix these costs, and by my estimation the pace of reduction far exceeds that of other opportunity costs. For example, the problem of suburbanization and lagging mass-transit has probably incurred an astronomically higher cost to the U.S. alone, but because the powers that be didn't care to have that cost reduced we have failed to assess it for the last 50 years. So some journalist decides he'll take a swipe at one of the hardest working segments of the world economy because it cannot continuously maximize its output. Provide some damn context and put this number in perspective.
does this amount take in to account the massive amounts of money made by ignoring bugs and pushing forward anyway?
sure a program might have a bunch of bugs that costs $$ to patch and deal with on a daily basis, but the fact that you now need 90% less staff or that you can do 1000 times more business is likely to far outweigh the cost. Which of course is why businesses still love IT.
Sure better and less complex solutions could be created, but they take thinking and planning time and usually then have to deal with the massive mess anyway.
...and that is all I have to say about that.
http://jessta.id.au
Back in the good old days, mainframes (IBM big iron) and minicomputers (Unix, AS/400s, HP's MPE, etc) ruled the business world. Purchase of this equipment was hideously expensive, and access to use it was generally limited to highly trained specialists... expensive computer-science-degreed specialists whom management loathes because management cannot stomach the thought that they have to hire expensive people with attitudes who can hold management "over the barrel". These however systems ran like clockwork, rock solid reliability with uptimes usually measured in months to sometimes years before the inevitable hard drive crash halts the system. Component failures were almost always limited to moving parts -- the disk drives and tape drives, and also power supply units. When a new system was bought and installed, the expected useful service life averaged around nine year cycles in between forklift upgrades.
Then comes along the PC and the Windows operating system. Hardware gets cheap and the O/S initially was cheap too (but arguably not anymore). Systems uptime and reliability goes in the toilet. Forklift upgrades are pushed down to 24 to 36 month cycles, and in some cases, as low as 18 month cycles. Business grows accustomed to a steady diet of PC unreliability, system crashes, sloppily written and buggy commodity software apps become the norm too. Business just shrugs and accepts this new status quo as the way IT works now. Cheap throwaway computers and now cheap throwaway staff to run them. That's where we're at now.
Basically, IMHO, it's Microsoft's fault.
(Amazingly, the captcha I have to enter to post this is "cutback". How fitting.)
If the lost productivity outweighs the costs then we would be better off without it. This is called "cost benefits analysis".
I don't think this was addressed.
putting the 'B' in LGBTQ+
"IT failure" is a very broad term and can happen for a lot of reasons:
My take on this is that the main cause of failure is the fact that IT still hasn't settled on a set of engineering principles to deliver projects. Things change way too fast still -- over the life of a 2-year project, your hardware platform may be changed out from under you, for example. PHP, .NET or Java may be swapped out for YetAnotherCoolLanguage0.1alpha4. This is made worse by unscrupulous vendors, poorly-trained consultants, and lack of acceptance by the user base of the software.
I think the author is referring to the direct cost of a failure. Every few months, the technical publications run an article or two about a large company or government agency writing off millions of dollars for a failed SAP/Oracle Financials/similar package deployment. Whenever I see one of these, it's interesting to see what happened. Usually it has something to do with one or more of the causes I listed above. Generally, the more expensive, tranformational and long a project is, the worse the results are. It's not just vendors either - I've seen in-house projects spiral down the same way. The other thing that comes to my mind when I read articles like this is why they didn't see it coming. Don't IT executives talk to each other over golf or something and say, "Yeah, SAP screwed us out of $100M in consulting fees. I'd watch them if I were you..."?
Other branches of engineering aren't immune to this though. Construction and infrastructure projects often run over time and budget. The difference is that a construction project gets finished one way or another. A software project failure means throwing away two years of work and putting the hardware on eBay.
This sounds like one of those "America loses 50 zillion dollars a year while employees zone out" studies. If people were machines we wouldn't need IT.
The truth is somewhere in the middle.
Well *I* am not only a noted expert on complexity but a specialist in improbability and a noted chaos activist (having a doctorate in activism) and *I* say that IT errors cost TEN QUINZILLION DOLLARS so pay attention to me me me.
Mgmt blames the devs, and devs blame the mgmt, and both get modded "insightful".
It's like watching hot naked babes wrestling in the mud, except that it's the exact opposite.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
a Bounced Reality Check
Every Death March can be attributed to Bouncing Checks (or checks not written at all much less cashed)
Any person using FTFY or editing my postings agrees to a US$50.00 charge
It should be:
"Worldwide productivity gain from IT was $6.2T less than it would have been in the most ideal case imaginable"
Comment removed based on user account deletion
The Institute of Economics and Peace reports that the global peace dividend would be $7.2 trillion per year, or about 8.1% of the global economy. http://www.visionofhumanity.org/causes-value-peace/economic-growth.php
In my experience a lot of these "IT Failures" are actually management/client/accounting failures that happen to overlap the IT spectrum.
YES! I couldn't agree more. A gold-plated backup/recovery system for a small/mid sized enterprise (multiple drives, multiple applications, maintenance, on-site support, frequent media replacement, secure off-site storage) -- far beyond what I'd consider adequate -- is what, $10-15k per year? You could do pretty well at half that, yet I see plenty of clients with budgets over a million dollars seriously question spending a quarter of that.
Some of my co-workers and I have even suggested management draw up a "hold harmless"-type agreement that we give to It decision makers AND their bosses; a cover letter outlines the rationale for the agreement and its practical meaning (we will help you get back on your feet, you agree not to blame us and accept in principal the magnified costs of data recovery).
Its not that we'd expect practical legal cover, but it'd be more about scaring the fuck out of management so they do SOMETHING, as well as giving the controller/financial person a discussion point with their boss over their "sharp pencil" IT strategy and whether its a risk worth taking.
This would be interesting to compare with, say, the yearly cost of management failure.
... every time someone starts talking about "complexity theory". When I got to the point in the original article where he just freaking made up the indirect cost as ratio as "between 5:1 and 10:1"... and then took the "average" of the two made up numbers to proceed with his "analysis", I lost all interest in the story. News flash: when you make up your own numbers, you can get any answer you want... and really big, scary numbers sell more articles. Yawn.
What about the "costs" of blundering in other endevors?
Medical errors in because doctors are too time pressed to make an proper diagnosis? Or because interns are too sleep-deprived to think clearly?
Highway accidents caused by drivers lacking sleep or drunk?
Legal errors by lawyers or their aides?
Political errors caused by politicians and media personalities playing up the wrong aspects of some tragedy?
Needless barking about the "costs" of mistakes where the methodology is arbitrary and capricious?
... he apparently just pulled the indirect:direct cost ratio out of his ass! If there had been any data backing this up, it would be one thing, but apparently this analysis was at least in part based on numbers he just made up.
There is money to be made being part of the problem.
*Raises a glass*
Proudly contributing to losses due to IT failure since 1997.
I almost didn't read the article, but I'm glad I did. If this is how financial/investment decisions are made, I now understand the financial crisis. Roger's white paper starts with actual data--GDP, annual budget for IT--so far, so good. It then proceeds to make a calculation based on (failure rate of "at risk" projects)... a fact? No. An estimate? No. An assumption? That's right. Actually, a range of an assumption (50%-80%), from which an average (65%) is calculated. I'm sorry, but the average of an assumption with an assumption is not data. In three-valued logic, if you multiply a truth with an unknown you get an unknown.
The author then proceeds to combine this calculation with a new wild guess--direct to indirect costs of between 5:1 and 10:1 to get an average of 7.5:1.
The article ends with "The numbers are estimates, of course. The precise numbers are not the point." These numbers aren't even estimates. This might meet the dictionary definition of estimate, but I don't believe it would meet the common knowledge understanding of most people's definition of estimate. An estimate comes from some kind of familiarity with a source that leads you to use your judgment to come up with the estimate. The author claims none of that here.
One might as well come up with a total so enormous as to draw attention and then determine what inputs would come up with that total. That seems to be what was done here.
> It would be the same as trying to build a house without blueprints, just nailing up wood at one of the corners.. It will kind of look like a house when done, but will have lots of problems. Code is the same thing.
;).
:).
It's not really the same thing in practice though.
You see, in the software world, the blueprints compile and kinda run... Heck the plastic models and artist's impression might even run too!
Management typically sells those to the customer as v1.0 and v2.0
Why? Because in the software world, each blueprint costs as much to make as the Real Thing (which is the result of building/compiling blueprint #<big number>).
That's not true in the Civil Engineering world, where the Real Thing costs 10x or more. So management is more agreeable to spend the resources and time for enough design iterations just so the Real Thing is more likely to be good enough.
Basically:
In the civil engineering world, the design phase cost a lot less money (and typically less time) than the build phase (<=10%?), which involves lots of people, lots of building materials and heavy machinery.
In the software world, the design phase costs most of the money and time (>90%), and the build phase involves someone doing "make all" and fetching a cup of coffee.
I believe there's a difference between "design phase" project management and "build phase" project management (the build phase of a software project is managed by the CPUs, Operating System Scheduler, compiler and packager).
But most project managers (and bosses) manage software projects the way people manage the build phase of a civil engineering project.
And that's why software tends to be crappier
Admittedly, the article does read like a hastily thrown together program, full of guesses and assumptions and untested routines. Fortunately, our brains don't crash as easily as computers. But one thing about calling something a load of crap. Do you know of a better measure, a better researched report? Cite it please! And throw in a few quotes. Or, can you yourself do better? Please do! The author admitted it was back of the envelope. And we all know that it is extremely difficult to measure the productivity of programmers, and have doubts that it even makes sense to try. For the effort expended, which obviously wasn't much, the article seemed to be an adequate bit of guesswork.
At one software engineering business I attended an interesting talk on this subject. Using a harsh measure, and more rigorous statistics and facts, they stated that 90% of all software projects ended in failure! However, about 1/3 (I don't recall the exact number) of those "failures" worked, it's just that they were late and/or over budget. The next 1/3 were only partly successful, achieving only part of the goal or achieving something else of value, and the last 1/3 were complete catastrophies. I felt that they could have been much more generous in defining what constitutes a success, as a 30% failure rate is still plenty dramatic.
Intellectual Property is a monopolistic, selfish, and defective concept. It is "tyranny over the mind of man"
That is a better way to evaluate costs. Money is not lost if you learn how to implement things better. If the mistakes are repeated then yes the company is wasting its time. Usually, on implementing version 1 of software, we learn basically how not to do it. We take those mistakes and learn how to make version 2 much better. Version 3 further refines the product and development procedures into something that can be used again and again.
New development processes try to smash the above three versions into a repeating process. Agile development comes to mind. But even this has to be learned and adapted to what fits best for a project. The assumption is that assumptions will be wrong, mistakes will be made, learning will occur, and more correct goals will be set and implemented.
Effective IT is learning from your mistakes whereas bad IT is repeating them. Certainly some of that $6.2T is the cost of learning.
So, you have a problem with agile development, build, ship, fix, eventully... like the spelling in these comments :p
When one does research one seeks to eliminate bias to the greatest extent possible. When one has a vested interest in the subject, it is even more important, as one's reputation rides on it.
Sessions is not incapable when it comes to business IT and complexity. Unfortunately he is more capable in those areas than in methodology. Although his approach is laudable, his exclusion of bias sources appears approximately nil. TFA clearly states that he makes certain assumptions. That can't be helped. But to make the result reflect real world rather than producing a paper to boost self-importance (even inadvertantly) those assumptions should have been better questioned at the outset. Better late than never:
His primary source is the World Technology and Services Alliance. They want to appear important to others. Thus they will emphasize data that won't get counted the same way by an outsider. A neutral source would have provided data less likely to be considered biased. The CIA Factbook for instance.
Rather than assuming a percentage of GDP as primary expendature (the same IT percentage for the US as for Republic of Congo - per capita GDP = US$300), go to a source that has calculated the total (with references so they can be checked or argued). Gartner, not unbiased but industrious towards that end, says "Worldwide IT spending is on pace to total $3.2 trillion in 2009, a 6 percent decline from 2008 spending of $3.4 trillion". And now we're on track for twice as much failure as spending, indicating a problem greater than simple math.
He lumps all communications technology in with IT. Not what most would do, but at least he says what he's doing. But is he being relevant to IT, from CIO down to help desk answer-droid by making them appear responsible for the cost of a high bandwidth geosynch satellite?
"66% of all Federal IT dollars are invested in projects that are “at risk”". Federal expendatures (in this case, purchases) are well known to have their importance padded so as not to lose funding next cycle. Without a varifiable basis for using this claim, it should simply be dropped. Instead he attempts to estimate failure rate from it. This begs the question, if the purchase was based on at risk, and it was made, did that risk go away? If not, there will be some risk assessment criteria coming down with the next round of budget cuts. Without the white paper, I can't say, but I'm guessing the risk includes new tech to thwart intrusion and so forth, not technology at risk of melting down.
Finally, he makes the statement that these are estimates and the numbers aren't important, but their sheer magnitude it. Magnitude relates to numbers. You can't justify a statement of magnitude without using some. His result is twice the estimated 2009 spending. Might he have a problem with magnitude? Definitely. Orders of magnitude, probably. Over 20 years ago health care spending passed defense spending as the greatest bite of the US GDP. In 2007, US health care spending was US$2.26 trillion. He claims worldwide IT failure is 2.7 times that. It would seem we don't have a health care crisis, we have an IT crisis that is draining revenue from everything at a rate up to or even greater than the funding that fuels it. We would do better without IT. (This is reduction to absurdity, lest anyone take that seriously).
A point that may rescue his work somewhat, is the fact that a failure/loss is not a cost. It gets called that if the failure impinges directly on a profit margin. Even then, that's not necessarily accurate. A loss or failure that's replaced with something purchased counts as a cost. Something thrown away, left broken, used in a crippled state, operating at less than capacity/effectiveness or otherwise not giving what was paid for is not a cost. It was a cost when first purchased. It can't cost again because it doesn't act right (unless replaced, as noted, and then the cost is the new one, not the old). When a company has to account for its failures and losses, if these can be made to
"I may be synthetic, but I'm not stupid." -- Bishop 341-B
"Certainly some of that $6.2T is the cost of learning."
Most of it is not lost money, it's lost time. Sure time is money but the hourly rate differs greatly depending on all sorts of things. $6.2 trillion/year means that every man woman and child on the planet is somehow losing $1K/yr due to software problems. For half the planet that is more than their annual income. I don't think that's a reasonable assesment for anyone except an economist.
However I think you hit the nail on the head, it's pointless to talk about how much is lost unless you can prevent a reccurence with something better and to have something better you first need to discover the problems with what exists.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
Dude, you said it yourself. You are good developer trying to do a mangers job. Due to the way you blame eveyone else in your post, I just came to the obvious conclusion that you're failing at your primary job wich is to clear away the bullshit so that your team can get on with it. However, if you haven't built a team you're in trouble.
Don't feel bad about it, exceptional managers are much rarer than exception devs, I was an unexceptional boss in the 90's and found the "big picture" wasn't worth the aggravation and the extra hours meant that on an hourly rate the pay wasn't any better than a lead developer.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
Failure among competing companies allows for the possibility of double-counting (or more) "lost" opportunities.
That is to say, if 5 companies all have IT projects to create the same "next big thing" that is worth $5B, then if all 5 fail, which is likely with a high rate of failure, then you cannot count it as an opportunity cost of $25B total. In practical terms, when successful, the $5B can only be claimed by one contender, or split, but the total value should be essentially $5B.
This can also happen within a given company. What about that damn IT project that took 4 attempts to get right? That's 4 projects, with the associated costs, but was it 4 opportunities? I think not.
Definitely agree with parent, and think there's a lot of missing "analysis" from our "expert".
T H E C U L T U R E O F C O M P L E X I T Y
Q - Why each new version of Windows is twice as big (and slow) as the previous?
A - It sells new hardware (and new Windows licenses for the new hardware).
I remember when someone gave a figure of something like an estimate of TCO (total cost of ownership) for PCs was something like $10,000 a year or $12,000 a year because it priced out everything at the maximum professional cost for software failures, installation of new software, etc. Ignoring PCs in non-commercial environments, I have a PC here at home; It's what I'm using to write this. My labor costs me nothing and the changes I make to my computer are for my benefit, and thus, while my own labor might have some value to me, it is not costing me anything other than opportunity cost, which again, has actual financial expenditure to me of zero.
If a team has to spend $10 million to develop an application because they had to do it twice and if they had done it right the first time would have cost $3 million, you can claim that it's a loss of $7 million, or you can - correctly - claim that it's a system that cost $10 million to develop including false starts. It all depends on how you want to cook the numbers.
If they are claiming that $6+ trillion represents complete failures I find that a bit unlikely. But if you count the amounts wasted because the customer didn't know what they wanted, should we then count as failures and expense costs all of the people who take perfectly working bathrooms and kitchens who gut them after a few years because they no longer like the way they look?
You can create any kind of number by how you count failure, if you include redesigns for performance, redesigns because of desire for increased features, or redesign for maintenance. You can also count failure as systems needing to be scrapped because they have absolutely no usability for any of the problems needed to be solved. If that was what was being claimed I would, again, find that number highly suspect. It all depends on where they get their numbers from.
Let's also not forget, again, this is an estimate, because most of these numbers are neither published nor available to outsiders to the company that developed the program or system. The number could be higher, or it could be lower. It reminds me of the supposed estimate of the losses for pirated software raised to huge numbers by claiming every copy made was a lost sale that would have been at full price without discounting. Some kid who made a copy of a program where he had to ask someone for a free disc is certainly not going to pay $200 for a copy, but the numbers presumed that the bootleg copy would have resulted in a full-price sale.
So if someone wants to claim that the total cost of software failures is US$6,200,000,000,000.00 I'd really like to know how they got this number. Are they pricing out costs in Africa as if the cost of labor is the same in New York City? Are they pricing labor in Los Angeles the same as in Baton Rouge, Louisiana? How are they determining costs?
Paul Robinson — Paul@paul-robinson.us — My Blog
The lessons of history teach us - if they teach us anything - that nobody learns the lessons that history teaches us.
Just 6.2 trillion? They must have left the public sector out of the tally.