Total Cost of Ownership for software

Total Cost of Ownership (TCO) includes the direct and indirect costs over the lifecycle of an asset. The majority of resources in many software manufacturer organizations are consumed by software maintenance. Studies indicate that maintenance costs can be two or four times the initial costs of the system and this proportion is increasing. The high fraction of life-cycle costs expended on maintenance stresses the fact that the maintainability of a software product is important, especially when it is first developed and released. Releasing software that is difficult to maintain might lead to unexpectedly high post-release costs of corrective maintenance ("technical debt"), and adaptive and perfective maintenance on software that will soon no longer be able to evolve.

Total Cost of Ownership SE-CURE AG

Technical debt is a metaphor referring to the eventual consequences of poor system design, software architecture or software development within a code base. Put differently, it is a metaphor for the quality of software. The debt can be thought of as work that still needs to be done before a particular job can be considered complete or proper. If the debt is not repaid, then it will keep on accumulating interest, making it hard to implement changes later on. Just like financial debt, these uncompleted changes incur interest on top of interest, making harder and harder to implement changes to the code base: the effort to fix defects or to add new functionality increases exponentially.

SE-CURE AG Technical Debt

The fact is all companies will accrue technical debt, as it is unavoidable on any development project. There is relentless pressure on development teams to deliver new innovation to the market faster than ever before and this tends to lead to a continuing debt accumulation. After releasing the software, there is usually not enough time to ‘pay back’ the technical debt that the business accrued. There is only time to fix the critical defects (pay back the interest) as there is a new business requirement to be met. If the debt grows large enough, eventually the company will spend more on servicing its debt (maintenance) than it invests in increasing the value of its other assets (new development).

SE-CURE AG is currently investigating existing models related to the total cost of ownership covering the entire software life-cycle, at the same time integrating own experiences from research and consulting assignments in this area.

SE-CURE AG Total Cost of Ownership Dr. Hans Sassenburg

The results will be published in a book, autumn 2015. Organizations and individuals willing to contribute, are requested to contact us.

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