Removing Millions of Dollars from Your Annual Development Costs

Leading IT executives in today’s competitive landscape realize that taking a broader view of software testing and leveraging new test tools and methodologies can significantly decrease software development costs while achieving higher quality of application code.

The impetus might come from an enterprise-wide mandate to significantly reduce the cost of application development, or it could arise from a need to increase the quality and production of promised applications by IT.

Regardless of the source, the burden rests on the CIO’s shoulders to answer the question: How do we balance the need to drive out application development and support costs against the need to deliver high quality applications on time and under budget to our business users?

The answers to this question may reside in one of the most costly and least strategic areas: software testing – a process that is typically relegated to the final stages of the systems development life cycle.

Testing: A Costly Tedium

Testing is arguably the most mundane aspect of the software development life cycle and therefore is often treated as something that only requires attention prior to production. Herein lies the difference between what constitutes the thinking and actions of a strategic IT organization. It realizes that testing can potentially consume 30 to 60 percent of a typical IT budget, translating into millions of dollars or more in annual costs. And the strategic IT organization also realizes it can dramatically reduce their cost of testing while increasing their quality and delivery time.

Major challenges in the process are the sheer number of systems in a typical enterprise and handing the frequency of version upgrades and releases. In most environments, the testing functions is loosely defined, project-based and not centralized. This causes the testing processes to be manually intensive, inefficient, and prone to high levels of costly defects.

These challenges are frequently compounded by internal staff often lacking the skills and formal training for successful testing, increasing the risk of costly defects and production delays thereby driving up the cost of application development and dissatisfaction by the business units with IT’s inability to address their needs.

In such circumstances, it is little wonder that establishing a testing approach that meets both cost and quality requirements – in addition to adding strategic value – can be difficult to achieve.

Bringing Testing to the Forefront of the Enterprise

In contrast to the above scenario, strategic organizations have emphasized the importance and value that testing can mean economically, and therefore view it as a competitive advantage that can be harnessed by the enterprise.

Here are some of the key questions that strategic CIO’s want answered as part of their focus:

• Which resources conduct the testing currently, and what standard tools and processes do they use?
• How much of the process is automated?
• What is the actual level of testing quality and at what stage are defects identified and prioritized?
• How well is IT hitting promised production dates?
• Do the current systems meet the needs of the business?

Perhaps the most difficult question is “Where to start?” With so many applications in the environment, it is not feasible to tackle all of them at once. The first criterion is to identify applications that would derive the highest value from testing improvement.

On this basis, core applications such as enterprise resource planning or billing are likely candidates, because of the potential they hold for significant cost takeout through testing improvement. In some cases the best choice might be an application critical to complying with mandates, such as the Sarbanes-Oxley Act of 2002 and other regulatory and compliance requirements that transcend cost considerations. Or, a planned change such as a system upgrade may be the driving force.

Once applications are identified, the next step is to benchmark current testing practices and performance to diagnose what the IT department is doing well and which areas can be improved. This validation of the current testing state will identify where cost savings can be achieved, as well as isolate defects such as bad code, explain why production dates may have been missed, and reveal the reasons that end user expectations were not fulfilled. Oftentimes these are the critical factors behind the “Go Live” decision, which can have cascading impact on other business commitments.

Surprisingly, testing continues to be a manual process in the vast majority of companies. Based on the findings of the benchmarking effort, improvement steps can be developed, including the use of test automation tools.

Achieving a Higher Level of Testing Performance

Testing improvement can help elevate the entire IT organization. Many companies consider the Capability Maturity Model (CMM) Process Maturity model (Levels 1 through 5) as an objective barometer to gauge how effective their application development is meeting the needs of their business. For example, a client’s testing maturity can be documented and specific areas of improvement identified that will direct the CIO to opportunities for the greatest return on investment. Testing improvement initiatives can in fact create a virtuous circle. Savings from the initial testing improvement efforts, which are potentially substantial, can be used to fund further initiatives. In addition, the resources and processes applied to the applications initially earmarked for testing improvement can be leveraged across multiple enterprise domains.

Ultimately, the enterprise can achieve what we at BearingPoint describe as a “Testing Center of Excellence,” which centralizes the resources, processes and responsibilities of the testing function under an organization that delivers economies of scale and high quality results to the enterprise. This type of approach has proved to lower testing costs by reducing production defects, automation of certain testing functions, and standardization of tools and methodologies. For the CIO, it is easier to help IT executives validate which applications are core to the organization and which might be better outsourced. The testing process can become a tool to help them quantify performance and costs to a level of accuracy that few could imagine previously.

Finally, along with providing substantial savings and a better grasp of the organization’s software landscape, these efforts can lead to improved customer satisfaction, faster time to market, improved resource management and lower risk.

In closing, although testing is often viewed as “non-strategic,” most leading corporations have realized that testing can in fact become a strategic asset of their organization, saving millions of dollars as a result of proper attention and improvements to their application development capabilities, and in particular the common areas of application testing where the majority of cost, issues and delays can be improved and deliver millions of savings to the bottom line. This is where IT, Finance and the business units can benefit significantly.

About the Author

Domenick Ciccone is a managing director with BearingPoint, Inc. (NYSE:BE), one of the world’s largest business consulting and systems integration firms. For more information on this topic, please click here.