Are we really wasting $1T USD annually?

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Last week I was quoted by the BBC saying that taken as a whole, the world wastes $1 trillion (with a 'T') dollars on information and communications technology. And judging by the various blog postings that have been generated in reaction to that, I estimate that fewer than 20% have any quibbles at all with that number, meaning that more than 80% are ready to see a change in how we do software and technology in the 21st century. But regardless of the acceptance or not of the number, a great number are curious: how did I estimate that number?

In 2006 I wrote a paper for the STS Forum titled Software Industry vs. Software Society: Who Wins in 2020 which estimated we wasted "only" $386B USD per year. Since writing that paper, the estimates of global ICT spend have increased by more than 3-fold (to be fair, the 2006 paper used 2004 economic data, and now I have 2008 data), and yet most of the factors that lead to the waste are as rampant as ever.

Last year I was invited to submit a paper to the Encyclopedia of Library and Information Science about Open Source Software, and I decided to use that paper as a basis. After editing the paper, updating the links, and downloading lots of new information, I submitted a revised paper that justified the $1T USD number. And because there's been so much interest in this number, I've revised that paper yet again, so you can all read the analysis.

Here is the actual link to the paper which was unintentionally hidden from users unless logged into the site. My apologies to all who read this blog posting and wondered about where the paper actually was.

The paper has over 50 citations and references, and I am indebted to all, living and dead, who provided this basic material. I especially want to thank several folks who have probed the same territory, and have built the strong foundations of this argument. In no particular order: David Wheeler, Stephen Vaughn-Nichols, Sean Michael Kerner, Rishab Ghosh, and Eric Raymond.


Is it really JUST proprietary software. Have organizations really figured out the appropriate use of technology and how to manage these projects effectively? I'd guess that the money wasted on licenses and expensive proprietary solutions are a drop in the bucket next to failed projects.

The Standish Group numbers measured ICT spending as 50% on hardware and software, 50% on support and services, and that the money lost when a project is abandoned prior to production is allocated across all these budgets. The research does not take into account what is lost when a space mission fails due to software bugs, or when a trading program triggers a bug in a stock exchange and causes the net value of the entire country's trading portfolio to drop a few percent. Most companies are OK about disclosing the failures of others that cost them money, but not so good at reporting their own failures that cost customers money.

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