July 1, 2002

Software Bugs Cost U.S. Economy $59.6 Billion Annually, RTI Study Finds

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Research Triangle Park, NC -- Software bugs are costly both to software producers and users. Extrapolating from estimates of the costs in several software-intensive industries, bugs may be costing the U.S. economy $59.5 billion a year; about 0.6 percent of gross domestic product, says a study conducted by RTI for the U.S. Department of Commerce's National Institute of Standards and Technology (NIST).

"More than half of the costs are borne by software users, and the remainder by software developers and vendors," NIST said in summarizing the findings. "More than a third of these costs … could be eliminated by an improved testing infrastructure that enables earlier and more effective identification and removal of software defects."

RTI's researchers on the study were Mike Gallaher, director of the RTI Technology Economics and Policy (TEP) group, and Michelle Bullock, also of TEP.

"This is one of the first studies to quantify this well-publicized problem in the software industry," Gallaher said.

By gathering extensive feedback from software end users and developers, Gallaher and Bullock examined the impact of software problems in a number of major industries, among them financial services, aerospace and automotive.

As an example of the study's findings, the researchers learned that users of software design tools in the automotive and aerospace industries spent significant resources dealing with software errors. In these sectors alone, the total cost from inadequate software testing was estimated at $1.8 billion.

Similarly, the total cost to the financial services industry from inadequate software testing was estimated at $3.3 billion. Users in that industry agreed that an ideal testing infrastructure would remedy problems in real time rather than requiring developers to wait for the product to be fully assembled, the study found.

It is a widely remarked phenomenon that consumers and businesses tend to accept defects in software to a degree that they would not tolerate in other products. In commenting on his research, Gallaher doubted this would change any time soon.

"In many cases users said that to remain on the cutting edge of technology and stay ahead of competitors they needed to adopt early (beta) versions of software, realizing they would have to work through the bugs," he said. "Thus, in the future they will continue installing buggy software. However, if improved testing resources were available they would be able to develop the software with fewer bugs and this is the focus of the study -- not accelerating the release date of the software, but improving the quality."

The NIST announcement of the study's findings may be viewed at www.nist.gov/public_affairs/update/upd20020624.htm#Economics. The full 309-page study report, "The Economic Impacts of Inadequate Infrastructure for Software Testing," is available online at www.nist.gov/director/prog-ofc/report02-3.pdf.