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"Cost of Quality": It's More Than You Think

cost_of_qualityWe're in an era in which leading organizations must reassess the true "cost of quality" for software.  Remember: the cost of quality isn't the price of creating quality software—it’s the penalty or risk incurred by failing to deliver quality software.

Today, business expectations about the speed and reliability of software releases have changed dramatically—largely because software has morphed from a business process enabler into a competitive differentiator.  

For example, APIs represent componentized pieces of software functionality which developers can either consume or write themselves.  In a recent Parasoft survey about API adoption, over 80% of respondents said that they have stopped using an API because it was "too buggy."  Moreover, when we asked the same respondents if they would ever consider using that API again, 97% said “no.”  With switching costs associated with software like an API at an all-time low, software quality matters more than ever. 

Another example is mobile check deposit applications.  In 2011, top banks were racing to provide this must-have feature.  By 2012, mobile check deposit became the leading driver for bank selection.  Getting a secure, reliable application to market was suddenly business critical.  With low switching costs associated with online banking, financial institutions unable to innovate were threatened with customer defection.  

This sea change associated with the quality expectations of software is also reflected in the manner in which software failures are reported.  Today, software failures are highlighted in news headlines as organizational failings with deep-rooted impacts on C-level executives and stock prices.  Parasoft analyzed the most notable software failures in 2012 and 2013; each incident initiated an average -3.35% decline in stock price, which equates to an average of negative $ 2.15 billion loss of market capitalization.  This is a tremendous loss of shareholder value. 

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Additionally, looking at organizations that endured multiple news-worthy software failures, it is clear that the market punishes repeat offenders even more aggressively. Repeat offenders suffered an average -5.68% decline in stock price, which equates to an average of negative $ 2.65 billion loss of market capitalization.

The bottom line is that we must re-evaluate the cost of quality for our organizations and individual projects.  If your cost of quality assessment exposes a gap in your quality process, it's a sign that now is the time to reassess your organization's culture as it relates to building and testing software.  In most organizations, quality software is clearly the intention, yet the culture of the organization yields trade-off decisions that significantly increase the risk of exposing faulty software to the market.

[VIDEO] Behind the Code: Cost of Quality

Want to learn more about the cost of quality for software? Check out Parasoft's new monthly web series, exploring how software quality directly affects your bottom line: Behind the Code. In this month's episode of Behind The Code, Wayne Ariola, Chief Strategy Officer at Parasoft, and Arthur Hicken, Parasoft Evangelist, discuss the true cost of software quality and why it's more than you might think.

Image credit: RambergMediaImages

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