According to a June 25, 2002, Computer World Federal Study, software bugs cost the U.S. approximately $59.5 billion per year. The study further showed that improvements in testing could reduce this cost by approximately $22.5 billion per year (more than a third). These findings support the March 2001, Jupiter executive survey which noted that four out of five IT projects begin without testing and of these projects 90% undergo costly and avoidable re-work as a result. As such, it is easy to see why testing is not a luxury but a necessity.
Cresta will be focusing primarily on two broad categories of customers: finance, banking and insurance (FBIs) and biotech and life science companies (Pharmas). In New York City alone, there are over 175 separate financial services firms with annual revenues in excess of $250 million and in neighboring New Jersey Pharmas dominate the landscape.
Both of these industries are highly regulated, highly competitive and require the highest standards both internally as well as with respect to the products and services they offer to the public. They do not want to waste their time or risk their money looking for bargain solutions or questionable expertise. As they go into initiatives looking at new opportunities, technologies and solutions, they are very sensitive to risking their company's (or personal) name and reputation. Cresta's strength is managing these risks through testing.
Automated application and system quality assurance (QA) and testing techniques have evolved beyond intellectual market acceptance into the realm of proliferation based on necessity and proven progress in quality, costs and time-to-market.
Revenue growth and market penetration of the leading testing-related software manufacturers supports this theory. Market share leader, Mercury Interactive, has experienced an average yearly revenue growth of 45%, maintains offices in 25 countries, employs over 1,600 employees and claims more than 50% of the market share with over 30,000 customers.
The tools market is expected to grow from $700 million this year to nearly $1.9 billion by 2005. North America is the overwhelming consumer of automated testing tools for distributed environments with more than two-thirds.
The growth in license revenue is significant, but it tells only part of the story. Many companies purchased testing products expecting a "silver bullet" that did all of the work in a turnkey fashion. In those instances, customers grossly under-invested in developing the supporting operational and organizational infrastructure to fully leverage the tools.
Operational policies, processes and procedures were not adequately developed, thereby limiting the achievable enterprise return on investment (ROI). Similarly, they under-invested in developing skills within their own staff, preventing them from fully exploiting the capabilities of the tools, again limiting achievable ROI.
The most successful organizations have appropriately invested to construct a comprehensive, highly skilled, cost-effective, QA/testing infrastructure and they continue to realize substantial financial and business benefits.
These organizations remain in the minority, however, and the potential to introduce associated benefits and efficiencies to the remaining majority, is what Cresta remains focused on. Business drivers to outsource the deployment of a specialist-developed QA/testing infrastructure include:
Companies are combating IT project costs by outsourcing segments of the IT project. Currently, it is estimated that 30% of project work is outsourced. There are a number of advantages to this strategy.
By outsourcing, companies can take advantage of a specialized experience base without paying the personnel price tag to retain the talent on payroll. By negotiating a price for the outsourcing, companies can also cap development cost. More importantly, as a few companies compete in the marketplace for dominance, a number of service firms will emerge to fill the demand for quality QA personnel and testers that are necessary for specific projects, much like the rest of the IT industry. It is estimated that product development in the software industry can save upwards to 30% of development costs by outsourcing key elements of the development process.