What's the True Cost of a Software Bug?

  August 08, 2017

Test early and test often -- that’s what everyone says will help you avoid the high cost of deploying a software bug. But a bug might not seem like a big deal without a dollar sign attributed to it. Why invest in testing if you can just fix your mistake after? What's the true cost of a software bug?

While there’s no set cost you can ascribe to a software bug found after the product release because it’s highly dependant on the organization’s size, customers, employees, and debugging resources, we can look at a few statistics and examples that show just how damaging it can be.

Starting with the big picture, software failures cost the worldwide economy $1.1 trillion in 2016. These failures were found at 363 companies, affected 4.4 billion customers, and caused more than 315 years of lost time. Most of these incidents were avoidable, but the software was simply pushed to production without proper QA.

Those may be stunning numbers, but you could still be thinking it doesn’t mean much to your specific organization, so let’s look at it on a smaller scale.

IBM found that the cost to fix an error found after product release was 4 to 5 times higher than if it’s uncovered during the design phase, and up to 100 more expensive than if it’s identified in the maintenance phase.

The costs go up as the bug moves through the SDLC. For example, IBM estimates that if a bug costs $100 to fix in Gathering Requirements phase, it would be $1,500 in QA testing phase, and $10,000 once in Production

And software bug expenses aren’t just related to the impact on internal operations. When a company announces a software failure, they lose an average of $2.3 B of shareholder value just on the first day.

The fact of the matter is that a software bug can affect everything from indirect costs like customer loyalty and brand reputation to more direct losses in business revenue and wasted time.

Companies Who Learned the Hard Way

You might think a software bug can only be so bad, or that any bug big enough to cause significant financial distress will be a complex mathematical error. In reality, some of the most detrimental bugs had minor mistakes that developers just didn’t catch because they weren’t used to putting the software through proper testing.

The following are companies who suffered monumental losses -- some that almost put them out of business -- due to easy errors, new software, or a bad line of code.

NASA - The Mars Climate Orbiter was a robotic space probe that NASA Launched in 1998 to study the climate and atmosphere of Mars. All was well until communication got cut-off a year into the mission when the Orbiter got lost in space. When dealing with spacecraft engineering, there’s a lot that could go wrong -- it’s literally rocket science. However, the error could have been an easy fix if caught on time. The $125 million spacecraft presumably orbited too close to Mars’ surface and disintegrated because the engineering team failed to convert their measurements from U.S. units to metric. However, that’s not the only time a programming blunder destroyed a NASA rocket.

Knight Capital Group - As one of the biggest American financial services firms, Knight had a lot to lose, and in 2012 they lost $440 million of it. All it took was thirty minutes to drop 75 percent of their shares after an automated set of orders was sent out all at once to nearly 150 stocks instead of over a period of days like it was supposed to. The function, known as “power peg,” made stocks move up and down, lowering the stock price of all the affected companies. The loss was almost four times the company’s profit and would have put them into bankruptcy if a group of investors hadn’t come to the rescue.

AT&T - In January of 1990, AT&T failed to meet the basic needs of their customers as thousands attempted to call their friends, family, and airports. Long distance calling was down for nine hours, and customers sparked outrage after experiencing a total of 75 million missed phone calls and 200,000 lost airline reservations. Initially, AT&T thought they were being hacked, but the issue was due to a software bug. AT&T had just recently “updated” code, but the change of speed ended up being detrimental to a system that couldn’t keep up. AT&T lost an estimated $60 million from long distances charges that didn’t go through after being down less than a full day in an error that was the result of one line of buggy code.

EDS Child Support - In 2004, a computer system managed to overpay 1.9 million people, underpay 700,000, accumulate $7 billion in uncollected child support, backlog 239,000 cases, and get 36,000 new cases “stuck” in the system. This happened after a software company introduced a complex new IT system to the UK’s Child Support Agency. Meanwhile, the Department for Work and Pensions was restructuring their entire agency. The software was incompatible as the systems clashed, and as a result, the oversight cost taxpayers $1 billion.

Apple - For many consumers, Apple can do no wrong, but when they replaced Google Maps with Apple Maps on iOS 6 in 2012, they managed to put a pause on customer’s endless adoration. The update was nothing more than a product of corporate politics -- Apple no longer wanted to be tied to Google’s application, so they made their own version. However, in Apple’s haste to release the latest and greatest map app, they made some unforgivable lapses in navigation warranting the #ios6apocalypse hashtag. Just a few of the many Apple Maps fails include erased cities, buildings disappearing, flattened landmarks, duplicated islands, warped graphics, and false location data. While an exact financial loss was never attributed to this lack of judgment, it made customers question whether Apple prioritized their needs over their money as they considered switching to the very competitor Apple was trying to combat.

An Argument for Agile and Continuous Testing

As technology evolves, so do our development methodologies and knowledge of testing practices. Getting stuck in the old age of software development means that crucial processes go ignored.

For example, while a Waterfall methodology used to be the go-to back in the day, high functioning software teams have realized that following Agile practices better support changes made throughout development. Agile’s incremental approach allows more feedback, flexibility, and of course, testing so that every time a feature, fix, or function is added or changed in code, it’s checked for bugs.

Since teams have adopted Agile and Continuous Integration, thus adopting continuous testing, software is higher quality after a product release because bugs and inconsistencies are caught earlier and fixed easier. In turn, organizations have found that this helps avoid preventable bugs, save time and money, and retain their customers’ trust.

How to Prevent Your Next Software Bug

While we can’t expect to test everything and go our entire lives deploying a product that’s 100% error free, we can make strides to safeguard software as best we can. Many of the worst bugs that we encounter are simple mistakes that could have been caught with a more thorough quality analysis.

The moral of the story is to test your software. If you don’t, it’ll cost you.

For more proof of why software testing is so important, check out Why Testing Matters and what the top QA professionals have to say.