IBM Green Hat To Cut Development Costs

IBM wants to take a big bite out of software development costs with the acquisition of Green Hat, a provider of software quality and testing solutions for the cloud and other environments. The two companies say software defects cost the United States almost $60 billion annually, and testing accounts for more than half of overall development costs and upward of a third of testing teams' time. When the deal is complete, Green Hat will join IBM's Rational Software business and will be offered through IBM Global Business Services' Application Management Services (AMS), which provides strategy, design, implementation, testing and managed services for application virtualization.

There were three reasons driving the acquisition from an industry perspective with respect to quality management and the quality of applications, says Charles Chu, director, product management & strategy, IBM Rational. The first factor is the increasing cost of quality during the last 10 to 15 years, caused in part by the global shift of labor to countries where it costs less. "Labor arbitrage is no longer an option for lower costs."

The second factor is the rise of application complexity. With more moving pieces and inter-related application components, many of which may not be controlled by a company's development team, testing is more difficult and errors are more difficult to spot in a timely manner.

The third factor is the traditional tradeoff between quality and speed to market. A test shop can cost anywhere from $5 million to $30 million to set up, says Chu. So you can have a test lab and build it up, but that dramatically inhibits speed, or you can do the hope-and-pray method and get an application out faster.

Green Hat enables developers to set up a virtual test environment in a matter of minutes versus weeks, and for a fraction of the cost of traditional methods. This allows developers to conduct testing on a software application prior to its delivery. The company says that, historically, to run simulation testing on a software program, a development team had to construct an actual testing lab made up of both hardware and software, a time-consuming and labor-intensive process.

IBM already has experience with Green Hat, both from a services and product perspective, says Chu, so integration shouldn't be an issue. The developer also has relationships with companies like Oracle and SAP, and he expects those relationships to not only continue but to be expanded. If the acquisition follows IBM's usual procedures, the first six months will primarily involve taking the product and related services global, with an IBM version typically released within the first 12 months. The other point to note, states Chu, is that this is not a large-enterprise-only opportunity. "Just because you're small in size, that doesn't mean you're any less complex."

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