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How Software Defects Increase Customer Churn and Cost Businesses Millions of Dollars

By Jason Axelrod posted 05-07-2024 10:43:40 AM

Updating test data management processes can reduce software defects and the costs of repairing them.
How Software Defects Increase Customer Churn and Cost Businesses Millions of Dollars
This article was originally published on the Delphix website here March 13, 2024.

Walmart founder Sam Walton famously said, “There’s only one boss. The customer.” Customers are any business’s lifeblood, but acquiring new customers can cost four to five times more than retaining existing customers, per Forbes. So, it’s just as important to retain customers as it is to acquire new ones. But maintaining a strong customer base is easier said than done, as customers can be fickle— 60% of customers would stop doing business with a company after one bad experience, according to a 2022 Zendesk report. Therefore, maintaining a consistently great customer experience is crucial for ensuring customer retention and limiting customer churn, while also saving budget dollars on acquisition costs. 

In today’s digitally-driven markets, unified customer experience and robust software quality go hand-in-hand in ensuring successful digital-first businesses. All modern enterprises have software woven into their products and services (as well as internal systems), helping to influence customer experience directly across their business offerings. Consider how many software professionals large enterprises across industries have on staff — retail giant Walmart employs over 15,000 software engineers, data scientists, and service professionals, while investment bank Goldman Sachs has about 12,000 developers on its payroll. Even John Deere, a leader in agricultural and road-building equipment manufacturing, employs more software engineers than mechanical engineers. 

While software quality varies in definition from company to company, a generally accepted measure of quality is the absence of defects. After all, a quality product, service, or system should do its job without failure or error. As one would expect, software defects can be a catalyst for customer churn. 90% of app users reported they stopped using an app due to poor performance, while 88% of online consumers are less likely to return to a site after a bad experience, according to TopTal

Poor software performance is usually a sign of poor software testing, and updating test data management (TDM) processes can help businesses reduce software defects and the costs of repairing them, helping them reduce customer churn in the process.

The Costs of Squashing Software Bugs

It helps to examine the software development process to get a clear view of how software bugs increase customer churn. Software engineers do much of their work using non-production environments, also called lower environments. These environments are typically temporary combinations of hardware- and software-based workspaces with tools that support development and test systems. The trouble is software defects often escape undetected from non-production environments into production environments, which are the customer-facing “live applications” in which software is used. 

These defects can cause a number of application issues that hurt the customer experience, including downtime, errors, lag, corruption, and security vulnerabilities. And while software defects and application issues cause headaches for the developers and testers that need to fix them, they can devastate the business side with revenue losses, high operational and repair costs, and overconsumption of resources. Finding and fixing software defects cost U.S. businesses $607 billion in 2022, according to a report from the Consortium for Information & Software Quality (CISQ). And 91% of mid-size enterprises and large enterprises polled in an Information Technology Intelligence Consulting (ITIC) survey said that just an hour of downtime costs them over $300,000.  

Fixing software defects also becomes more expensive when defects are detected and resolved later on in the software development life cycle (SDLC). The ideal time to fix defects is during the early stages of design and coding. Fixing defects down the road during testing costs 15 times as much as fixing them during design, according to research from the IBM System Science Institute. When defects are fixed in the much-later maintenance phase, it costs 100 times as much as fixing them during design.

Weak Test Data Management is to Blame

Finding defects late in the SDLC is often a symptom of poor test data processes. Software engineers require a steady supply of fresh, up-to-date test data to build, test, and release software updates. Effective test data management (TDM), or the set of processes that creates, manages, and delivers test data to development teams, is essential for enterprises to release effective software into production environments.

TDM has been a staple of efficient software development for decades. However, TDM has traditionally been viewed within software departments as a back-office function. Certainly important, yet far less visible than increasing efficiency by implementing software development methodologies such as Agile or DevOps. While businesses have used Agile and DevOps to streamline and automate many other software development processes, companies are still having multiple teams use the same manual, high-touch, error-prone TDM processes and mechanisms as they did in decades prior. 

While manual, legacy TDM processes have worked for decades, the actual data that businesses must manage today is far different than the data they’ve worked with in the past. For one thing, it’s far more voluminous — about 2 zettabytes (2 billion terabytes) of data were generated worldwide in 2010, while about 147 zettabytes of data are projected to be generated worldwide by the end of 2024, per Statista. At the same time, businesses face mounting pressure to secure their data against escalating cyberattacks while also making it compliant with a growing group of data privacy regulations worldwide. 

The clash between rapid, automated development and manual TDM processes combined with methodical security procedures manifests itself as bottlenecks of data that lead to massive wait states in the development process. This not only forces developers to focus on TDM processes rather than development, it also keeps the latest test data from non-production environments, which enables defects to grow within software.

DevOps TDM Ensures Better Software Quality, Quicker

Adopting a highly evolved set of practices known as DevOps test data management (DevOps TDM) can automate security procedures and manual TDM processes, allowing them to match the speed of automated development processes. DevOps TDM updates TDM processes through several core technologies, with the three most prominent being data virtualization, data masking, and connectivity through application programming interfaces (APIs). 

These technologies work in tandem to solve various issues facing modern-day data processes. Data virtualization shrinks a company’s data footprint and facilitates quick provisioning of test data, which reduces storage costs, improves sustainability efforts, and improves business velocity. Data masking streamlines compliance and security practices by anonymizing test data. And APIs allow one to orchestrate and monitor these automated actions from other software, such as development tools and IT service management tools. 

DevOps TDM carries numerous benefits that include reducing data storage costs and quickly ensuring compliance. In the context of software quality, DevOps TDM automates TDM procedures, which frees up developer resources. This allows developers to shift their focus towards testing software sooner and detecting defects earlier in the SDLC— a practice known in software development as shifting left

Streamlining software testing and shifting left reduces the costs of fixing software defects and also minimizes the defects that customers experience within production environments. This, in turn, improves customer experience and won’t turn them away from your offerings. It’ll also ensure your business saves money by retaining customers for cheaper costs than acquiring new ones.

The Delphix Data Platform is a comprehensive DevOps TDM solution which leverages data masking, data virtualization, and APIs to ensure automated delivery of lightweight, compliant data wherever it’s needed. Reach out to us to learn how Delphix can benefit your organization.