BT VAT error shows importance of testing

Business units must be prepared to pay for software testing and auditing after they adopt a new application, if they are to...

Business units must be prepared  to pay for software testing and auditing after they adopt a new application, if they are to avoid problems such as those suffered by BT, analysts have warned.

Errors in bespoke accounting software built in the 1980s have caused the telecoms firm to overpay £40m in VAT over 11 years. HM Revenue and Customs has since repaid £16.3m, but last week BT lost a High Court case to have the remainder, plus interest, reinstated to its accounts. The company said it would appeal.

The case is a salutary lesson in the importance of software testing, said Chris Harris-Jones, principal consultant at analyst firm Ovum. Business units must understand that major applications need to be tested on live data and audited regularly once introduced, he said.

“We do not know what happened in BT's case, but there is a potential breakdown of responsibility," Harris-Jones said.

“The IT manager may no longer have responsibility for the system after it has been accepted by the user department. Somewhere between the two there can be a miscommunication of the fact that IT needs to be tested in a business environment. Unless the business understands that, and that there is a cost associated with it, then this kind of problem can occur."

 

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