Childhood Ends: Liability and the IT Industry


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By 2015 in the U.S. and 2018 in the European Union, software products and related services with potential for high-impact failures will be subject to external or self-regulation. Vendors and internal application development organizations must consider their strategies now.

Table of Contents

  • Analysis
    • 1.0 Introduction: Childhood Ends, Sooner or Later
      • 1.1 The IT Industry Does Not Assume That Freedom From Liability Is a Given
      • 1.2 Gaps in Information Liability Are Growing, Especially for Businesses
      • 1.3 As the Costs of Failure Increase
      • 1.4 IT Industry Immunity From Liability Will End: The Question Is How
    • 2.0 IT Vendors Are Free From Nearly All Liability
      • 2.1 In the U.S., Technology Users, Not Producers, Are Regulated
      • 2.2 U.S. IT Vendors Dominate in Software Liability and Warranty
      • 2.3 Vendor Negotiating Positions Have Weakened Slightly, but Only for Large Customers
      • 2.4 EU Regulation Is Consumer and Antitrust-Oriented
      • 2.5 EU Data Collectors Are at Risk; Software Producers Are Not
    • 3.0 Strong Drivers to Change Are Present
      • 3.1 The Chase Curve Describes the Life Cycle of a Public Policy Issue
      • 3.2 We Are Well Along the Chase Curve Where Privacy Is Concerned
      • 3.3 A Dangerous Condition: Technology Is Ubiquitous and Quality Remains an Issue
      • 3.4 Impact, if Not Frequency, of IT Failure Is Apparently Increasing
      • 3.5 Software Is Applied to Problems It Was Not Designed to Solve
      • 3.6 Crime Is Not the Main Issue
      • 3.7 Other Destabilizing Forces Are Present
      • 3.8 The Y2K Crisis Offers a Look Over the Brink
      • 3.9 A Crisis Big Enough to Produce Change Is Imaginable, but Unpredictable
    • 4.0 Strong Inhibitors to Change Are Present
      • 4.1 Insulation of Consumers From Direct Effects of IT Is a Change Inhibitor
      • 4.2 Regulation of Privacy Does Not Equal Regulation of Software
      • 4.3 Courts Are an Inhibitor to Change in Enterprise Markets
      • 4.4 The Installed Base Is an Inhibitor to Change in Enterprise Markets
      • 4.5 Isolation Is an Inhibitor to Change in Enterprise Markets
      • 4.6 Self-Regulation and Market Regulation Are Inhibitors to External Regulation
      • 4.7 The Relative Harmlessness of Much Software Is an Inhibitor to External Regulation
      • 4.8 Consumers Drive All
    • 5.0 Scenarios for Regulation and Liability
      • 5.1 The Status Quo Is Profitable for Industry Players, but Unlikely to Continue
      • 5.2 Full-On Regulation Is Complex
      • 5.3 Full-On Regulation Is Unlikely Barring Utter Disaster — And Even With It
      • 5.4 Targeted Regulation — Internal and External — Is the Likeliest Scenario
    • 6.0 Features of a Targeted Regulation Model for the IT Industry
      • 6.1 Industry Self-Regulation Is an Effective Solution for Most Aspects of the Model
      • 6.2 The Targeted Model Creates Markets for Vendors
      • 6.3 The Targeted Model Creates Opportunities and Liabilities for Enterprise Users
      • 6.4 The Targeted Model Will Raise Awareness of IT Constraints Among Consumers
    • 7.0 The Economic Impact of Targeted Regulation
      • 7.1 Software and Services Have a Nontrivial Impact on GDP
      • 7.2 Software Sales and Marketing Practices Will Change — Completely
      • 7.3 Software Development Costs and Processes Will Be Impacted — In the Long Term, Favorably
      • 7.4 Consolidation Increases — Within and Outside the IT Industry
      • 7.5 Impacts on IT Services Providers Produce Big Winners and Big Losers
      • 7.6 The Impact on the Open-Source Movement Is Uncertain and Potentially Deadly
    • 8.0 Gartner's Advice: Get Ready
      • 8.1 Software Vendors: Prepare for Transparency and Product Differentiation Based on Quality
      • 8.2 Service Vendors: Do All the Above, And …
      • 8.3 Enterprise Users: Demand Vendor Transparency, and Fix Your Own House
      • 8.4 Conclusion: When Childhood Ends, Tools Replace Toys
  • Recommended Reading
© 2006 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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