What Actually Is Technical Debt And How Could It Be Limiting Your Business?

Web Development

By Corefocus, 27 November 2019

Do you really know how much technical debt you have?


Unlike financial debt, technical debt can go unnoticed for years, without anyone understanding the true cost. Today we will introduce you to what technical debt actually means, and how it could be limiting your business.


Source: Intel IT Peer Network, https://itpeernetwork.intel.com/information-security-and-technical-debt-management/#gs.j66xz0

Source: FreelancingGig, https://www.freelancinggig.com/blog/2019/04/03/what-is-technical-debt/


What Is Technical Debt?


Technical debt is defined as “the incremental cost and loss of agility to a company as a result of prior decisions that were made to save time or money when implementing new systems or maintaining existing ones”.


Unlike a bug technical debt is not a visible defect, rather it may be a system that is slowing everyone down or inefficient software. Technical debt has the ability to lead to inefficiency and inertia, such as if you delay an upgrade several times to hit short term financial targets. This then leads to a lack of productivity or time wasted on ill-equipped machinery.


This means that unrecognised technical debt is potentially serious to your business as it results in a hidden loss of sales and costs that you may not realise are stacking up or costing you new clients and jobs.


Therefore, some clear examples of technical debt could be;

- Using an old version of Windows that prevent you from using new software or applying a security upgrade.

- ERP systems that are so old and customizes that they can’t be upgraded or easily refurnished.

- Using similar systems that have overlapping functions in different parts of your organisations, where one communal system would save time and money.



Source: Intel IT Peer Network, https://itpeernetwork.intel.com/information-security-and-technical-debt-management/#gs.j66xz0



Why Does Technical Debt Occur?


Often, we forget to replace systems that could cause technical debt due to time constraints that often lead to ineffective compromises being made.


We tend to focus on the costs saved by not upgrading software, rather than how they could be limiting our business. This leads to a vicious cycle of technical debt that goes unnoticed. The important thing with technical debt is to way up the risk and costs incurred with the future of the business. For example, it is probably worth getting into a small amount of debt to fix a technical security issue that could lose you hundreds of customers and personal data.


This is where we could help reduce debt. Our team can advise and help install the latest software that we know will streamline and increase productivity in your business. Find out more about how we can help by emailing info@corefocus.co.uk.


Source: Melvin Tech Product Management, https://melv1n.com/how-to-manage-technical-debt/



What Are The Costs Of Technical Debt?


In short, there are very real cash costs to technical debt. Below are some of the soft costs and cash costs that you may be experiencing:


Cash Costs

- Increased team members, needed to maintain existing systems

- Remediation and fines from cybersecurity breaches that could have been prevented.

- Loss of sales due to system outages


Soft Costs

- Lack of Market Intelligence and the inability to quickly adapt to opportunities or changes in the market that will benefit the business

- Inability to convert data to streamline the sales process

- Decreased staff productivity

- Senior manager’s wasted time spent on preventative security breaches etc.


Source: The Andela Way, Medium, https://medium.com/the-andela-way/what-technical-debt-is-and-how-its-measured-ff41603005e3



So, How Do You Address Technical Debt?


Much like with financial debt, the technical debt must be confronted head-on. This means analysing what your debt is, how much it is and the payment terms of the debt. Confront technical debt head-on by brainstorming with your stakeholders and current staff. How would the year’s business have been improved if all the technical issues were fixed? A good way of analysing this debt is to use a 2x2 matrix, allowing you to assess the ease of resolution compared to the continued debt. This can help you prioritise projects more effectively.

Once you’ve prioritised your technical debt and determined if it would be better in the short and long term to replace the software or not take the risk you have two choices; ignore the debt or pay it off. Look at cash flow and create a payment plan of the various scenarios that you could face both with the debt and without it.


Source: Digi Web Art, http://www.digiwebart.com/explore-the-best-practices-of-managing-technical-debt-effectively/



How Do You Mitigate Future Technical Debt?


The first thing to do is to talk to your IT team. What are the levels of acceptable debt and what are the boundaries in which they must operate? For example, how long can you go without upgrades and what priority should each technology software, program or cycle take in the bigger picture of technical debt?


Additionally, you could set up a technical debt management team to look at technology projects, their urgency and how your business should approach these. This way no debts will get lost or forgotten about in the bigger picture of technology debt. The worst position to be in is to have no idea of how much debt you have and thus be unaware of how much your lack of investment is costing you in potential sales and business growth.


If your business needs help identifying or managing technical debt, we can help at Corefocus. Simply get in touch with our team on 01534 780183 for an informal chat with our recommendations on software and upgrades to help streamline your business processes.