Tech Debt 2.0: Recognizing and Managing Liability in Technology

Unless technical debt is routinely monitored and measured, it can accumulate unchecked and become a destructive threat to the future of a business.
michael
Michael Fillios
Expert Contributor
August 3, 2020
Updated: July 8, 2021
michael
Michael Fillios
Expert Contributor
August 3, 2020
Updated: July 8, 2021

Years of experience working in finance and technology at large, mid-sized, and small businesses have taught me that business leaders face real challenges managing the technology their company needs to operate effectively and stay competitive. This is especially the case for small and mid-sized businesses (SMBs), which typically do not have the resources available to large enterprises. The challenge has grown significantly in recent years as businesses have adopted technologies to meet the expectations of their customers and to compete for advantage in the digital world.

The challenge is not necessarily in deploying new applications or platforms but in managing investment in technology and balancing that investment with other business priorities. Striking that balance means recognizing and managing technical debt.

Technical debt is similar to the financial debt a business can incur through salary and benefit commitments, plant and equipment payments, and loans. But there are critical differences. Unlike financial debt, technical debt is not paid to outsiders: It is debt a business owes internally that needs to be paid with internal resources such as time, diverted funding, market opportunity, and competitive standing. Also, unlike financial debt, technical debt is not clearly identified by the reporting built into a business’ financial and accounting practices. Unless it is routinely monitored and measured, it can accumulate unchecked and become a destructive threat to the future of a business.

Initially, technical debt was defined as defective code released to rush a product to market. Today with the widespread adoption of technology, the expanded definition of tech debt, or Tech Debt 2.0, includes any liability incurred in the development, acquisition, use, and retirement of technology, from hardware and software systems to the skillsets needed to support them. Just like the evolution of technology over the past several decades has occurred from mainframe to client server to the internet and now the cloud, Tech Debt 2.0 has steadily grown smarter, stealthier, and more sinister.

Tech Debt 2.0 can be broken down into three main types:

Unplanned Tech Debt is unintentional. It typically stems from flawed practices, such as insufficiently trained code developers using overly complicated, undocumented, and unsupervised coding techniques. Poor communication between parties in preparation of requirement specifications and unforeseen changes to product requirements can also be factors. Unplanned tech debt often occurs in the beginning stages of a project and, if recognized, can be corrected without overhauling or scrubbing a project.

Creeping Tech Debt is sneaky. It may initially be non-existent in a new application or piece of hardware infrastructure. Over time though, obsolescence takes its toll. Changes to the needs or size of the user base reveal weakness in the design. Performance issues begin to increase. Increased incidents of downtime and time spent on maintenance drain the productivity and morale of technicians and engineers. At the same time, CTOS and CIOs face an uphill battle convincing the C-Suite to invest in replacing an infrastructure that has worked in the past and continues to work, if not optimally.

The way to combat creeping tech debt is to highlight the creep and its costs. Track time spent on staff performing rework, doing maintenance, and fixing the same issues over and over again. Track the time this work takes away from progress on new projects and product development. Measure the number and duration of failures. Communicate the effect of these incidents on customers to departments throughout the business. Correlate rework time and downtime to staff turnover and productivity measures. Benchmark technology performance and investment against industry best practices. Periodically review application and equipment portfolios. Know and communicate the life cycle status of the business’ technology. Include phone systems, physical plant and electrical components.

Intentional Tech Debt has the potential to be good for a business — if approached with balance. There is a constant tug of war and tension between marketing and technical development. Marketing product managers want to move product to customers as quickly as possible. That is key to capturing market share and gaining competitive advantage. Technology developers want all the time and information necessary to design, build, and test products of the highest quality with all the performance characteristics and capabilities a customer could envision. Give developers their way and the “perfect” product might well be late to market and just one of a number of similar products among leading competitors. Oh, and in the time it took to build and exhaustively QA that product, customer requirements might well have shifted.

A middle ground addresses time-to-market considerations while delivering customers a minimally viable product, with full disclosure that it lacks certain desirable features or may contain “bugs.” Accepting intentional tech debt has let the product get to market first or, at least, early. It has let customers benefit from the initial product capability and has given them a powerful voice in the product’s evolution, letting their user experience refine further requirements and priorities. Intentional tech debt has recruited the customer as a key part of future development and freed the technology developers to concentrate on evolving features instead of trying to discern from afar what the customer might want next. Tech debt deployed in this manner places the technology developer in the perfect position to exercise the agile methodology.

Different kinds of Tech Debt 2.0 lurk in all kinds of businesses, and even the most brilliant among us can miss what’s right in front of us. Like other business disciplines, technology departments require monitoring, measurement, and management. Implementing a comprehensive diagnostic provides unique insights into the causes of Tech Debt 2.0 and highlights areas that need improvement. The results reflect your company’s level of technomic health:

  • Excellent: Tech Debt 2.0 is being proactively managed jointly by the business and the tech team with a strong focus on innovation and customer experience while maintaining operational excellence.
  • Good: Tech Debt 2.0 is proactively managed jointly by the business and the tech team and shows little or no negative impact on business performance.
  • Fair: Tech Debt 2.0 management is a mix of reactive and proactive, is led by the tech team, and shows some signs of negative impact on business performance.
  • Poor: Tech Debt 2.0 is reactively managed by the tech team and has significant impact on business performance.

Beyond any specific technology or group of technologies, Tech Debt 2.0 is about awareness of the role technology investment plays in determining the viability, success, and existence of an enterprise. Effective Tech Debt 2.0 management enables reaching a balance of investment and prioritization over time and in response to the dynamically changing environment — a priority for not only the CIO but all C-Suite occupants and stakeholders.

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