How to Manage Technical Debt | Pharaoh Soft

Technology increasingly influences everyday life and the way we handle business. It is always evolving, creating more efficient processes, offering new capabilities, and opening doors to new ways to do business.

This technical growth is great, allowing our society to advance in ways we never thought possible before. However, it does also create an issue for businesses known as technical debt. This debt is the amount of resources that a business will need to invest in the future to update its products, services, and systems.

In this article, we’ll talk about what exactly technical debt is, how a business can accrue it quickly, and how you can reach technical equity.

Technical Debt Definition?

Technical debt refers to the cost needed to bring all of your business’s technology up-to-date. When you’re running with the most efficient, cutting edge technology, software, apps, etc., you reach technical equity.

Like any debt, technical debt has a principal cost and a cost of interest. The principal cost refers to the amount that you would need to spend to update all of the technology in your business to reach technical equity. It’s a large amount. But if you can’t afford it, you continue to pay the technical debt interest. In this scenario, interest refers to the time and money that you spend trying to make workarounds that allow you to continue business with sub-par technology.

When you continue to put off the principal cost, you pay more and more in interest, and the cost increases the longer this goes on. As your equipment and software become more and more outdated, the cost grows because the workarounds become more complex. Eventually, you can fall so far behind that your technology is no longer sufficient, and you must update your tech or become obsolete.

In the time that you continue to put off updates, the financial resources that could have gone to the principal are all wasted on the interest.

Not only are you slowly draining your resources, but the future financial investments in your tech are stunted. For instance, if you spend $100 (for simplicity’s sake) on a new IT project, but half of your budget has to go to adapting your old tech to the new process, you really are only able to invest $50 in this new venture.

On the other hand, if you consistently maintain technical equity, you won’t get caught in the cycle of draining financial resources on interest. You will also be able to fully focus your IT project budget on the new offering itself, which translates to more innovative products and services.

How Do Businesses Accrue Technical Debt?

Technical debt is unavoidable because the tech industry grows and evolves so quickly. So first, accept that you will face tech debt and that you need a plan of action to address it. Beyond that, here are some reasons that you may accrue technical debt quickly.

• Unnecessary complexity or redundancy

Can your products, processes, or applications be simplified? Can they be more standardized? Are multiple apps working to complete an action that one app could do? Review your tech and see if there are ways to make things more streamlined and efficient with fewer components.

• No dedicated technical debt team

Often, managing technical debt is deprioritized in an effort to deliver new offerings quicker. Because the teams dedicated to new offerings are on tight deadlines, they focus on getting their project finished on time and do not take steps to limit the additional tech debt they may cause or to address tech debt that they encounter.

Ultimately, the issue of technical debt keeps getting pushed back further and further because there are no resources specifically dedicated to it. By creating a team that solely manages tech debt, the issue will no longer be pushed back for “someone else” to deal with.

• Unclear expectations

Tech debt can accrue quickly without clear funding strategies, business strategies, or capability requirements. Expectations need to be explicit to ensure that initiatives are managed well with low technical debt accrual.

• Rigid software

Highly customized software can quickly result in tech debt accumulation. Because coding is heavily tailored to your specific needs, it’s a lot of work to go back in and create workarounds for the future. Similarly, large blocks of code can be difficult to reuse or revise.

When you don’t plan for flexibility in your software, it can make updates more time-consuming, more expensive, and all-around less convenient.

• No plan for the backlog

Recovering from accessive tech debt can be tough because you need to address new issues while also working through a backlog of updates that should have already been made. In order to work on these simultaneously, there needs to be some sort of prioritization strategy so that the most pressing needs are addressed first. Use a task-management tool to help keep your business on track and create accountability.

These are just some reasons that tech debt may be accruing quickly within your business, but there are many different potential causes. The best way to get ahead of tech debt is to first be aware of the major ways in which it’s adding up within your business. If you are aware of it, you can begin to work on it earlier and prevent a significant build-up.

How to Recover from Technical Debt

If you have a large amount of tech debt, there are a few things that you can do to right the ship:

• Define technical debt

Start by establishing a company-wide definition of tech debt. Because tech debt has such a significant impact on the business overall, it cannot be pigeonholed into a tech department issue.

Of course, tech debt can be defined by the actual financial costs that go into creating workarounds with outdated equipment, software, etc. However, it can also include staffing required to create workarounds, a slower go-to-market timeframe, decreased flexibility, and more.

Before you can really address technical debt, you have to have a specific definition that is shared and agreed upon within the organization.

• Actively monitor principal and interest costs

To help keep an eye on resources that are being drained by tech debt, create a tracking system that allows executives and other leaders to see its impact. Put these costs on P&L statements so that each department can see how they are affected by tech debt.

This is useful for two reasons. First, it can be easy to underestimate the impact that tech debt has on your business, especially for non-IT departments. By creating a space where everyone can see the impact, leaders can fully understand how this issue impacts their department.

Second, when everyone is on the same page about the impact of tech debt, it’s much easier to create a united front dedicated to achieving technical equity.

• Be honest about the usefulness of your tech

Don’t become overly attached to “business as usual.” Businesses that dig in their heels in the presence of technological change are not the businesses that grow and thrive.

Take a moment to honestly evaluate the equipment, software, apps, and other technology used for your business — both back-office and customer-facing. What definitely needs to be updated? What is doing okay for now, but may need to change in the future? What is draining your time and financial resources more than it is benefitting your business?

Once you have a thorough understanding of what you’re working with, it’s much easier to create a plan of action that addresses the most draining needs first.

• Dedicate a set amount of resources to manage technical debt

Achieving and maintaining technical equity is significantly easier with budgeted resources. At this point, you have defined tech debt in your business, monitored the costs, and established which areas most need attention. With a budget in place, you can begin to systematically recover from technical debt.

Dedicating resources goes beyond funding; it also includes staffing. Create an interdepartmental team that focuses specifically on managing tech debt. They can regularly review the usefulness of your tech, discuss where resources are being drained, and allocate resources to updates.

• Make small updates regularly

Making small updates regularly is the best way to maintain technical equity without interrupting the day-to-day workings of the business. If you wait until the eleventh hour and make huge updates all at once, you expose yourself to a lot of risks, potentially disrupt business until the update is completed, and you spend a lot of resources on interest along the way.

When you choose smaller and more regular updates, you can be more strategic, predictable, and efficient for the long haul.

Technical debt is unavoidable, and it has the power to completely bury your business. It can slow down production, create unnecessary costs, and take a huge bite out of your IT project budgets. However, with the proper awareness, designated resources, and a solid maintenance strategy, you can keep that debt from accumulating and interrupting your business.