Technology debt is a term used to describe the cost associated with implementing inefficient technology solutions or requiring additional work to achieve required goals. Often, businesses find themselves stuck in a cycle of accumulating tech debt due to inefficient development practices leading to incomplete or subpar solutions. This can significantly impact businesses, from increased development costs and longer time-to-market to decreased customer satisfaction. A survey released last year by Software AG found 78% of organizations have accrued more technical debt during the pandemic. While skills issues are still the most pressing issue for executives, technical debt has risen to become the No. 2 issue, as found in a recent IDG/Foundry survey of 400 IT executives. A majority, 86%, report having been impacted by technical debt in the last 12 months. The fallout from technical debt included 43% citing the limited ability to innovate, 41% mentioning difficulty meeting SLAs, and 37% reporting outages and downtime.
Understanding Technical Debt
Technical debt can be classified both based on the type of debt as well as how it’s incurred: Here are some different types of tech debt:
- Design Debt- Due to suboptimal design and architecture choices made during development.
- Code Debt- Arises from poorly written, inefficient, or redundant code.
- Documentation Debt- This happens when documentation is incomplete or outdated, making it difficult to maintain and update software.
- Testing Debt- Due to inadequate testing practices, leading to bugs and other software issues.
- Infrastructure Debt- Results from using outdated or inefficient hardware or software, leading to slower performance and reduced productivity.
- People Debt- This happens when the development team lacks skills or experience.
- Process Debt- Inefficient or inadequate development processes that can lead to delays, errors, and other issues.
Technical debt can be advantageous for businesses in a variety of ways. For starters, it provides an opportunity to test the waters with minimum investment by developing and launching an MVP quickly – giving organizations valuable data points from users that can inform product progressions down the line. Additionally, technical debt allows companies to remain nimble as markets change at breakneck speed; making decisions faster without worrying about perfecting every detail paves the way for growth opportunities while reducing long-term development costs.
The Impact of Poor Data Quality
Poor data quality can significantly impact finances and technical debt for businesses. Inaccurate or incomplete data can lead to poor decision-making, wasting resources, and missed opportunities. This can lead to financial losses and a buildup of technical debt in areas such as system maintenance and data cleaning efforts. In addition, poor data quality can also lead to increased manual workloads and the need for costly data remediation efforts. Businesses need to prioritize data quality to avoid these negative effects. Furthermore, poor data quality can impact a company’s reputation, as incorrect data may lead to inaccurate reporting, violating regulatory requirements, or creating public dissatisfaction. Technical debt refers to the costs associated with short-term fixes rather than making long-term, sustainable solutions, often caused by taking shortcuts due to poor data quality. This cost can ultimately inhibit a company’s ability to innovate, reduce efficiency or create technical problems, increasing the time and costs required to perform necessary maintenance, further adding to technical debt.
The Problem with Tech Debt
The concept of technical debt has been a growing concern for companies as they embark on digital transformation initiatives. A survey from McKinsey asked 220 CIOs to take their best shot at estimating their tech debt, with 30 percent estimating that “more than 20 percent of their technical budget ostensibly dedicated to new products is diverted to resolving issues related to tech debt.” They also calculate that tech debt amounts to 20 to 40 percent of the value of their entire technology estate. Companies that ignore these costs during digital transformation can be in for major problems down the line, from slow performance to unexpected outages. Dealing with these costs after the fact can dramatically increase project timelines, budgets, and complexity. Therefore, it’s essential for companies to plan ahead and assess potential technical debt before investing in digital transformation efforts. The consequences of technical debt can result in significant financial, customer, and productivity losses. Poor code quality decreases performance, bugs, and maintenance costs while severely limiting the ability to introduce new features that ensure customer satisfaction and generate revenue. Furthermore, development teams must dedicate valuable resources to understanding complex code issues when they could be actively developing instead. Fortunately, there are ways to reduce tech debt and its impact on businesses. One of the most effective strategies is to adopt an Agile development methodology. This approach emphasizes quick iterations, rapid prototyping, and frequent feedback loops to ensure that projects meet customer needs.
Using Agile to Reduce Technical Debt
Agile Methodology is a flexible and iterative approach to software development that has gained popularity in recent years. This methodology focuses on delivering high-quality working solutions quickly and efficiently, emphasizing continual improvement. By taking an agile approach to developing software, businesses can reduce the amount of technology debt they accumulate over time by eliminating unnecessary features, addressing potential problems early on, and focusing on the most important areas of development. By incorporating regular reviews of incremental changes and solutions, companies can quickly identify and fix any issues that arise related to technical debt before they become too costly or complex to address. An emphasis on simplicity and modularity of code also helps prevent tech debt within projects. Taking a proactive approach to reduce technical debt is essential to successful digital transformation strategies. In addition to adopting an Agile methodology, businesses can reduce the impact of technology debt by investing in experienced people and advanced tools. Experienced professionals understand how different pieces of software interact and fit together, helping reduce the amount of manual effort required for development. Advanced tools also reduce manual labor by providing automated testing and debugging capabilities, which can help reduce the amount of tech debt over time. Overall, technology debt can significantly impact businesses if not addressed properly. However, by taking steps to reduce tech debt through an Agile approach and investing in experienced professionals and advanced tools, businesses can reduce its impact and increase their chances of success.
Discover how adopting an agile methodology can help you get ahead of tech debt before it starts. Dive into our case study, “Adopting An Agile Methodology“ to see how.