In today’s fast-paced digital landscape, businesses rely heavily on technology for daily operation as well as a tool to drive growth and innovation. However, the rapid evolution of software and systems can lead to a phenomenon known as technical debt.
By definition (according to Wikipedia), this term refers to “…the implied cost of future reworking required when choosing an easy but limited solution instead of a better approach that could take more time.”.
While this term is typically associated with poor in-house application lifecycle management, did you know that this problem is just as prevalent with software application that you are using from any 3rd party vendors to run your business?
When you add in factors such as a sudden change in standards, policies, principles, or market conditions, the interest which the tech debt has accrued all the sudden becomes may become a huge issue for any leader to take on.
A common issue we have observed over the years, which has been further exacerbated during the pandemic, is the tendency to select technology based solely on short-term needs and requirements, without carefully considering long-term company strategy, current/future system architecture, and implementation support processes.
While it’s possible to achieve some short-term success, it will inevitably become an anchor to slow down your organization on top of the monetary cost that goes into maintaining the application.
As a business leader, it’s vital to recognize these signs of technical debt within your organization in order to make informed decisions and ensure sustainable growth. In this article, we will explore some leading indicators that can help with early identification of hidden technical debt.
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Frequent & Costly Maintenance
Perhaps the easiest indicator to spot is the increasing amount of time and resources spent on maintenance activities. If your IT or development team finds itself constantly fixing bugs, addressing system failures, or performing routine maintenance, it could be a clear indication of underlying technical debt.
These efforts drain valuable resources that could otherwise be invested in innovation and new feature development. According to research by McKinsey, most organization spend 20 – 40% of its total IT budget towards the maintenance activities with companies on the lower end of the tech debt ratio performing at +1% CAGR vs the companies on the higher end.
Increased System Downtime or Failures
Another easy indicator to spot as manifestation of tech debt will eventually lead to fragile systems that are prone to failures or downtime. If your applications experience frequent crashes, outages, or performance issues, it’s a clear indication that something is brewing under the cover and the hidden technical debt is impacting your business operations.
Not only you are losing valuable time & money from the lost productivity, but unresolved technical issues on any customer facing apps can easily tarnish your brand reputation, damage customer trust, and result in lost revenue opportunities.
Customer Complaints or Negative Feedback
Customers’ voices are invaluable when it comes to assessing the hidden impact of technical debt. Pay attention to customer feedback, including complaints, negative reviews, or declining satisfaction scores such as NPS. Technical debt can manifest in user-facing issues such as slow performance, usability problems, or security vulnerabilities. Consistent negative feedback could indicate the presence of technical debt affecting your product’s quality and user experience, ultimately impacting customer loyalty and retention.
Higher Development Effort
From a cost perspective, accumulated debt leads to code complexity, making it challenging to understand and modify existing systems. Consequently, developers need to invest additional effort, resulting in delayed releases and increased project/product costs. If you are noticing a pattern that your IT team or developers are spending more time and effort than anticipated to deliver new features or implement changes, it could be a good leading indicator of underlying technical debt that is obstructing the progress.
Decreased Agility and Innovation
From an opportunity perspective, technical debt can severely impede your organization’s ability to respond quickly to market changes and customer demands. If your development team struggles to implement new features or make updates due to complex or outdated code, it’s a strong signal that technical debt is hindering agility and innovation. This can result in missed opportunities and give your competitors an edge to respond to changing market conditions more rapidly.
Difficulty in Attracting and Retaining Talent
The ongoing workplace generational shift brings forth a younger workforce that has grown up in the digital era. As they make their way into the professional arena, it becomes increasingly vital to acknowledge and cater to their preferences and demands for modern tools and methods.
If your organization insists on using legacy applications in order to maintain status quo, it may deter young & talented professionals from joining your team or prompt existing team members to seek opportunities elsewhere. Difficulty in attracting and retaining top talent is a red flag that technical debt is negatively affecting your business’s reputation and long-term growth prospects.
Conclusion
As a business leader, understanding the impact of technical debt is crucial for maintaining a competitive edge and ensuring long-term success. By recognizing the signs of technical debt, such as frequent and costly maintenance, decreased agility and innovation, higher development effort, increased system downtime or failures, difficulty in attracting and retaining talent, escalating costs, and customer complaints, you can take proactive measures to address and manage technical debt effectively. By prioritizing technical debt reduction, you pave the way for a more resilient and scalable technology infrastructure, enabling your organization to thrive in a rapidly evolving digital landscape.
