What CTOs Need To Know About Technical Debt

by | Jun 16, 2022 | Blogs

According to the State of Technical Debt 2021 report by Stepsize, 58% of companies surveyed don’t have a process to manage technical debt. Technical debt makes systems vulnerable and can expose organizations to outside security threats. When technical debt builds up, it can have a negative impact on productivity, innovation, and an organization’s revenue growth.

What is technical debt?

Technical debt is an interest-bearing loan. Less expensive up front, but with a long tail that ultimately inflates the principal. How so? Think about the cost of technology-related decisions that prioritize time to completion over true organizational outcomes. While these decisions certainly have a lower up-front cost, they can also lead to inefficiencies that reduce productivity and effectiveness, and ultimately drive down revenue.

But the cost of decisions that prioritize speed over best practices is not the only cause of technical debt. Some other examples include:

  • Legacy technology that is outdated or unsupported by its vendor, lacks functionality, or may contain substantial customizations.
  • Poor project decisions that didn’t take into account the complexity of the system or the impact on other components.
  • Poor project implementation that didn’t consider organizational goals, have a change management strategy or understand the needs of users.
  • Expediting the development of software with the intention of fixing the code later.
  • Not introducing best practices or a set of standards for users to follow.

Over 60% of engineers believe technical debt slows down the development process, negatively impacting productivity levels, and limiting an organization’s ability to remain innovative.

What is the impact of technical debt?

1. Poor productivity

Allowing technical debt to accumulate creates a slog that the development team has to work through each time a new product is slated for delivery. Workarounds, shortcuts, and non-standardized practices result in limitations to both scalability and time to market.

2. Inability to innovate

CTOs at organizations that support critical functions with old technology will find it difficult to scale or implement new technology when they need it the most. Accordingly, the organization will not be able to innovate or respond to change effectively.

The workarounds, shortcuts, and non-standardized practices that result from technical debt limit an organization’s ability to innovate. The siloed practices that began as workarounds limit effective KPI reporting, minimize cross-functional communications, and may ultimately lead to a complete lack of awareness of the impact of technical debt. When the need to innovate becomes apparent, it is oftentimes too late.

3. Performance and security

When best practices or a set of standards are not followed, technical debt impairs system performance. Underperforming systems produce less and cost organizations more to maintain. In addition, vulnerabilities or weaknesses in the system can increase the risk of system failures and exposure to security threats from outside the organization.

4. Employee morale

52% of engineers believe that technical debt negatively impacts their team’s morale with tedious tasks that erode their experience as an employee. Technical debt inhibits and prevents employees from working on new projects and learning new skills because they are caught in the vicious cycle of fixing the debt instead.

5. Customer experience

For CTOs, underperforming systems not only mean that you will deliver fewer products, but the organization’s customer-facing technology is also likely providing poor customer experiences. When customers are confronted with slow-loading apps or websites, user errors, and outages, they become unsatisfied with your organization and look elsewhere for what they want.

Strong customer experiences, internal and external, and both back and front office, drive value for any organization. Technical debt slows down an organization’s ability to respond and creates large, complex systems that lead to further silos in the business process. The impact on customer experience is immediate, resulting in mediocrity, inadequacy, and leaving room for competitors to step in, provide value, and take revenue away from your organization.

Fix the past so you can focus on the future

Technical debt is at the core of organizational performance. Speridian is a global business and technology solutions provider with a proven record of solving business challenges with our unique, industry-based consultative approach. Our experts can help you identify the technical debt slowing down and putting your organization at risk and help you build a value-driven roadmap for tackling the challenge. Don’t let technical debt be an obstacle to innovation and financial growth. Let us help you fix the past so that you can focus on the future.