Technology Debt: Understanding and overcoming growth issues 
Insights 9 minutes read

Technology Debt: Understanding and overcoming growth issues 

Published on
June 27, 2024

In the fast-paced realm of modern business, technology debt has emerged as a critical challenge for CIOs and tech leaders striving to maintain operational efficiency and drive innovation. 

In fact, technology debt poses significant challenges for tech leaders striving to maintain operational efficiency and drive innovation while managing cloud costs, operational costs, and realising cost savings. From outdated systems to inefficient workflows, these issues can impede productivity and hinder business growth. A structured approach is crucial to getting technology debt under control.

According to analysts, including McKinsey, technology debt costs organisations vast sums of money annually in lost productivity and missed opportunities.

A 2023 McKinsey report, titled ‘Breaking technical debt’s vicious cycle to modernise your business,’ found that CIOs estimate that tech debt amounts to 20 to 40 percent of the value of their entire technology estate. The report also noted, “While many companies understand the importance of technology in meeting their strategic goals, the silent killer of technology modernisation efforts – technical debt – often stands in their way.”

What is technology debt?

Let’s examine it more closely: Technology debt represents the accumulated impact of deferred maintenance, outdated infrastructure, and inefficient processes within an organisation’s IT ecosystem. It arises when short-term solutions are prioritised over long-term strategic investments in technology infrastructure and software development.

Like McKinsey, Gartner agrees it’s a major concern, estimating businesses typically spend between 40% to 60% of their IT budgets on maintaining existing systems, a significant portion of which can be attributed to managing technology debt.

Addressing these issues proactively is essential for sustaining competitive advantage and fostering long-term success in today’s digital landscape.

Why is the problem difficult to solve

According to Gartner, three key factors make tech debt reduction difficult:

  • It’s cheaper and easier to put off refreshes and upgrades in the short term.
  • New initiatives are more attractive to business leaders than the upkeep and maintenance of old systems.
  • Tech debt impacts differ among stakeholders, making it hard for them to agree on which items to prioritise for remediation.

Technical debt vs. technology debt: Understanding the difference

Before we unlock some strategies, let’s first determine the difference between technical debt and technology debt, two terms that are often used interchangeably.

While technical debt primarily pertains to software development practices and code quality, technology debt encompasses a broader spectrum of challenges within the IT environment. This includes outdated infrastructure, inefficient processes, cybersecurity vulnerabilities, and the operational impact of deferred investments in technology infrastructure and systems.

On the other hand, Gartner defines technical debt as work that is “owed” to an IT system when teams “borrow” against long-term quality by making short-term sacrifices, taking short cuts, or using workarounds to meet delivery deadlines. These debts can impact system performance, scalability or resilience.

Key differences explained:

Focus: Technical debt is narrowly focused on software development practices, while technology debt encompasses a wider range of technological and operational issues.

Origins: Technical debt arises from development decisions; technology debt can originate from a variety of sources, including hardware choices, process inefficiencies, and overall IT strategy.

Management: Managing technical debt often involves refactoring code and improving development practices. Managing technology debt requires a broader approach, including updating infrastructure, optimising workflows, and strategic planning.

How to deal with technology debt: 7 steps to success

This 7-step plan offers a comprehensive framework: from prioritising critical issues and leveraging automation to optimising product lifecycles and adopting Azure Cloud Services.

These strategies not only streamline operations, but also ensure that organisations stay agile and competitive, reducing operational costs and achieving significant cost savings.

Embracing proactive measures like hardware maintenance and robust business continuity planning further enhances resilience, enabling businesses to mitigate risks and maintain operational stability while optimising cloud costs effectively.

Step 1: Build a process

Effectively managing technology debt begins with establishing a clear, structured process. This involves identifying and documenting instances of technology debt, assessing their impact on business operations, and developing a plan for resolution.

By creating a comprehensive inventory of outdated systems, inefficient workflows, and technical shortcuts, organisations can systematically address these issues.

Step 2: Prioritise the biggest problems

Not all technology debt is equal. Some issues may have a more significant impact on operations and productivity than others.

Prioritise addressing the most critical problems first. Focus on areas where technology debt is causing the most disruption or posing the greatest risk to the organisation. This strategic approach ensures that resources are allocated efficiently and that the most pressing issues are resolved promptly.

Conduct a thorough assessment of your IT landscape to identify areas where technology debt is most acute. Prioritise initiatives based on their potential impact on operational efficiency, customer experience, and strategic goals.

Step 3: Take advantage of automation

Automation can play a vital role in reducing technology debt. By automating repetitive tasks and processes, organisations can minimise the risk of human error, increase efficiency, and free up valuable resources for more strategic initiatives.

Implementing automation tools and practices helps streamline operations and reduce the burden of maintaining outdated systems and processes.

Step 4: Utilise product lifecycle optimisation

Optimising the product lifecycle is another key strategy for managing technology debt. This involves regularly reviewing and updating products and systems to ensure they remain relevant and efficient.

By proactively managing the lifecycle of technology assets, organisations can prevent the accumulation of debt and ensure that their technology stack evolves in line with business needs and industry advancements.

Step 5: Adopt Azure Cloud Services

Leveraging Azure Cloud Services can significantly help manage and reduce technology debt. Azure offers scalable, flexible, and secure cloud solutions that enable organisations to modernise their IT infrastructure.

By migrating to Azure, businesses can eliminate the need for maintaining outdated hardware, reduce operational costs, and gain access to cutting-edge technologies. Azure’s robust set of tools and services supports continuous improvement and innovation, making it easier to keep technology debt in check.

Embrace cloud solutions such as Azure Cloud Services, which offer scalability, flexibility, and built-in security features. Cloud platforms reduce dependency on physical infrastructure, streamline IT operations, and facilitate rapid deployment of new technologies, according to IDC.

Step 6: Beef up hardware maintenance

Regular hardware maintenance is crucial for managing technology debt. Ensuring that all hardware components are up-to-date and functioning optimally can prevent unexpected failures and extend the lifespan of IT assets.

Tech leaders require hardware maintenance services that provide comprehensive support, including proactive monitoring, repairs, and upgrades, in order to help organisations maintain a reliable and efficient hardware environment.

And don’t forget to: Allocate resources for regular maintenance and updates of hardware and software systems. Proactive maintenance not only prevents costly downtime and disruptions, but also enhances system reliability and security posture.

Step 7: Embrace business continuity

Establishing a robust business continuity plan is essential for addressing technology debt. A well-defined continuity strategy ensures that critical business functions can continue operating despite technical issues or disruptions.

Tech leaders require business continuity services that offer comprehensive solutions, including disaster recovery planning, backup solutions, and resilient infrastructure, enabling the organisations to mitigate the impact of technology debt and maintain operational stability.

By implementing these strategies, organisations can effectively manage and reduce technology debt, ensuring they remain agile, competitive, and ready to embrace future technological advancements.

And don’t forget to: Develop robust business continuity and disaster recovery plans to safeguard against disruptions caused by technological failures, cyber security incidents, or natural disasters. Effective continuity planning ensures minimal downtime and protects critical business operations.

The way forward: How Interactive can help

Certainly, addressing technology debt requires a strategic approach involving proactive planning, investment prioritisation, and adoption of modern technologies like cloud computing and business continuity solutions.

This approach enables organisations to streamline operations, enhance flexibility, and position themselves for sustainable growth and innovation in a competitive market.

But navigating the complexities of digital transformation can be challenging for many tech leaders, prompting the need for guidance from a trusted partner. Here’s how Interactive can help:

Expertise: Backed by a team of over 150 cloud experts.

Azure Cloud Services: Assists in managing and reducing technology debt through scalable, flexible, and secure cloud solutions.

Modernisation: Modernises IT infrastructure, eliminating the constraints of outdated hardware.

Efficiency: Ensures a smooth transition to the cloud, enhancing operational efficiency and reducing maintenance costs.

Proactive Approach: Includes continuous monitoring, regular updates, and strategic planning to prevent new debt accumulation.

Optimisation: Optimises resources and streamlines processes to help businesses maintain competitiveness and agility in an evolving digital landscape.

Interactive empowers organisations to effectively manage technology debt, enabling them to focus on strategic initiatives and drive business success.

FREQUENTLY ASKED QUESTIONS:

1) What are the types of technology debt?

There are ten primary types of technology debt, with the most important being:

Code Debt: Poor code quality and lack of documentation, leading to increased maintenance and bugs.

Architectural Debt: Suboptimal system design that limits scalability and performance.

Infrastructure Debt: Outdated hardware and network infrastructure that reduces reliability and increases costs.

Process Debt: Inefficient workflows and outdated practices that reduce operational efficiency.

Security Debt: Accumulated vulnerabilities and outdated security measures that increase breach risks.

Data Debt: Poor data management practices leading to data quality issues and hindering analysis.

Knowledge Debt: Lack of documentation and knowledge sharing, complicating onboarding and troubleshooting.

UX/UI Debt: Outdated design and poor user experience, decreasing user satisfaction.

Compliance Debt: Non-compliance with regulations, resulting in legal risks and fines.

Integration Debt: Challenges in integrating disparate systems, creating data silos and inefficiencies.

Addressing these key types of technology debt is essential for improving efficiency, reducing risks, and supporting sustainable growth.

2) What is intentional debt?

Intentional debt arises when an organisation consciously decides to take shortcuts or delay certain technical tasks to achieve immediate goals or meet deadlines.

3) What is unintentional debt?

Definition: Unintentional debt occurs without a deliberate decision, often as a result of oversight, lack of knowledge, or evolving business requirements. It is typically discovered later, sometimes only when it starts causing problems.

4) Is Tech debt bad?

Tech debt itself isn’t inherently bad; it’s more about how it’s managed and its impact on the organisation. Consider three things: impact; management; and context.

5) Is tech debt unavoidable?

Tech debt is often unavoidable to some extent, especially in fast-paced environments where decisions must be made quickly to stay competitive.

6) How Do I Conduct a Technology Debt Assessment?

Conducting a technology debt assessment involves evaluating your organisation’s current IT landscape to identify, prioritise, and manage existing tech debt effectively. Things to consider – inventory; assessment criteria; prioritisation; implementation; monitoring and iteration; and more.

This article provides a glimpse into the depth of insights and best practices available. For a deeper dive and personalised guidance, reach out to Interactive 

 

Looking for IT solutions to meet the unique requirements of your organisation?

Whether you’re a single site operation looking to expand, or a national business eager to scale up, Interactive is with you every step of the way.

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