Technical debt – managing costs and change
Technical debt – the accumulation of legacy systems and applications that are an ongoing challenge to maintain and support – takes a meaningful bite out of IT budgets and resources. Technical debt is the antithesis of innovation. Efforts to inculcate an innovative culture can be frustrated when technical debt has “accrued” to such a level that it slows organisational response to emerging market opportunities and stifles the ability to compete in a digital world.
As most CFOs are well aware, organisations that fail to account for technical debt increase their level of risk significantly and are inhibiting the ability for the business to grow and become agile. Resolving these issues starts with understanding how technical debt impacts an organisation. In many cases, this debt results from the need to support legacy systems. Over time, businesses run the risk that technical debt becomes so extreme that they can no longer viably innovate or migrate to newer solutions.
In our view, the rush to build new services and solutions can create more technical debt, which can then result in a bad investment of time and resources. CFOs should lead the charge in addressing the enterprise’s accumulated technical debt to drive efficiency in business and IT systems, reduce infrastructure costs by streamlining services and moving core applications to the cloud, and improve capacity to innovate to enrich customer experiences, digitise products and services, inform decision-making, and compete with “born digital” players.
The bottom line: Technical debt is an expense that should be minimised over time. Achieving that requires planning and budgeting, along with determining the feasibility, complexity and value of replacing legacy systems. That comes down to identifying what a replacement system or process can offer.
Innovation is the name of the game in today’s global market. Recognising this new reality, technology executives and leaders are exploring new ways to fuel innovation throughout their organisations. However, there are many roadblocks on this path, including the spectre of technical debt, which is hampering the organisation’s ability to innovate and grow.
Finance leaders play a key role in partnering with their technology counterparts to ensure the enterprise is innovating in a responsible way, with a proper focus on internal controls. In addition, the CFO should be a leader in technical debt management and spearheading efforts to reduce its long-term burden on the organisation.
About the Global Technology Executives Survey
Protiviti surveyed more than 1,000 CIOs, CTOs, CISOs and other technology executives and leaders (n = 1,050) to ascertain the status of several concepts around innovation and technical debt across numerous regions, business types, revenue classes and management roles.
The respondents answered 18 survey questions which were collated and then transferred into reportable elements with totals, averages, and divisions based upon the size of the organisation, the location of the organisation, the industry, and the role the respondent played within the organisation.
Read our report. The Innovation vs. Technical Debt Tug of War, here.
1. The Innovation vs Technical Debt Tug of War (a report on the results of a global survey of technology leaders), Protiviti, March 2023, https://www.protiviti.com/de-de/global-technology-executive-survey.