Technical debt remains a major burden

As organisations strive to increase their focus, and time and resources, on innovation, technical debt becomes a significant concern and burden that can lead to decreased productivity as well as increased costs and risk. On average, nearly 70% of organisations view technical debt as having a high level of impact on their ability to innovate.

What’s more, technical debt takes a meaningful bite out of budgets and resources. Globally, organisations are spending an average of 30% of their IT budgets and investing, on average, 20% of their resources on technical debt management.

What is technical debt?

Technical debt can be defined as the accumulation of legacy systems and applications that are difficult to maintain and support, as well as poorly written or hastily implemented code that increases risk over time. These technical challenges can significantly impact the performance and stability of critical operations, and it is essential that these be addressed before they cause damage to your organisation. By listening to the voice of customers, employees, and other users, businesses can identify potential technical debt early and prioritise their modernisation efforts.

Nearly 70% of organisations view technical debt as having a high level of impact on their ability to innovate.

What impact is technical debt having on your ability to innovate?

What impact is technical debt having on your ability to innovate?

Technical debt is the antithesis of innovation. Organisations that don’t account for technical debt are increasing 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 innovate or migrate to newer solutions. In our view, the rush to build new services and solutions can create more technical debt, which becomes a bad investment of time and resources.

What percentage of the resources below would you estimate is dedicated to resolving technical debt?

Investments that grow technical debt are bad investments.
What percentage of the resources below would you estimate is dedicated to resolving technical debt?

Technical debt is an expense that should be minimised over time. Achieving that requires planning and budgeting, along with determining the value of eliminating legacy systems. That comes down to identifying what a replacement system or process can offer. For example, Nucleus Research reports that the cloud can offer four times as much ROI as an on-premises solution, which proves to be a good indicator as to why organisations should be looking at their investments and the return on them.

Investments that grow technical debt are bad investments.

What are the top three strategies that your company prioritises when dealing with technical debt?

Global technology executive survey chart 15

Of course, dealing with technical debt means having the right people and skills in place. In terms of strategies organisations prioritise to address technical debt, the most cited one is having a knowledge base to provide information even when specific employees leave the team or company. This underscores the importance of effective succession planning as well as strong knowledge management.

This illustrates that technical debt typically proves to be as much a people problem as a technology problem. Organisations are finding that maintaining the legacy technology that creates technical debt requires having people in place that are using older skill sets, which in turn limits the time available to upskill those staffers to transition to newer systems. In addition, new or junior employees want to work on the latest technology and not the oldest, so it can impact your ability to attract and keep junior employees.

Easing technical debt also involves educating experienced and accountable IT executives and managers on how to liberate the organisation from older, problematic systems and platforms using a systematic process that fuels a start and works its way throughout the enterprise.  Additionally, today's latest technologies have the potential to become tomorrow's unloved debt. This issue can potentially be mitigated by developing and implementing built-in processes that guard against the obsolescence that increases technical debt.

Most enterprises view technology assets depreciating over a four-year time span, which in turn prompts technology vendors to sell those enterprises the latest and greatest technologies. However, companies often have a hard time moving off their older platforms, which are too big and complicated to ditch. Understanding the lifecycle of products and services, as well as the potential for obsolescence, goes a long way toward minimising future technical debt

Ultimately, organisations must seek a balance where technical debt can be reduced while also bringing staff up to speed on newer, more innovative technology.

A call to action for technology leaders

Notable Observations – Industry and Region

  • As expected, financial services organisations expressed greater concern about the impact of technical debt on innovation (78%) compared to the overall survey response.
  • Interestingly, technology organisations are significantly less likely to have a process in place to track and report technical debt (6%) compared with organisations in every other industry.
  • For the most part, all organisations understand technical debt can put a damper on innovation. However, compared with other organisations, those in the biotechnology/medical devices (82%), telecommunications (81%), and financial services (78%) industries indicate that technical debt has a higher impact on their ability to innovate.
  • 66% of healthcare provider services market states that technical debt is having a high impact on their ability to innovate.
  • Organisations in the transportation and logistics industry spend a notable amount of their IT budget (39%) to service technical debt.
  • From a regional standpoint, 78% of Japanese companies, 77% of UK businesses and 73% of U.S. organisations find that technical debt has a high impact on innovation.
  • In North America, 19% of respondents claimed that technical debt was having a significant impact on their ability to innovate.
  • In Europe, 28% of respondents offered that technical debt only had a moderate impact on their ability to innovate.
  • In the UK, organisations are dedicating 38% of their IT budgets to control technical debt. However, German businesses claim that servicing technical debt only requires 19% of their non-financial resources.
  • For U.S.-based organisations, the top strategies to deal with technical debt are revamping software, hardware and systems where technical debt occurs (e.g., refactoring code, etc.); educating teams on technical debt and how to report it; having a knowledge base to provide information even when specific employees have left the team or business; and having a process in place to track and report technical debt.

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Michael Pang
Michael is a managing director with over 20 years’ experience. He is the IT consulting practice leader for Protiviti Hong Kong and Mainland China. His experience covers cybersecurity, data privacy protection, IT strategy, IT organisation transformation, IT risk, post ...
Franklin Yeung
Franklin is a director with over 22 years’ experience in IT consulting, audit, and system implementation. He has experience in assisting organisations with IT/IS security, strategy, governance, risk management, internal controls, business continuity management, system ...