How Reducing Tech Debt Drives Real Business Value

By Neveen Awad, Steven Kok and David Ritter

Technical debt is a persistent, perennial problem at many large organizations which often defies systematic solutions—but real progress is possible.

Technical debt takes many forms. Deferred maintenance of IT systems is a primary source, both in hardware and software. Failure to stay current leads to increased support costs and potential vulnerability to downtime and cyber attacks. Proliferation of non-standard technical platforms and practices adds to complexity and cost. Gaps in testing can expose customers to undiscovered errors.

Organizations regularly lose 20% or more of their time to technical debt, which creates major risks and even sometimes leads to business failure.

Internal leaders often struggle with balancing major investments required for maintaining and modernizing infrastructure with novel program spending which may have more direct and visible bottom-line benefits.

One key part of this is establishing the right platform operating model for an organization and aligning incentives for successful scaling across divisions and departments. Having set policies and procedures in place for hardware, software, DevOps, governance, security, and other key processes play important parts in reducing potential technical debt losses.

Continuous investment in DevOps and refactoring existing code makes existing systems easier to maintain, enhances business innovation, and helps drive value.

Although addressing technical debt may be less visible than other initiatives, it leads to increased productivity and fewer project delays. The battle for speed is won in the DevOps arena; small advances there lead to larger wins later.

Ignoring the importance of reducing technical debt losses means delivering essential business priorities more slowly and much less efficiently.

To bring solutions to market quickly, organizations may apply the notion of a “minimum viable product.” The inherent risk with this approach is that “viable” may be defined only in terms of features, not robustness. Proper application of DevOps tools and practices address this to a degree – but must be coupled with standards for viability that include code quality, performance, reliability, security and conformance to patterns. These factors should be baked into the organization’s “Definition of Done.”

Under most circumstances, tech debt-tackling work happens on project and/or agile teams. Leadership must make sure that both allocate resources to reduce technical debt.

Ideally, internal champions will do this without diverting resources from direct business priorities. Unfortunately, because most organizations lack the discipline to do this, it’s important to both create and track distinct internal tech debt burndowns. This should be followed by redirecting teams to address these needs.

In our work, for instance, we helped a client establish a technical debt capacity budget of approximately 20% by both setting up procedures for allocating time per sprint and adding an additional “hardening sprint” into each quarter’s schedule.

Organizations also must reconcile internal organizational tensions around creating new features and capabilities versus protecting and maintaining core systems. This means consistently devoting a set percentage of tech spend to addressing tech debt to prevent troubles down the road quarter-after-quarter. If organizations do not institute this practice, cascading technical problems will lead to lost trust with both internal teams and their clients.

Aligning incentives and establishing concrete Objectives and Key Results (OKRs) play an important part in addressing technical debt over the long term. In our past work, we have demonstrated how setting OKRs for platforms inside organizations leads to results.

By tying OKRs to clear tech-debt related goals, offering financial incentives, setting up internal training, and ensuring executive supports, organizations can make significant headway in reducing tech debt.

In many cases, clear OKRs can be established around reducing cycle time, reducing defects, lowering maintenance costs, and higher levels of reuse. OKR achievements can also be enhanced through developing clear backlogs for prioritization of tech debt-reduction work. Prioritization should be structured around both business value and critical architecture areas for individual organizations.

These “techinology” measures may seems relevant only to the tech teams. But organizations that are effective in managing tech debt understand that improvements in cycle time (e.g.) lead directly to faster delivery of business value, flowing real financial benefits to the company. Responding to and correcting defects is expensive in both actual cost and user satisfaction, again measurable in terms of bottom-line value. Incorporation the impact on business helps the work on tech debt to be more appropriately prioritized versus simply building the next feature.

Organizations should also institute an unbroken chain of “why” into their technical practices and processes.

This means teams start with why in all technical projects. Leaders should establish and clearly communicate why projects exist, set goals that directly support their purpose, and define OKRs for measuring success.

Neglecting technical debt sets organizations up for all the risks we note above, as well as continuing losses and challenges in achieving goals. Project and agile teams should be measured both on their business contributions and their progress against debt as part of the “unbroken chain of why.”

Technical managers play an especially important role in reducing technological debt.

Technical managers can prioritize individual tech debt backlogs and coach both engineers and teams on how to best drive value. Driving value in this context can include establishing patterns for reuse, standards and tools, and teaching best practices. They are also well-positioned to collaborate with business stakeholders in showing the actual economic value of reducing debt.

Decision makers in large organizations are aware of technical debt. At the same time, strong structural factors lead to tech debt being deprioritized when it should remain a constant concern. The fact is this: Organizations which make decisive choices to tackle technical debt with clear OKRs for success will be in a better place competitively and technologically compared to their competitors. It’s that simple.