Written by Dheeraj Vyas, Principal, Cyber Group Inc.
We all have been in situations where a rigid and aging technology stack has hindered moving business goals forward. The topic of technical debt is often not acted upon swiftly in a lot of organizations. The discussion usually gets delayed until something catastrophic happens or a significant new need arises (like responding in a pandemic). Because the concept begins with the word “technical,” business users often dismiss the issue as under the “office of the CIO.” This is a mistake. The core of the challenge lies in the lack of acknowledgment that this issue slows the business, makes it harder to change and limits the reaction to market forces. Kicking this can down the road often results in serious financial repercussions, including missed opportunities.
The biggest challenge I feel is that IT leaders are not aware of the side effects of mounting technical debt. It’s not about how well your systems are performing, and it is not about how effective these solutions are to your business needs. The focus should be on how quickly the systems can adapt to the business changes that might arise in the future. The key is having a nimble, flexible, and responsive architecture.
Let’s examine a case study. I went on to work with a client a few years ago who had a multi-tenant application serving an impressive list of customers across the globe. Every customer on this system had a separate set of business rules in their specific database, served by a common codebase. Soon the systems started to become inflexible. As the market cycle began to change, and the business wanted to change, they could not. An army of resources was needed to effectively serve the customers, driving the margins down for the business. This was never intentional, but the company suffered. The smallest change requests would take weeks to get released to production. Users became impatient, and their business suffered in both revenue and gross margin.
In this past year, we have seen that companies with a higher appetite to invest in technology have survived and thrived. It also appears as those companies burdened with technical debt fell further behind.
Now! Every company has some legacy system that is slowing them down! Technical debt is real, and the need for change is real. Many people will argue that “if it ain’t broke, don’t fix it”. I disagree with this notion because a system might be running just fine but be incapable of moving in a new direction. In many cases, the phrase “quick win” comes in the way of doing the right thing. There should always be a conscious effort to audit and fix systems throughout the life of a technology solution. No system is perfect, and every system can be challenged, given the right conditions.
Untimely resolution to technical debt could potentially result in opportunities lost. One could lose the advantage of gaining that 3% of market share or lose the first-mover advantage. One could have realized a revenue growth that eventually would have increased your profit margins.
Carving the time and resources to manage can prove in long term benefits of managing this.
Looking at Home Depot’s and Lowe’s performance during the pandemic, a new paradigm to investigate technical debt management appears. The one related to flexibility and nimbleness.
Home Depot in Q3 2020 reported a 24% increase from the past year.
Similarly, Lowe’s Q3 2020 sales from the past year rose 30%, online sales doubling in this period.
You realize how agile and fast they have been to turn around the business when most retail companies struggled to keep the lights on. The answer lies in innovation, and I believe the nimbleness they have to implement and execute these innovations. Proactively managing technical debt, I believe, is an integral part of this achievement.
Like any other debt, the approach to pay off technical debt should be in installments. The strategy to clean up, prune, and provide necessary technology tools periodically helps to manage this. This allows organizations to
Nobody can foresee what their technical debt would or may look like in the future, but one can continuously audit the systems for potential issues that may arise. The discipline, awareness, and intention of managing technical debt should always be on the top of the list for any leader. Promoting and engaging their teams to develop a culture where necessary checks and balances exist will minimize this debt accumulation and allow the business to remain competitive, regardless of the market.