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What is Technical Debt & How to Avoid It

What is Technical Debt & How to Avoid Technical DebtWe are all familiar with debt. When we are obliged to spend money, time, and effort on something that we didn’t plan and budget for, we get into debt. But did you know you can also get into technical debt? In your personal life or in business, if you are not doing what you should to maintain and upgrade your technology, you’ll end up so far behind, the costs of your debt load will be extensive and reach beyond monetary costs. You need a technical debt strategy. The good news is that you can reduce your technical debt and stay ahead of it with a few simple steps. Learn how to avoid technical debt with these best practices and debt reduction strategies below.

What is Technical Debt?

Are you in technical debt? … Not sure?

What is technical debt? Technical debt is when software, hardware, or code need updating and/or upgrading in order to work at full capacity, yet those updates are not implemented. This “debt” bogs down your technological infrastructure and the processes needed to run your business and cuts into productivity.

Technical Debt Examples

A good technical debt example is with your smartphone. If you ignore the suggested app and phone updates, eventually your phone and/or apps will stop working correctly. This will, without a doubt, cause a host of issues, including possible missed calls, emails, texts, and security vulnerabilities.

Other common technical debt examples include smartphones that are outpacing “old technologies,” so basic functions may no longer work with an outdated phone. If you aren’t proactive about replacing your phone, you may be forced to jump several models and go through the hassle of transferring data, updating old apps and files (hoping you don’t lose any information), and make unplanned, hefty new phone payments. 

Technical debt is widespread in business software and operating systems, like Microsoft Windows. Months or years can pass as you stay in your comfort zone without updating (it’s just easier, right?). However, when you’re finally forced to update to the latest software or operating systems, you will be so far behind that the financial and time expenditures will be much greater than necessary.

Technical Debt Budget

Now that you know what is technical debt, you must budget for it. Businesses must include tech debt investment and updating legacy systems in their IT budgets.

As with any hardware, software, operating system, web application or mobile app, you need the recommended updates. If you avoid updates and don’t create tech debt reduction plans, you’re extremely vulnerable to hackers. Imagine the fallout from having your identity stolen and sold on the black market or your business data breached. While what causes technical debt varies for each company, you must ensure you’re business technology is up to date and running efficiently. 

Close up of floppy disk insert into the drive A of the old computer

The Cost of Outdated IT on Business

If you are a business owner or the head of IT, technical debt is a much larger issue when it comes to your servers and hardware, operating systems, software and business process automation systems, Cloud solutions, and web and mobile apps. You could rack up technical debt that puts your company at risk by continuing to use what you are comfortable with and following the old adage, “If it isn’t broke, don’t fix it.”

The cost of outdated IT & technical debt includes reduced production, lost man-hours, negative company culture, sales and customer issues, and the acquired debt to buy, install, and implement years of technological updates all at once. It can quickly become a big investment.

Besides the unplanned, significant financial burden for new hardware, software, and/or operating systems, technical debt can also lead to:

  • Production downtime and reduced inventory.
  • Data breaches and legal ramifications. 
  • Wasted man-hours and additional labor expenses.
  • Lost information and data that may be irreplaceable.
  • Impaired sales performance.
  • Damaged reputation and customer satisfaction.
  • Negative impact on company culture.
  • Decreased revenue.

Debt Reduction Plan: How to Reduce Technical Debt

You must focus on reducing technical debt and is by creating a debt reduction plan. If a portion of an outdated system malfunctions and/or you’re unexpectedly forced to update the entire system, the expenses and lost revenue can be substantial. If you don’t update legacy systems, the costs can grow even higher. 

Now, imagine you’ve been updating a couple of times a year, or as necessary. If there’s a glitch in the system or any needed installations/maintenance, typically your software company or IT team can take care of it quickly and with minor disruption. Avoiding technical debt gives you peace of mind that your data is protected, and all systems are operating at or above the required standards.

In the simplest of examples, to go from system A to system E requires stepping up to each echelon one letter at a time – with most technology, you cannot jump five stages in one step. It is much easier and cost-effective to take each update as it comes, from A to B to C, and so on, while your business continues to run smoothly.

Business man holding money buy house business and laptop computer

Buy Down Your Debt Gradually 

If your company is in technical debt, the best strategy to reduce technical debt is to buy down that debt in a strategic way. Depending on how long it’s been since you’ve updated your systems, meet with your internal and/or external IT team to review which updates need to happen first. Then, create an update/upgrade technical debt strategy and allocate a technology budget. 

As you spend over time and buy down your debt, revenue often increases, so the incentive is there to stay with it in perpetuity. 

The Second Law of Thermodynamics states all systems tend toward entropy. By the very nature of things, they will deteriorate over time and get worse, not better. In the case of technical debt, when you keep up, disorder is minimized.

How to Avoid Technical Debt: Prevention 

As mentioned, staying current with technology and maintenance requirements reduces larger expenses, wasted time, and frustration, and keeps molehills from turning into mountains. So, how do you make sure you remain debt-free? Keep these tips in mind when considering how to avoid technical debt in your business. 

  1. Build an annual technology maintenance budget. When accounted for in the budget, it’s much easier to stay on top of updates and issues as they arise. If you’re not sure how to calculate IT maintenance costs, ask your team for estimations.
  2. Keep an eye out for upgrade notifications. These will often come from your software and operational systems, as well as your IT department or external IT company. It is imperative to install the updates for stable infrastructure, usability, bug fixes, and solid security. (The easiest way for a cybercriminal to steal data is through an outdated system).
  3. Do not ignore service announcements and emails from your IT team. They will let you know (usually via email or in a meeting) when a system update is coming, how to prepare for it, and what problems to watch for. Help them help you have the most current and productive technology to keep things running smoothly. 
  4. Communicate. If you sense any part of your technology isn’t working – be it an app, website, emails, ordering or inventory systems – no matter what, tell your IT team right away. This allows your team to be agile and fix it before it becomes a huge problem. Also, during regular due diligence, if an issue is diagnosed, your IT team should communicate with you and propose a solution. If you have two-way communication, the sooner problems are addressed and the roadblocks eliminated, the faster you can carry on with business as usual.

The light red arrow icon on a background of money. The concept of changing course of US dollar on the market. Devaluation, collapse, stagnation of the economy.

The Bottom Line…

If you continue to do nothing to reduce technical debt, your technical debt will become overwhelming and detrimental to the existence of your business.

The best way to avoid technical debt is to be proactive, have a plan, create a budget, and work with a team that keeps your technology up to date and running smoothly. By maintaining your systems, you can avoid technical debt and remain debt-free. If you have any questions about this topic or would like to know how Swip Systems can help you with tech debt, please feel free to contact our team today. We’re here to help your business grow!  877.377.SWIP

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Tom established Swip Systems in 1995 and has been providing business automation, software development, web application, and mobile app solutions ever since. As a business owner himself, he’s aware of the challenges and what’s necessary to stay competitive, which is why he is on a mission to help business owners grow and maintain profitability through technology. Tom is also the founder of Midwest Manufacturing Leaders (MML) and a keynote speaker.

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