Technical debt is something that almost every developer and engineer is familiar with. Whilst many people understand that dealing with technical debt is an inevitable by-product of any software or product development project, few are aware of the actual impact that this can have on a business if it’s not correctly handled and monitored.
Scale-ups need to use all of their resources carefully in order to continue growing their business, and technical debt can disrupt this without a proper plan for how to approach it. In this article, we explain the true cost of technical debt as calculated by several recent studies, then share some of our top tips on how to minimise technical debt in your scale-up.
What is Technical Debt?
Technical debt is described as the product of the decisions that are made in order to reach a deadline or milestone faster in a software development or tech project. It usually involves cutting corners, lowering standards or using ‘quick fixes’ to get a project over the line, creating problems that have to be fixed at a later date.
The term ‘debt’ is used to describe this situation because developers and engineers ‘borrow’ solutions that will help in the short-term, like a temporary loan, but the ultimate effort and resources needed to ‘pay’ this back will usually take up more time and effort in the future.
There is a range of different types of technical debt that are defined depending on the area of the project that will be affected (design, code, developer understanding) and whether the people involved are aware of the debt and have calculated its cost. In ideal situations, any technical debt that occurs in a project will have been carefully considered before it happens and will also be responded to before it develops into a significant problem.
Despite its reputation as something to be avoided, not all technical debt is a bad thing, and it’s important to accept that some kinds of technical debt will always be inevitable. However, if you’re going to knowingly take on technical debt during a project then it’s important to understand the impact that this may have on your scale-up.
What Does Technical Debt Cost a Scale-Up?
In a study conducted by McKinsey with 50 CIOs from financial services and technology organisations, it was estimated that between 10% and 20% of technology budgets end up being used to resolve problems that are related to technical debt. That’s up to one-fifth of the money spent on a project lost to technical debt, which really adds up if your scale-up is working on quite a few different projects every year.
The same study also found that 69% of these organisations were spending at least 10% of new-project spend on work required to resolve technical debt issues. So when it comes to the monetary cost of technical debt, scale-ups stand to lose a reasonable portion of their budget to dealing with technical debt if they don’t actively work to reduce it.
Another study by McKinsey looked at what they called a ‘Tech Debt Score’ (TDS), which quantified the amount of technical debt that an organisation had. This data identified that companies with a TDS in the higher percentiles had much higher levels of business growth than those with a TDS in the bottom percentile, due to being able to dedicate more resources to new projects that bring in more revenue.
Therefore, another way that technical debt can cost scale-ups is that it limits their ability to pursue innovative new ideas and create products or services that help the business to prosper. There’s a clear correlation between high TDS and higher revenue growth, so establishing a system to minimise tech debt can help to boost business growth and profits.
Aside from limiting business growth and eating into project budgets, technical debt can also really impact how a business performs. A 2021 report on the state of technical debt revealed that 52% of engineers believe that their team’s morale is negatively impacted by technical debt. When a team knows that they are going to have to deal with the impact of technical debt, they are less enthusiastic about working on a project which can reduce productivity and efficiency.
This report also identified that 50% of maintenance work done by engineers and developers is focused on resolving technical debt, which is a huge amount of time to spend on problems that can often be avoided or reduced. 66% of these engineers believed that they would complete projects up to 100% faster if there was an established process for technical debt, which would free up a lot of additional time that could benefit the business in the ways we detailed above.
It’s been predicted that organisations that can actively manage and minimise technical debt will be able to increase their service delivery times by up to 50% in 2023. So if you want to reduce the impact that technical debt has on your scale-up, you need to establish a successful strategy for addressing technical debt.
How to Minimise Technical Debt
You can't completely eliminate technical debt from a project, but you can effectively minimise it with the right strategy. Here are five of the best methods for technical debt management.
Understand How Technical Debt Will Be Acquired
To begin with, in order to manage and minimise technical debt you need to know where it’s going to come from. Before a project begins, go through every stage of development and identify where you might or will likely acquire technical debt.
You can then use this information to make everyone involved in the project aware of where technical debt is going to come from. You can also take this further by estimating what the impact of this is going to be and how you’re going to fix it.
This also makes it easier to keep track of technical debt so that it doesn’t later develop into a problem that will catch you off guard, as you know where all your issues have come from.
Prioritise Transparency
Understanding how technical debt is acquired also makes it easier to be transparent with the entire team about the technical debt connected to a project. Transparency means that developers and engineers are aware of the work they might need to do to tackle technical debt which stops it from being a morale-draining inconvenience that eats into other tasks.
Technical debt transparency also keeps everyone aware of how time and resources are being spent in a budget, so relevant stakeholders and managers have a clearer idea of timelines and progress. This is also useful as it keeps everyone aware of any technical debt that was taken on to reach a milestone and the necessary work that may need to be done to resolve problems connected to this.
Allocate Regular Time to Technical Debt
If you plan a project without factoring in the impact of technical debt, you’ll likely end up with a lot of capacity and timeline issues. To avoid losing time that was meant to be spent on other tasks, it’s a good idea to regularly allocate time to deal with technical debt at every stage of a development project.
This is a great practice, as it helps your team view technical debt as a necessary aspect of a project and not something that has to be gone back to and fixed. Try allocating a couple of hours every week to managing technical debt, instead of having to go back after every milestone and put out any fires you may have created and left unchecked.
Having time allocated to technical debt is also really useful because it allows you to keep track of how this debt has developed and keep a realistic record of what issues will need to be fixed. There might be some sessions where there are no new technical debt problems, but you need to have this time set aside in order to recognise and celebrate this.
Set Internal Standards
Having a clear set of internal standards for development projects is one of the best ways to reduce unnecessary technical debt. If you have clear standards and procedures in place that things like code have to pass, you’ll hopefully avoid any technical debt issues that might have been caused by lazy or rushed programming.
Having things like coding standards can also help to eliminate technical debt caused by a lack of shared knowledge between members of a team, or maybe even teams working on different elements of a project. It can also help team members to find the root cause of other issues, as they’ll be able to rule out problems that these measures would have picked up.
Internal standards might also involve mandatory testing procedures that can highlight issues that may have otherwise been overlooked. By deciding which standards and quality controls are mandatory in a project, you can also control which kinds of technical debt are reduced because of these necessary measures.
Measure your Impact
Finally, if you want to develop an effective technical debt reduction strategy, you need to measure the impact that these techniques have on the amount of technical debt acquired in a project. Ideally, you’ll be measuring technical debt at each stage so you can get a good idea of which techniques are working well and which may not be having the desired impact, allowing you to hone your approach.
We previously highlighted the different ways that technical debt can cost a scale-up, so it’s worth measuring things like the percentage of project budget and time that ended up being spent on technical debt, and whether these efforts had a long-term impact on business growth. You should also speak with developers and engineers to get their feedback on the management of technical debt and see whether things like morale and productivity have been improved too.
Summary
In order to properly control and reduce technical debt, you first need to understand all the different ways that it can impact a business. This is essential in developing a technical debt management approach that not only improves how time and resources are spent on a project, but also how your team approaches technical debt and treats it as part of their workload.
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