Technical Debt and Its Financial Implications
Owing technical debt is never good, but unfortunately, it's common in business. Many companies take on this debt to meet deadlines or reduce costs without realizing the long-term consequences. And as the old saying goes, "the longer you put off paying down your debt, the more interest you'll owe."
Technical debt is often hidden and can be challenging to track down and quantify, making it tough for management to address the issue. But ignoring technical debt can be costly in the long run, both financially and strategically.
In this article, we'll explore the financial implications of technical debt and offer some tips for how to deal with it head-on.
What Is Technical Debt?
You may have heard the term "technical debt" tossed around in various circles, but what does it mean? The term' technical debt' was first coined by Ward Cunningham in 1992 and described the accumulated technical complexity in a software system. Technical debt is the total cost of implementing and maintaining a suboptimal solution to a problem. In other words, it's what you end up paying—in time and money—to avoid doing things the right way from the start.
Technical debt is a metaphor often used in software development, but it can be relevant to any business. It is the idea that whenever you decide on something for your business, you also choose a path in the future. This could be as simple as taking the easy way out now and fixing it later, or it could be something more serious like building a system that is not sustainable and needs replacing.
Examples of Technical Debts
Like financial debt, you must be wise about incurring technical debt. Technical debt results from changes that make future fixes and maintenance more difficult. There are good and bad types of technical debt; good debt is investments that will grow your business, like a loan to buy a new factory, whereas bad debt is when you take out a loan to buy a new yacht.
Examples of bad technical debt:
Outdated dependencies: When using an old library or framework version, you miss security patches and new features.
Unmaintained code: Code untouched for years is more likely to have bugs. It's also harder to understand since the original author is probably long gone.
Spaghetti code: Code that's poorly organized and complex to read is harder to maintain and extend. It's also more likely to have bugs.
Examples of good technical debt:
Optimizations: Optimizations can make your code run faster, but they're usually only necessary once your code is in production and under load.
Refactoring: Refactoring your code can make it easier to understand and maintain, but it doesn't usually add new features.
Documentation: Documentation can be helpful for both developers and users, but it's often skipped to save time.
What Are the Symptoms of Technical Debt?
A few different symptoms can indicate that an organization has too much technical debt. For example, if a company is constantly releasing new software updates or patches, it may mean they have yet to take the time to test its products before releasing them. This can lead to customer frustration and even loss of business.
Another symptom of technical debt is when an organization constantly plays catch-up with its competitors. If you continually have to add new features or make changes to keep up with the competition, it may indicate that you need to spend more time on product development and less time on releases.
Finally, another potential symptom of technical debt is high employee turnover. If your employees frequently quit, it could be because they are unhappy with the working conditions or feel like they cannot do their best work. Either way, this indicates that something needs to change within your organization.
The Causes of Technical Debt
Time constraints and a lack of resources or processes often cause technical debt. For example, developers may need to meet a deadline and forgo adequate testing. When software is not adequately tested, your team cannot identify and resolve code problems before implementation.
Let’s examine a few more causes of technical debt.
Lack of Code Comments
A lack of code comments is among the most typical causes of technical debt. This happens when developers don't take the time to explain what their code is doing. Lack of code comments in complex code makes it difficult for other developers (or even themselves) to understand the code later, leading to many problems.
If you're a developer, make sure to comment on your code! It may seem like an extra step, but it will save you a lot of headaches down the road.
Incomplete or Missing Documentation
One of the most common ways technical debt starts to pile up is when there is incomplete documentation. This can be caused by several things, such as a rushed project deadline, an inexperienced developer, or simply needing more time to document everything properly.
It's important to realize that incomplete or missing documentation is one of the biggest contributors to technical debt. This can lead to other problems, such as coding inconsistency and even confusion among the team members.
So what can you do to avoid this? The best solution is to ensure everything is documented correctly from the beginning. This includes making a detailed project plan, setting specific documentation deadlines, and creating checklists for QA testers.
Outdated Dependencies
One of the most common causes of technical debt is outdated dependencies. In software development, a dependency is a library or module used by another library or module. When a dependency is updated, the software developers must decide whether to update their module to use the new dependency or keep using the old one.
They create technical debt if they choose to use the old dependency. This is because using an outdated dependency creates more problems than it solves. It can lead to compatibility issues, slower code, security vulnerabilities, and many other problems.
The best way to avoid technical debt is to update your dependencies immediately. This can be time-consuming but worth it in the long run, depending on what was updated in the dependency.
Unused or Unnecessary Code
One of the most common causes of technical debt is unused or unnecessary code. When code is no longer needed, it can create code clutter and make it more difficult to find and use the required code. This can lead to performance issues and make it more challenging to maintain your system.
To avoid this, it's essential to regularly review your code and remove any unused or unnecessary code. This will keep your system cleaner and help you avoid performance issues. With source code version control in place, any previous changes can be viewed later, so you do not have to worry about deleting unused or commented code.
Poorly Written Code
One of the most common causes of technical debt is poorly written code. Sloppy code is harder to read and understand, which makes it more difficult to maintain and update. Over time, this can lead to much wasted time and effort trying to decipher what the original code was supposed to do.
It's essential to take the time to write clean, well-organized code from the start. This may require investing in training for your development team, but it will pay off in the long run.
Another way to avoid accumulating technical debt is to use coding standards and style guides. This helps ensure that everyone on the team writes code consistently, making it easier to read and maintain.
Lack of Unit Tests
Unit tests are essential and are one of the key ways to avoid accumulating technical debt.
Unit tests are small, isolated tests that check a specific code to see if it's working correctly. With the right unit tests in place, it's easier for errors to slip through the cracks.
Not only that, but unit tests provide immediate feedback for a developer before it is committed and makes it into production. This can save you time and money in the long run, so investing in unit testing early on is worth supporting.
How Does Technical Debt Affect the Bottom Line?
Technical debt can have far-reaching implications for a business and needs to be managed effectively. As a system grows and becomes more complex, the work required to maintain it increases. Due to the mounting time constraints caused by technical debt, there’s a risk of cutting corners and pushing out a mediocre product. This could lead to bugs in the code, which circles back around to incurring more technical debt to fix them. This inevitably leads to shortcuts being taken, which can result in technical debt.
Technical debt reduces or slows progress toward the end goal. When technical debt is out of control, development teams spend more time focusing on the interest from past projects instead of investing the necessary time in critical new updates and features.
The cascading effects of debt can negatively impact customer satisfaction due to system downtimes and lower performance. Technical debt destroys developer morale by forcing the developer to prioritize new features over vital maintenance work that could improve their experience.
If left unchecked, this spiraling effect can have dire consequences for businesses in terms of time and money. To avoid these pitfalls, it's crucial to understand technical debt and how to manage it effectively.
In its simplest form, technical debt is any code that needs to be refactored or rewritten to be maintainable. This could be due to bad design, inefficient code, or anything else that makes the code difficult to work with. It's important to note that technical debt is okay. Sometimes it's necessary to get a product out the door quickly.
One of the biggest dangers of technical debt is that it can lead to code rot. This happens when code becomes so complex and difficult to work with that it becomes unusable. At this point, businesses often have to start over, leading to additional costs and time.
Each of those shortcuts has a cost, which builds up over time. That cost might be money (the time and resources you have to spend to fix things later) or performance (the time and resources your customers have to spend waiting for your website to load or your application to start up).
Either way, technical debt affects the bottom line. It reduces productivity, increases expenses, and makes it difficult for your business to keep up with the competition.
How Can You Reduce the Financial Impact of Technical Debt?
To reduce the financial impact of technical debt, you can:
Prioritize your debt by determining which pieces will have the most significant impact if not addressed and focusing on those first. This can help you make the most of your resources and tackle the most important issues first.
Establish a plan outlining the steps, resources, and timeline needed to pay off your technical debt. This can help you stay organized and on track, and it can also help you communicate your plan to other team members and stakeholders.
Get help from a partner who can assist you in identifying the debt, developing a plan, and executing it. This can be especially helpful if you're unsure where to start or dealing with a large amount of technical debt in your legacy code base.
Use static analysis, test automation, and other tools to speed up paying off your debt. This can save time and money and help ensure your processes are consistent and reliable.
What Are Some Best Practices for Managing Technical Debt?
Now that you understand technical debt and how it can impact your business, you might wonder about the best management practices.
Understand the Technical Debt Situation
Identifying a technical debt situation and its implications is essential for a developer.
Technical debt is a metaphor for the eventual consequences of shortcuts taken during software development. It's like taking on a loan with interest that you know you'll have to pay back at some point, but you're hoping to delay that as long as possible.
The trouble is that the longer you wait, the more interest you'll pay. And in software development, that can mean more extensive and more expensive problems down the road.
Improve Code Quality
Improving code quality should be a top priority when dealing with technical debt. Ignoring the issue will only make it worse and can negatively impact the perception of your team's skills and competence. Here are a few key tactics to help improve code quality and manage technical debt:
Implement a code review process to ensure that multiple team members review all code before it is merged into the main codebase.
Use static analysis tools to automatically identify potential issues and vulnerabilities in your code.
Follow established coding standards and best practices to ensure consistency and maintainability.
Create unit tests to verify that individual components of your code are working as expected.
Fix broken builds as soon as possible to prevent further issues.
Refactor code whenever necessary to improve its design and structure.
Design for Change
One of the best tactics for addressing a technical debt situation is to design for change. When you build flexibility from the beginning, you can make changes more quickly down the road.
This is something we always keep in mind when we're designing our products. We want to ensure that they're adaptable to whatever changes come down the line. We know our customers will continue evolving, and we want to ensure our products keep up.
Simplify the Code Base
You can also simplify the code base. This one is easier said than done. But if you can, it will pay off in the long run.
There are a few ways you can go about this. Break the monolith into smaller, more manageable pieces, eliminating unused and commented-out code. Doing this will not only make the codebase more manageable but will also make it easier to understand and work with, which will save you time and money down the road.
Automate Technical Debt Management
Another way to handle your technical debt is by automating its management. You can set up nightly builds that check for code smells and violations. This way, you can catch them before they become a bigger problem. To automate technical debt management, you can also use static analysis tools. These tools will scan your code and look for potential issues. You can then run the reports and see where there are potential problems so you can address them before they cause any major issues.
You can also automate coding standards enforcement before a developer commits the code. This way, whenever someone tries to check in code that doesn't adhere to the standards, they'll get an error message and can only check in the code once they fix the problems.
Evaluate and Monitor Technical Debt
Evaluating and monitoring technical debt should be ongoing. As your company grows and changes, so will how you manage your technical debt.
You can keep an eye on a few key indicators to help you assess your technical debt situation:
The age of your codebase: How old is your code? Are you using outdated technologies? If so, it may be time for an update or modernization.
The number of bugs: Do you have a lot of bugs in your code? If so, that's a sign that your code needs some work.
The number of features: Is your codebase bloated with unnecessary features? If so, consider trimming it down.
The amount of time required to make changes: If it takes a long time to make even small changes to your code, that's a sign that your code needs to be simplified.
Monitoring these indicators will help you identify when it's time to take action to address your technical debt.
Get Help with Your Technical Debt Situation
Are you tired of dealing with technical debt that slows your organization and hinders your ability to innovate and grow? Fixing and preventing businesses from taking advantage of new opportunities can be expensive. It is common for many businesses, and knowing how to manage it without harming the company is important.
Don't let technical debt hold you back any longer. By working with Mach One Digital, you can reduce your time and resources on managing technical debt and instead focus on driving your business forward. We understand that every organization is different, and we'll work with you to develop a custom solution that fits your specific needs. We'll help you implement the solution and provide ongoing support to solve your technical debt. Our team of experts will support you every step of the way, so you can focus on moving your business forward.
Contact us today to schedule a call and learn more. We'll be happy to answer any of your questions and help you get started on the road to reducing your technical debt.
