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What is technology debt?

Technology debt in Organisations

Technology debt is built up when equipment ages and can’t handle new software or updates, or becomes unfit for purpose overall. Technology debt builds inefficiencies in an organisation’s business processes and is something companies should be actively avoiding.

Technical debt results in a lot of inefficiencies in your business operations, including the stress of having an unplanned replacement when equipment fails, as opposed to a structured rollout of new technologies. Essentially, if you don’t choose to manage your technology lifecycle, you run the risk that your technology will call that debt in at the most inconvenient time.

A mistake that we often encounter, particularly with new clients, is what’s commonly referred to in our industry (in the technology space), as ‘technology debt’. It’s essentially trying to get by on technology that we know is ageing, but the temptation is to ‘just stretch it for another year’. That then often turns to yet another year and before you know it, you end up in a situation where your technology investment is ceasing to deliver the results for which it was intended. It’s not something that happens overnight. It’s something that happens very gradually and it’s almost not noticeable until it’s too late. And the way that it manifests itself is that things start breaking down.

Not everything fails simultaneously, but it might start with a particular program for which you’ve received an update, and that update now requires additional resources from the system that’s running it. The host system is no longer capable of supporting that program, but the provider of that software assumes that you’ve moved along your hardware investments at a regular pace and they’re not supporting your hardware any longer. The end result? The program fails to perform. Then there is a misconception that the problem is with the program, whereas the problem might actually be with the underlying infrastructure or the investment in the tools used to perform a particular task. The same thing, by the way, can happen the other way around.

We’ve seen many organisations that do follow a regular cycle of upgrading hardware, for example, but they don’t maintain that in lockstep with the upgrade and updates of their software. And as a consequence of that, their old software that was built before the hardware was ever introduced is incompatible, doesn’t know how to behave and cannot produce its required outputs because it was built before that particular piece of hardware ever came about.

Now some of you may be reading this and thinking “this sounds like planned obsolescence”. What’s really important to understand here is that a lot of people argue that technology providers, the people that build technology, are planning obsolescence into their product. That’s not necessarily the case. No one’s planning obsolescence. What technology providers are doing is continuing to innovate, continuing to deliver more value in what it is that their products and services are set to deliver, and as a consequence of that we can do things better.

But if we fail to invest at the right frequency, we run into a difficulty of falling far behind in certain areas and thus accrue technology debt. Sometimes it actually gets to the point where we would probably have been better off had we not have used any technology at all, because it becomes an impediment to the way that an organisation operates.

A study by Deloitte showed that organisations that are technologically advanced experience 2 times as much revenue per employee and experienced an overall revenue growth that was nearly 4 times as high. Updating your technology at a suitable pace for your organisation’s objectives will increase your potential to reach your operational goals.

Phoenix business journals’ article ‘Outdated technology costs businesses more than it saves’, illustrates how using outdated technology results in technological debt that creates multiple issues within your organisation. The issues are regarding security threats, productivity and in customer preference. These are vital to an organisation’s success, so updating your technology is extremely important.

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