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Why accuring a technology debt is a false economy?

Is your organisation managing your technology debt effectively?

Deferring investment in technology is a tempting move for many organisations, particularly during times of stress. The immediate ‘payoff’ of not having to invest in technology means that resources are freed up to be deployed elsewhere. However, there is a hidden cost in the organisation’s growing inability to perform effectively in terms of providing services to existing clients and acquiring new ones, frustrated staff turning over at higher rates because they’re tolerating outdated equipment and unplanned replacement of equipment when it finally breaks down. Performing well in these areas is the key to organisational success, so investing in technology is a necessity in today’s market.

Technology continues to evolve at a rapid pace, and the market with it. Customers have new demands, enhanced expectations and they require services to be provided in a particular way. By making suitable, strategic investment, commensurate with the objectives of your organisation, you can meet these demands.

I think it’s important to understand that technology is going to cost money one way or the other. There is no way to avoid technology investment, but there is a way to ensure that it’s strategically managed. You can choose to ensure that you are keeping technology up to date, in line with the needs of your organisation. And yes, as a consequence of that decision, it’s going to cost money because there is a regular investment in the technology.

Or you can choose to continue to try and sweat those technology assets, making them work harder for longer than they were intended to. It seems attractive in the short term because there’s less investment. However, the hidden costs come from the lost opportunities, lost productivity and the impact on your staff. In addition, there’s also the impact it has on your current and prospective clients. Essentially, it’s a false economy to assume that by not investing in technology on an ongoing basis, you end up saving somewhere else.

Now the amount of investment varies from industry to industry, but typically what you should expect to see is a technology investment as a percentage of the revenue of the organisation, and that amount varies depending on the organisation and sector. But fundamentally every industry, and every type of business, and every business size has some metrics that are publicly available that we can help guide as to what is the appropriate level of investment for your type of organisation in relation to other organisations in your marketplace.

A recent US based study by OutSystems revealed that a shockingly low 15% of SMBs assessed themselves as managing their technology debt effectively, and only 35% believe they can manage it in the future. Is your organisation managing its technology debt as effectively as it could be? And if not, what is it costing you?

Anthony Mittelmark’s post on LinkedIn, titled ‘The Seven Deadly Sins of Tech Debt’, elaborates on the result of using outdated technology due to avoiding technology investment and development. These include key functional, cultural and managerial issues that highly impact an organisation’s processes.

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