How does technology debt reduce corporate profits?

How does technology debt reduce corporate profits?

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Did it occur to you already at the stage of planning and setting deadlines to notice that you won't be able to fit in the specified time, and the requirements may not be met? Moments later you convince yourself that you will find a moment to catch up in the future. Unfortunately, this scenario can be very disastrous due to upcoming new projects. Constant postponement is a sign that the task may never be completed, and it will only result in the appearance of technological debt.

What is technology debt?

Debt in many definitions is translated as an obligation to be fulfilled to a benefit or a moral obligation to a certain person. The word is most often associated with repayment of a certain amount, which in this case may be a good clue. Technological debt is a growing cost that a company will have to bear through accumulating problems. The organization may experience serious consequences in the future, as the debt will become larger the longer it grows. The cost of paying it off will ultimately be too much for the company. 

Technological debt is most often the result of a desire to complete a project faster, abandonment of work or delays that occur. In the case of the software development process, causes of debt include: taking shortcuts, using half-measures, suboptimal performance or delaying the project further. The seemingly beneficial idea of building now and fixing later turns out to be the nail in the coffin of the entire project. The person credited with coining the term "technology debt" is one of the creators of the Agile Manifesto - Ward Cunningham. He compared code problems to financial debt and announced that borrowing against the future can be beneficial, as long as proper care is taken to repay the debt. 

Types of technological debt

Are there types of technological debt? It turns out there are, and the main aspect of this division is awareness of the presence of the problem. The first example is debt caused on purpose - this is the result of full responsibility for the consequences and, for example, legitimate shortcuts. It is visible to the team that takes it over. Such debt can also be incurred due to the organization's abandonment of certain activities. The company consciously makes such a decision in favor of present interests.

The second type is technological debt caused unknowingly. Problems, through lack of proper control, then often build up to a state where they will be difficult to control. The cause of such debt is often the thoughtless taking of shortcuts without worrying about further consequences. Unintentional technology debt also results from misunderstanding, accidental errors, poor design approaches or even poorly written code. Awareness of the problem in the form of unintended debt occurs only after a software update is implemented or a project is completed.

Impact of technology debt on business development

Taking on debt can also have its good side. In the case of the need to quickly bring an application to market, an immediate decision is required, without thinking about optimization. The desire to accelerate the development of a particular technology or to enter a new market are other reasons why incurring debt will be a solution worth considering. Nonetheless, one should not forget to skillfully manage debt by measuring and accounting for processes that are deliberately overlooked.

How is technology debt created?

Technology debt can actually appear from day one of a project's inception. The main reason is downplaying the problems - an easy way for debt to appear in your company. What complications can you face?

  • Documentation is an important thing - lack of documentation or inaccurate documentation will be a big burden on the project when key people leave the team and need to be replaced by new employees.
  • Don't be pressured - running out of time or the need to implement features faster will cause the development team to decide to release an underdeveloped application with limited quality and performance. Such software, due to pressure, may even lack key features all in an effort to meet a deadline. 
  • Test it! - Implementing without testing first can be disastrous in its consequences. Releasing code without testing it will result in performance bugs that will require many fixes. Ignoring the issue will not be a good solution here, and could be very costly in the future.
  • Poorly made code - this may be due to lack of knowledge of the programmer. Such code will cause further errors during updates, and maintenance will be very problematic. It's worth ensuring proper training for your team.
  • Unclear requirements - failure to understand project requirements will result in the need to rebuild code in the future to include components that conform to the correct requirements. 
  • Changes, changes, changes - changing requirements can also delay the project and force the team to redesign some parts of the code. On the other hand, fully operational software developed on time will appear on the market in its outdated form. These challenges are created with programmer turnover, new threats, rising customer expectations or emerging market opportunities.

Technology debt is most often a list of several problems that teams must contend with in order to make a project work as intended. Even the smaller ones, like poor installation of equipment without proper markings, can lead to debt. Despite efforts during project planning, several difficulties can arise and get out of hand over time.

Effects of technological debt

The emergence of technology debt in your organization can negatively affect all layers of your organization, even those not strictly related to technical aspects. Poor performance of certain product features will cause customer satisfaction and your reputation to suffer. An unfinished application can have significant security difficulties, which will lead to serious breaches down the road. Software development may be significantly prolonged as specialists will be forced to deal with fixing defects. Delayed deliveries will negatively affect your company's marketing and sales departments and customer satisfaction. 

How to counter the emergence of technological debt?

Balance is one of the main factors that will help you prevent the emergence of debt. Manage your costs, time and quality in an optimal way and keep in mind the right tools and the way developers think. Carefully combine these aspects into one, and don't forget that technology can also give you a helping hand. Identifying the problem in advance is not easy, but it will allow you to schedule the various repair steps in time. Don't be afraid to talk to your employees about it. They will tell you about the possible difficulties and search together with you for the optimal solution. To spot potential losses, analyze the data again and consider automating faulty processes.

Managing technology debt - what to do once it's in place?

Don't delay the fact that technology debt has caught up with you - address it now. Many teams face a communication problem. In an era of mounting debt, there can be problems keeping track of it. Lack of control and proper communication will result in even more work than initially anticipated. In such a state, it will be harder to work on gaps in the application code. Document the debt as an example for future recomplications. This will help you make better decisions in the future.

The best solution for dealing with technology debt is good management. Make a proper list to keep your debt under control. Every time you notice a problem, prepare a task to help you pay off the debt. A checklist will help you observe what progress you are making in terms of dealing with debt. It will help you see which difficulties are piling up - recognize them as priorities. Don't leave problems alone and eliminate debt quickly and effectively. Remember, too, that the process takes time, and that any incremental debt is removed gradually until the repayment disappears altogether.


Nowadays, a large number of companies are facing pressure from competitors who are growing at a rapid pace. Teams are trying to keep up with these demands and are looking for compromises. Ignoring technology debt is the worst possible solution, but the mere appearance of debt does not have to herald the end of your organization. Notice the problem earlier and identify it so that you can plan appropriate steps to eliminate it. During certain stages, mistakes are inevitable - remember them and they will help you in future difficulties. Learn to pay off debt gradually and optimally to achieve balance in your operations, and you will develop a useful habit for the future.

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