Is Technical Debt Holding Your Enterprise Back?

Technical debt, or tech debt, is not a new problem. It's one of the reasons I started Vervio. As a lead architect in London during the early 2000s, I noticed a recurring problem: digital solutions weren't built to last. The engineering didn't match the creative execution, resulting in inflexible solutions that couldn't grow with a customer's business. Instead of generating and retaining value for the business, it created a technical burden.

Today, I see firsthand how businesses grapple with the competing priorities of delivering innovative solutions at speed with the need to maintain robust software development practices. In this article, I discuss why technical debt can silently incapacitate organisations and how AI and other best practices can accelerate future progress and reduce risks.

What Is Technical Debt

Technical debt is a metaphor Ward Cunningham coined in 1992 to describe the future costs incurred by taking shortcuts in software development. It encompasses various forms of debt, including applications, infrastructure, data, UX and process debt, and knowledge debt resulting from diminishing systemic intelligence and ineffective management.

Technical debt is an inevitable part of software development. While it can be an intentional, strategic choice to meet deadlines or business objectives—unintentional technical debt often arises from poor coding practices or outdated technologies. Like financial debt, it accumulates interest over time, making future changes more expensive and time-consuming.

The real cost of technical debt

Financial and operational impact

The costs associated with tech debt are substantial. According to McKinsey, technical debt accounts for about 40 per cent of IT balance sheets. CIOs estimate that tech debt amounts to 20 to 40 per cent of the value of their entire technology estate, translating to global opportunity costs of $85 billion annually. For Australian enterprises, this represents millions in lost revenue and productivity.

Typically, we see these costs in three main areas.

Increased maintenance costs

As technical debt accumulates, systems become more complex, leading to higher maintenance and support costs. Organisations can find themselves spending more on fixing issues than developing new features.

Reduced agility

High levels of technical debt can significantly decrease an organisation's ability to adapt to changing market conditions or customer needs. This rigidity can stifle innovation and limit competitive advantage.

Operational risks

Systems burdened with technical debt are more prone to failures and outages. The interconnectedness of components means that changes in one area can inadvertently cause issues elsewhere, leading to increased downtime and potential loss of revenue.

Inflexible digital solutions don’t grow with a customer's business. Instead of generating and retaining value for the business, it creates a technical burden.

Security Risks and Real-world Consequences

The risks of ignoring technical debt go beyond financial implications.

Security vulnerabilities

Quick fixes often leave systems exposed to security threats down the line. While many remain out of the public domain, we know Equifax’s breach affected 147 million people and was partially attributed to unaddressed technical debt in their software infrastructure—an unpatched vulnerability in the Apache Struts framework. The company knew about the vulnerability but delayed updates due to system complexity and technical debt.

Southwest Airlines experienced a network-wide collapse due to an outdated scheduling app that had been acknowledged as a weakness. Ten thousand flights were cancelled, affecting 1.5 million passengers. This was after the company had invested over $1 billion in customer experience improvements. In Australia, Service NSW experienced a data breach affecting 186,000 customers, which was also attributed to technical debt in legacy systems creating security vulnerabilities.

Breaches like these result in reputational damage. As transparency around these incidents increases, the fallout can be long-lasting and detrimental to an organisation’s growth.

Using AI to manage technical debt

As AI becomes increasingly sophisticated, engineering teams are examining technical debt differently. Today's AI systems excel at generating comprehensive unit tests, analysing code coverage gaps, and interpreting test requirements from human-written descriptions using natural language processing.

In the near future, AI will help us significantly accelerate remediation cycles and code review processes by automatically evaluating pull requests, identifying vulnerabilities, generating appropriate fixes, and submitting them for human verification.

Integrating AI into CI/CD pipelines will be another breakthrough. This will enable autonomous execution of integration and security tests, with human intervention required only for failing scenarios. Perhaps most valuable is AI's emerging ability to analyse entire codebases as unified systems rather than isolated components.

Being able to see the entire ecosystem allows AI to flag potential conflicts between new features and existing functionality before they become production issues. Automating routine tasks and providing unprecedented visibility across complex software infrastructures means AI will dramatically reduce the accumulation of new technical debt and expedite the resolution of existing deficiencies.

Other best Practices for Managing and Reducing Technical Debt

At Vervio, our mission is to deliver digital solutions that work right the first time, building a sustainable foundation that enables customers to easily adapt their digital strategy. Organisations undertaking digital transformation with this approach will find themselves in a much better position to manage and reduce technical debt.

Knowing where to begin when tackling technical debt can be difficult, but organisations can start with these industry best practices.

1. Accurately measure your tech debt

This should be a detailed analysis from which you can build a strategy. Your tech debt balance sheet can be a tool that enables decision-makers to recognise the trade-offs in paying down tech debt.

2. Undertake regular code reviews

Implementing a systematic code review process helps identify and document areas of technical debt early on. This practice encourages collaboration among developers and ensures adherence to coding standards.

3. Prioritise technical debt in backlogs

Treat technical debt as a priority in project management by allocating specific resources to address it. Regularly review and prioritise technical debt items alongside new feature development.

4. Establish clear documentation

Maintain comprehensive documentation of codebases and architectural decisions. This transparency aids future developers in understanding the rationale behind particular design choices and reduces the likelihood of repeating past mistakes.

5. Invest in training

Continuous education for developers on best practices and emerging technologies can help mitigate unintentional technical debt. Encouraging a culture of learning fosters innovation and reduces reliance on outdated methods.

6. Make technical debt a risk factor in your business

Regularly engage stakeholders in discussions about technical debt. Organisations can better align development efforts with business objectives by framing technical debt in terms of potential risks.

Business Case for Technical Debt Reduction

In a survey of 750 global executives on technical debt, 46% of IT executives noted they “very often encounter restrictions” or that “tech debt has a dramatic effect” on their organisation’s ability to pursue digital transformation or grow.

My experience is backed up by McKinsey and Gartner research that showcases the benefits of actively managing technical debt and maintaining modern technology infrastructure.

• Up to 30% faster development cycles for new features

• Up to 60% reduction in system outages and security incidents

• 50% faster service delivery times

• 50% more of engineers' time is spent working on value-generating products and services.

Sustainable Innovation Starts with Debt Management

Technical debt is an organisation-wide problem that comes as part of digital transformation. Businesses can reduce its negative impact by embracing best practices and taking a more sustainable approach to growth through innovation. This way, they can maintain a competitive advantage with solutions that work for today and are designed for the future.

Why Vervio?

Vervio is an Australian-owned digital engineering agency that delivers sustainable solutions to some of Australia's most iconic brands through technical leadership and engineering excellence. With a reputation for speed, precision, and accountability, they partner with customers for the long haul, ensuring digital success now and into the future.