Managing Technical Debt Like Financial Debt

Yesterday, we touched on the concept of technical debt that accrues as the hidden cost of quick fixes. Let's unpack this concept and talk about ways to safely use technical debt.

Technical debt is similar to financial debt: it's used as leverage to make something happen now and deal with the cost of it later.

Let's look at this through the lens of consumer debt like a credit card or "buy now, pay later" service for buying a fancy espresso machine.

• Realize benefit now: when you make a purchase on your credit card, you get the benefits of a strong latte after unboxing it

• Delay expense: but you're delaying the actual expense for the cost in the form of smaller payments over the next few months

• Pay extra: each of those payments has a finance charge in the form of interest, which is the additional cost for using debt to fund your homemade lattes

The same holds true when we do quick fixes to create a workaround in a business process or drop in a few innocuous changes to a system.

Let's consider the quick fix example from yesterday's newsletter of adding calculated fields for Q4 2023 Revenue and Q4 2024 Revenue for all customers in a CRM.

• Realize benefit: when you add these fields, you're getting the stakeholder those data points now

• Delay expense: but you're setting an expectation that could be the way such data is accessed and calculated, which might lead to reliance on that framework

• Pay extra: which means there is additional work to unwind that quick fix in both the system and as a change management exercise with people using that quick fix

Technical debt is inevitable for any organization, but assume you're not a sovereign government: you can't continue to accrue technical debt and pretend that it doesn't exist.

Here are three ways to manage your technical debt:

1. Pay down your balance by dedicating time and budget for your team to improve what you have

2. Restructure your interest payments by hiring more resources or vendors to speed up the process of those improvements

3. Write it off entirely by eliminating the business process or system if the inefficiencies or maintenance costs are more than an overhaul

Just like financial debt, there are healthy ways to use and manage technical debt: it all comes down knowing where your technical debt is and managing how much you have.

TLDR: Manage technical debt like financial debt: use it as leverage, then be sure to pay it down, restructure it, or write it off entirely.