Technology debt is described as the hard and sometimes soft cost of an organization’s aging infrastructure stack, hardware stack, application portfolio, or software development practices.
The impact of technology debt on middle market organizations can be debilitating. A company’s ability to adapt to market changes or optimize the customer experience can lag unacceptably as compared to its competition, resulting in loss of market share. The ability to comply with changes in legal or regulatory requirements may be in jeopardy. Increased costs due to upticks in break and fix scenarios, extended support requirements, or more support personnel could be significant. The ability to attract top information technology talent to care and feed for aging technology may be hindered.
This is just a subset of the impacts of technology debt, there are many more. What typically causes technology debt?
One cause of technology debt is easy to identify. As middle market organizations have navigated economic ebbs and flows it may have been necessary to reduce overall IT spend resulting in technology debt. Cost-cutting measures can result in company strategies that include the extended use of older infrastructures, hardware or applications. Reduced IT spend may have resulted in reduction of head count supporting already aging technologies.
No matter the cause of an organization’s technology debt, it needs to be managed like all other liabilities. This debt needs to be catalogued and assessed based on its true impact to the organization. Impacts should be captured in hard dollars where possible. Where the direct cost is not easily identifiable, the impact should be captured in terms of its hindrance to achieving corporate strategy. Organizations need to use the results of this analysis to create a business case and a roadmap containing logically sequenced mitigation measures to begin ridding the organization of these liabilities. The roadmap should be reviewed at regular intervals to measure progress and be updated to include continually aging IT assets.
To learn more about how RSM can assist you with technology debt, please contact RSM’s management consulting professionals at 800.274.3978 or email us.