What Is Technical Debt and How Is It Impacting Your Organization?

Technical debt refers to the inefficiencies and waste that arise when IT resources no longer meet an organization’s needs. It can encompass everything from code and applications to physical hardware. Perhaps the IT asset no longer works well, has become inefficient, is using too much energy, is underutilized or doesn’t integrate with your newer IT resources.

Technical debt can have a range of negative consequences for your business—affecting your costs, operational efficiency, employee morale and even your environmental impact. Some estimates suggest that engineers spend 33% of their time dealing with it.[1] And 60% of CIOs surveyed by McKinsey felt that their organization’s technical debt had risen perceptibly over the past three years.[2]

If tech debt is on the rise in your company, you may find your staff spending more time doing maintenance and managing complex integrations instead of focusing on priorities that deliver business value. It’s critical for IT leaders to understand where technical debt comes from, how they can reduce it and, ultimately, how to leverage technology for sustainable growth and innovation.

What causes technical debt?

Technical debt inevitably happens to every organization. The fast pace of change in IT means that today’s cutting-edge technologies can quickly become obsolete and create a drag on your organization’s resources.

There are a host of reasons why tech debt piles up:

• Inadequate planning or design, which can result in suboptimal system architecture
• Limited resources, including budget constraints, time pressure or lack of skilled personnel that leads to cutting corners
• Focusing on immediate business goals at the expense of long-term stability and scalability
• Incomplete or outdated documentation that makes it challenging to understand and maintain a system
• Insufficient testing, resulting in undiscovered issues that accumulate as technical debt
• Legacy systems that require more maintenance or are difficult to integrate with newer technology
• Rapidly changing technology that makes it difficult to keep up with the latest trends and innovations

Let’s focus for a moment on physical hardware. Hardware refresh cycles typically run 3 to 5 years, but sometimes equipment becomes obsolete well before the next investment cycle. Your priorities may change during its lifespan, or you may not have been clear on what you were trying to solve for when you made the purchase. The equipment you acquire could also turn out to be too big or too small for your needs. And in some organizations, too many decision-makers are involved with IT purchases, with no centralized strategy in place.

Acquisitions can also be a major driver of technical debt. If you acquire the assets of another company, there will likely be some redundancies or technologies that aren’t interoperable with yours.

Whatever the reason for the technical debt, it can burden your business and hinder your success. To optimize your operations and improve the resiliency and sustainability of your IT estate, you’ll need a strategy for prioritizing what technology to replace or refresh.

The consequences of technical debt

As technical debt accumulates, businesses may find themselves caught in a debt spiral, spending a lot of resources paying down interest alone. Here are some of the ways tech debt can affect your company:

• Increased maintenance costs: Resolving technical debt requires time, effort and resources, which can drive up operational costs.
• Reduced productivity: Technical debt can slow down development processes and make it harder to implement new features or improvements.
• Lower system reliability and performance: Technical debt can result in more frequent system failures, security vulnerabilities and performance issues, ultimately affecting user experience and customer satisfaction.
• Hindered innovation: Technical debt can make it difficult for organizations to adopt new technologies or implement innovative solutions, limiting their ability to compete in the market.
• Increased risk: Unresolved technical debt can expose organizations to higher risks, such as security breaches or compliance violations.
• Lower employee morale: Dealing with technical debt can be frustrating and demotivating for IT professionals, leading to higher turnover and reduced job satisfaction.

Technical debt and sustainability

Another effect of technical debt that’s starting to garner attention is its sustainability implications. Technical debt can hamper sustainability by creating obstacles in the development, maintenance and innovation of IT systems. In general, as tech debt accumulates, it consumes more resources and reduces your ability to adapt to new technologies or market changes, undermining long-term viability.

Self-operated data centers can be one of the more carbon-intensive parts of enterprise operations. Legacy hardware might use more energy, create more waste and require more cooling than newer equipment. But replacing old hardware with new also has environmental implications. We’ll talk more about sustainability in our next blog, but for now keep in mind that management of technical debt can help you champion sustainability in your organization. And working with a sustainability-focused data center provider can make a big difference.

Is your IT portfolio fit for purpose?

The most essential question to ask as you evaluate your IT asset portfolio is whether each technology is fit for purpose in your organization today. No doubt, you want to make the most efficient use of your IT resources and reduce the negative consequences of technical debt—both for your business and for the environment. Digital transformation and the management of tech debt often include replacing legacy IT infrastructure with digital infrastructure or taking advantage of colocation—and that’s where Equinix can help. As the world’s digital infrastructure company™, Platform Equinix® provides IT leaders with infrastructure solutions to help them thrive and stay agile in a digital world.

Stay tuned for our next blog post, where we’ll do a deeper dive into how you can tackle technical debt and improve your sustainability with colocation and digital infrastructure solutions.

Learn more about how to refresh your IT infrastructure sustainably in our Sustainable Digital Transformation white paper.

[1] Alex Omeyer, The Cost of Technical Debt, DZone, July 28, 2021.

[2] Vishal Dalal, Krish Krishnakanthan, Björn Münstermann, and Rob Patenge, Tech debt: Reclaiming tech equity, McKinsey Digital, October 6, 2020.