McKinsey - Tech debt: Reclaiming tech equity
“By reinventing our debt management, we went from 75 percent of engineer time paying the [tech debt] ‘tax’ to 25 percent. It allowed us to be who we are today.”
—— Former CIO, major cloud provider
What is tech debt
- The principal（本金） is all the work that must be done to modernize the entire technology stack.
- deferred maintenance or upgrades below the app layer,
- modifications to comply with data standards,
- and bespoke packaged software
- The interest（利息） is the complexity tax that every project pays today.
- work through fragile point-to-point or batch data integrations,
- harmonize nonstandard data,
- and create workarounds to confront risk and meet business needs.
Tech-debt principal accounts for up to 40 percent of IT balance sheets, while most companies pay more than 10 percent interest on projects.
What derives tech dept
- Strategy
- failure to clarity overall strategy
- poor alignment between IT and strategy
- mismatch between funding and strategy
- underprovisioned tech integration during M&A(Merger & Acquisition)
- Excessive complexity in products, processes or applications
- Architecture
- legacy issue
- failure to update hosting environments
- inflexible software design
- insufficient use of system-integration approaches
- failure to agree on a consistent data model
- Talent
- internal and external skill gap
- failure to align incentives
- Process
- poor prioritization
- weak management of development and maintenance processes
- unstable IT operations
How to tackle tech debt
- Start with a shared definition of tech debt
- Treat tech debt as a business issue, not a technology problem
- Create transparency to value the debt position
- Formalize the decision-making process
- Dedicate resources to tackling tech debt
- Avoid a big-bang approach to writing down all tech debt
- Determine which area are "bankrupt" and explore shifting them to a greenfield stack