The big bet in technical debt

Technical debt is the re-coding that must be done to digital systems after they have gone live. According to The Software AG Situation Report 2022, 78% of companies took on a little to a great deal more technical debt last year. Some of this was built up over time, as their infrastructure became more complex, and some was deliberate as a way of capturing specific opportunities.

                    “Creating technical debt is a productive strategy”

For many organizations the launch of new products and services is high priority in 2022. Technical debt is an integral part of this process but often it causes obstacles, slowdowns and additional costs. Stefan Sigg, CTO of Software AG, discusses some useful strategies for managing these challenges.

Stefan, looking back on 2021 it seems that companies invested in a more connected working environment for their employees, better experiences for their customers and more efficient supply chains. Do you share this view?

It’s true that many companies started to become more connected in 2021, as they have digitized themselves partly due to the pandemic situation. And the boom is not over yet. In an in-depth survey that we undertook with 700 of IT decision makers, we found that 78% of organizations expect their IT budget will be higher in 2022 than in 2021. And of the many behaviors of truly digital companies display is the commitment to a Minimum Viable Product (MVP) approach.

Spotify started out as a MVP and Sheryl Sandberg is famed for saying “done is better than perfect.” Why is the idea of MVPs still attractive?

MVPs do – and will continue to – enable companies to be more reactive to customer or employee needs, more alert to shifts in market conditions and more agile to opportunities that may be presented. However, the trade-off to this responsiveness is that MVPs create technical debt. This will prompt a shift in the next couple of years in how companies approach their transformation. Some technical debt is inevitable and a benefit to those who embrace it, when managed correctly.

How do you define technical debt?

It has several definitions. At Software AG we are defining it as the additional work or re-coding that must be done to digital systems after they have gone live.

How profoundly are companies affected by it?

78% of organizations have accrued more technical debt in the past year than in previous years. The encouraging news is that 82% of companies feel that they can assess some or all of it. However, and more crucially, 58% don’t feel that they have a formal strategy in place to manage it. This is one of the issues that should be high on the agenda for every company. In a world where technical debt will be commonplace, companies need to have strategies for addressing it.

Stefan Sigg, CPO of Software AG, and Sanjay Brahmawar, CEO


But how?

We identified different approaches that are helpful. A good place to start is seeing how technical debt is affecting the business. Assess the whole digital landscape looking for bottlenecks or any parts of the infrastructure that are being otherwise restricted. It won’t always be something that’s causing a major issue, but it will often be something that’s standing in the way of progress.

Like obstacles in the systems architecture?

Yes, sometimes. Architecture management tools can help to understand, from a platform or infrastructure level, where there might be systems that negatively impact the whole organization. Perhaps they don’t integrate, they don’t handle certain types of data accurately or perhaps they’re simply very slow or overloaded by the volume of demand. These are typical signs that technical debt exists and needs to be resolved.

Other companies have difficulties assessing the efficiency and effectiveness of individual systems or processes. Any recommendations for such cases?

Process mining is useful. And the leading question is pretty straight forward: Are the desired outcomes being achieved, and in the most efficient way possible? This will help to identify if certain processes are being overloaded and whether the functionality exists for employees or customers to get what they need. These challenges are another indication of technical debt that needs to be cleared.

What do you think about digital twins to cope with technical debt?

Making a digital twin of an organization (DTO) is one way to assess changes in a more thorough way, allowing more informed decisions to be made. A DTO can be used to plan, test, and optimize new processes or systems, giving predictions based on a range of real-time and historic data sources. The software-based representation of the organization knows the interdependencies between different assets and uses operational data to deliver its insights. It’s a powerful tool for understanding the impact of technical debt and helping to prioritize managing it.

Organizations often struggle with growing complexity, e.g., if systems are layered on top of other systems in companies, new strategies are put in place and different technologies are stitched together. How can they respond to it?

Well, managing this kind of technical debt is much trickier. I would ask back in reverse: What if some of it could be avoided? Taking just a little more time in the initial design process to anticipate the future requirements of any given platform or app could help circumvent some of this costlier technical debt. We’ve mentioned MVPs. They are naturally focused on the immediate task at hand, and that shouldn’t change. However, balancing considerations of resilience, such as how apps may need to integrate in the future, could avoid unexpected debt.

One way to reduce the technical debt in MVPs is to try and reduce the amount of code that is produced for the first time and on your own. Do you agree?

Of course! My advice is: Constantly evaluate whether certain parts of the stack are already available as a service from a specialist vendor. Companies that move away from a strict build-OR-buy model and rather go for a pragmatic build-AND-buy strategy, will not only reduce technical debt, but can also focus ‘own code’ development on capabilities that really are individual. Viewing components that already exist on the market as a utility - and avoiding re-inventing the wheel - should be a consideration for every company.

When you look ahead: Is technical debt a useful practical strategy for 2022 and beyond?

In our survey, 78% of organizations suggest that in 2022 fast-tracking the launch of new products and services will be a top or high priority for them. We already know that technical debt is an integral, if not essential, part of this process. So, to answer the question: Yes, creating technical debt is a productive strategy that companies can use to become more responsive, capitalize on opportunities in the best way possible and continue to evolve their transformation. On the other hand, an effective strategy for managing it takes into account measures to minimize unexpected debt. That will enable companies to become truly connected and constantly turn their data into value.

                    Read the Reality Check—2022

In our annual predictions report, we explore the state of play around technical debt—a byproduct of the last few years' rapid digitalization—and how companies should be dealing with it. 

                    Read the 2022 Situation Report 

Dive into the data behind the trends. See the full survey report and data in the 2022 Situation Report.