Technical debt is a serious issue that requires attention at every level of the development process. Your company may have substantial technical debt but you may not even know about it! Like financial debts, technical debt builds up over time and needs to be paid off through additional time and effort, which is compounding. In addition, it causes high unplanned costs in the future that increase company expenses and impact revenue. This article provides an insight into the effects of technical debt, what causes technical debt, and how to avoid it. We have analyzed real-life examples of company losses caused by technical debt to give you a clear understanding of how companies suffer if they fail to address minor technical issues along the way.

Coined by Ward Cunningham, technical debt is very similar to monetary debt, in the way that over time it can accumulate and compound, like interest in monetary debt. Just like monetary debt can pile up over time, technical debt can increase and cause significant technical challenges for software developers that can be hard to overcome and recover from.

How technical debt can hurt your company in the long run

Technical debt is the result of a myriad of systemic issues that impact your company in a number of ways. For example, it causes software troubles that can result in performance issues such as:

  • The inability to offer services to customers; software failure issues can disconnect customers from their required services, which can impact both the customer’s trust and the company’s finances.
  • Lack of security for customer data, which can also lead to legal issues.
  • The inability to retain experienced developers; team members may not want to work for a project that is a technical mess.
  • The inability to secure investments; investors and stakeholders don’t want to invest in companies that will fail due to technical debt. In addition, with significant technical debt, it can become hard for the company to secure future projects or bigger projects that are necessary for future growth.

If you are looking to establish longevity for your company, technical debt is something that you should avoid at all costs. In fact, you should ensure to implement practices that reduce the chances of increasing technical debt, as well as take the necessary measures to effectively eliminate existing technical debt.

How to identify technical debt

In order to tackle technical debt, you must learn how to identify it. Here are a couple of indicators you can look out for:

  • Code smells indicate subtle logic errors that may point to deep-rooted technical issues. These issues may impact overall performance and therefore require immediate code refactoring.
  • High levels of complexity in the code. When things start to overlap, there is a possibility for error.
  • Codes pasted from other projects or codes copy-pasted from one project to another are susceptible to errors.
  • Use of deprecated API’s and old libraries in the projects.
  • Slow testing or lack of proper testing throughout the project.

You can use tools like structure 101 and Sonar to track progress and tackle issues that can accumulate technical debt over time.

Martin Fowler’s technical debt quadrant is a useful tool to understand technical debt. Here we see the four developer mindsets that cause technical debt: Deliberately Reckless, Deliberately Prudent, Inadvertently Reckless, and Inadvertently Prudent, as well as 4 common outcomes of each of these mindsets.

Martin Fowler’s technical debt quadrant

Reckless technical debt can be a result of management and engineering decisions. These decisions can include outsourcing projects without careful consideration and writing poor quality code. Prudent technical debt results from pragmatic decisions that are made to achieve certain goals. The decision makers, in this case, believe the benefits of taking on technical debt outweigh the benefits of maintaining perfection in the process - a decision that is often extremely short sighted.

Deliberate technical debt results from a deliberate decision to take on the debt, knowing it’s going to be a battle later. On the other hand, with inadvertent technical debt, management (or programmers) simply do not have enough experience to see it coming.

How to avoid technical debt

Technical debt builds up fast and usually starts around the beginning of a project. You need to integrate predictive and proactive practices into daily operations to reduce the chances of technical debt from the very beginning of a project. There are a number of factors that can affect your performance over time and delay progress that is required for your success. Predictive measures keep you informed about those factors so you can avoid them in a timely manner.

In order to avoid technical debt, you need to understand what causes it and eliminate the instigating factors. Here are some of the most prominent causes that could create technical debt for your company:

Causes of technical debt

  • Lack of knowledge and necessary expertise: When developers don’t know how to write clean code, the product lacks the quality that is required for its success in the market. This can cause significant technical debt.
  • Developing for speed, not quality: When developers code using practices that produce fast results right away, yet cause problems in the long run - instead of using best-practices development techniques that guarantee a maintainable codebase for future scalability. In other words, this kind of technical debt comes about from utilizing easy, lazy solutions that are less effective overall and create a mess that requires fixing with considerable downstream resources.
  • Lack of focus: Working on more than one project at a given time can divide the programmer’s attention between two different products. This lack of focus can generate inferior results that may require rework and add to the technical debt of the company. The best software companies ensure that each project has its specific team that solely works on the project until it’s delivered.
  • Lack of a proper team: Quality software development depends on many different factors and activities (including architecture planning and unit testing), which requires an appropriate number of developers and specialists, each of which can ensure code quality and timely delivery. By not having the right team and number of developers on the project, you can cripple its quality and cause massive reworks that can lead to technical debt in the long run.
  • Unclear project requirements: In order to produce quality results, it is important that project requirements are well defined before development starts. In some cases, companies choose to design without sufficient project details, in an effort to save time. This can lead to technical debt over time; projects that are started without sufficient information have to be reworked later. In addition, when companies lack proper understanding of the project scope, they make decisions that cause technical debt in the long run.
  • Tight deadlines: Extreme workloads can create pressure on developers which can result in an incomplete product that may require changes later. This is usually a result of poor estimates that cause work pressure for software developers who are incapable of producing the desired results in a given time frame.
  • Lack of modular programming: Without modular programming, there isn’t enough flexibility to allow adaptability in the software, which leads to significant code changes, causing technical debt.
  • Lack of testing: This is usually a result of a hasty project that needs to fulfill a tight deadline. When developers don’t have time to thoroughly test the software for bugs, they will need to patch or do substantial rework when they arise after product release, causing technical debt.
  • Lack of supporting documentation: Without proper documentation, code reworks can be a nightmare; companies have to incur both time and money for the reworks.
  • Lack of team collaboration: Team collaboration ensures open communication, which is essential to identify software bugs and find technical solutions to resolve them. When the team works through constant and consistent collaboration, they are able to create a product while being responsive to the business’s needs and readily offer solutions to incoming customer problems. In addition, team collaboration also eliminates the potential problems that may cause a hindrance in the development process in the near future, hence eradicating risk factors that could cause reworks. Successful team collaborations are only possible through agile development practices. IT experts who incorporate agile methodologies are likely to have strong team communication.
  • Delayed refactoring: Project requirements can sometimes evolve throughout the project development phase requiring code changes, in which case refactoring becomes essential. Delays in refactoring can pile up changes, as new code is added to the project. The delay also makes it hard to edit old code in order to make it effective for the overall project. In addition, developers who use cheap software hacks to fix bugs in the program instead of proper refactoring can deliberately cause additional technical debt.
  • Quality issues with inferior outsourced projects: Outsourcing development projects to under-qualified or mismanaged teams can produce inferior results, which may require rework. To have outsourcing be an effective strategic move requires partnering with experienced experts in software architecture and development, who follow management, coding and quality best practices. The best IT outsourcing companies implement these practices for project success to create a bug-free product that requires fewer reworks.
  • Poor technical leadership: Software development teams must follow a proper chain of command to ensure technical consistency. The development team should have a reasonable ratio of senior and junior or mid level programmers with substantial experience in the given framework. Senior developers should be able to command and collaborate with the junior and mid level developers involved in the project to ensure technical consistency.
  • Lack of conformance to coding standards: Software products must conform to coding standards and best software development practices. Lack of conformance can lead to rework, costing companies both time and money. In addition, it is important that the development team has substantial experience in the given industry to understand the industry standards required for a particular project.
  • Relying on outdated or obsolete technologies that have not been not upgraded or updated to current versions: Libraries and other components can become obsolete or have security issues, which then makes them very difficult to update because of outdated dependencies on other libraries, leading to a tangled, broken headache for developers.
  • Using bleeding edge technologies without proper know-how: Every technology has its pros and cons. Companies who use new and advanced technologies without the proper knowledge can have increased costs in terms of time and money, as the projects have to be reworked.
  • Lack of company culture: Strong company culture eliminates many of the factors (including poor leadership, delayed refactoring, and lack of conformance to code standards) that can contribute to increasing technical debt. Company cultures that foster best software development practices are crucial for the technical success of projects. Lack of unit testing, code reviews, and agile development can lead to a lot of the above-mentioned causes that can significantly pile up technical debt for your company.

Now, let’s learn a little more about the disastrous effects of technical debt with some real-life examples.

How Knight Capital lost $US462 million to technical debt

Knight Capital Group is a prominent example of what happens when you become crippled by technical debt.

In 2012, the company was the biggest trader of US equities with a 17% market share on both the NASDAQ and the NYSE. Early in 2012, the NYSE planned the launch of the Retail Liquidity Program, intended to provide better pricing options for retail investors through brokers like Knight Capital.

In order to be prepared for the launch of the Liquidity Program, Knight Capital updated their algorithmic router. This update was intended to replace the old code. During the manual deployment process, Knight’s technicians missed copying the code to one of the eight servers. The manual deployment did not go through a second technical review, so no one on the team realized that one of the eight servers still had the old code. When the servers started to take orders, the old code triggered and caused the server to malfunction. The efforts to restore the system only made things worse; the other servers picked the old, flawed code, which added to the damage.

The result: the company accumulated around $461 million dollars in losses.

How Allscripts suffered from technical debt

Allscripts recently experienced a security breach that left its systems crippled for weeks.

On January 18, 2018, Allscripts faced a critical crisis situation when the Security Operations Center (SOC) at Electronic Health Record (EHR) recorded abnormal activity on the systems. After a few hours of the behavior, SOC’s investigation determined that the abnormal activity was a ransomware attack by SamSam, a custom infection that targets healthcare organizations.

Soon after the attack was determined, Cisco, Microsoft, and Mandiant were contacted for help, but the damage had already started to take its toll. The Electronic Prescriptions for Controlled Substances (EPCS) services and Professional EHR services were the main targets of the attack, impacting around 1,500 healthcare practices.

IT security professionals are usually prepared for an incident response in order to tackle the situation. In case of Allscripts, the incident response plan had hidden snags that made a quick and effective response to the problem much more difficult. Customers reportedly couldn’t access the system for a week.

The result: A crippling lawsuit and a deteriorating reputation after the company failed to take proper measures to protect it’s clients’ data.

How to avoid being a victim of technical debt

Minor technical issues and delays can sometimes wreak havoc on your entire system. This is quite evident in both the Allscripts and Knight Capital cases mentioned above. Technical debt usually starts with bad code and lack of testing.

How to avoid it? By investing in the best software development companies who have the right company culture and experience to implement best software development practices. These practices will ensure that all these instigating factors are eliminated successfully before they cause technical debt.

Technical debt can lead to an unavoidable crisis for both companies and its employees. In most cases, companies face slow and ineffective project development that costs them a lot of money. Outsourcing your project to experienced IT experts can ensure conformance to standards for quality results and reduce the chances of substantial technical debt over time.

We offer extensive software development services for all your software development needs. Our team comprises of experienced software developers (both senior and mid-level developers) who are ambitious and driven to produce a high standard of code quality. We care about project quality and follow the best software practices to ensure its delivery. If you are starting a new project or upgrading/fixing an old one, get in touch and let us help you avoid technical debt.