Debt is Dumb – Including Technical Debt

By Tamara Wilhite posted 5 days ago

  

According to Steve McConnell, CEO of Construx, technical debt is technical work delayed when short cuts are taken. Technical debt can be accidental as a result of insufficient skill to finish the job right or a job done badly. It can also be intentional with good enough to get it done decisions. He believes that technical debt can be useful, when it helps meet a schedule. Other technical debt is counterproductive. Mr. McConnell believes technical debt should be managed just as financial debt is managed.

 

Mr. McConnell states that technical debt can be estimated from the maintenance budget. I believe it can also be estimated based on work backlogs, past due projects, and to do lists. However it is defined, technical debt is a problem for organizations that have it.

 

To quote from financial adviser Dave Ramsey, “Debt is dumb and cash is king”. In technical firms, workflow – the ability to perform work – partially substitutes cash flow. There are only so many hours that can be worked per week by the current team, and those billable hours are what generates cash flow. Cash flow, of course, is the revenue stream generated from work performed by the organization. The disadvantages of financial debt are clearly defined and known. The interest rate is given in the loan documents and the minimum monthly payments are commonly sent in bills to the organization. What are the disadvantages of technical debt?

 

  1. Putting time and effort into catching up can take resources away from investment in growth. Time spent on backlogs cannot be spent on researching and quoting new initiatives.
  2. Technical debt can increase financial burdens. Bringing in contractors to help catch up on work costs more than if the work had been part of the balanced work flow. Paying for experts to debug inadvertent technical debt from bad code is more expensive than if it had been done right the first time. Paying staff overtime to catch up on technical costs above and beyond their standard paycheck.
  3. Falling behind on work creates stress. This stress can further impair performance when higher levels of performance are needed to catch up.
  4. High debt loads hurt personal reputations by creating the image of irresponsibility or poor judgment. High technical debt loads do the same to organizations.
  5. If technical debt becomes too high, the organization cannot properly service new customers and old customers at the same time. Business and payments are lost. This risks bankruptcy.

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