Moderator John Connors a Freelance Writer together with Michael Fillios, Founder & CEO at IT Ally talk about ways to future proof your small business and improve your tech bottom line.
[This was originally published on cdomagazine.tech.]
To stay competitive in our digital world, small and medium-sized businesses need to be equipped with and proficient in the latest technologies. Yet, unlike large companies, most SMBs lack the resources to staff an IT department. Along with lack of oversight, outdated software or hardware, inadequate cybersecurity, or one bad tech investment could seal the demise of a small enterprise.
In his new book, “Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line”, senior global business and technology executive Michael C. Fillios offers expert insights and practical strategies to help small business leaders managing evolving technology to their advantage and avoid racking up debt that could put their company in peril.
Fillios recent sat down with Young Upstarts to share his insights about the role of technology-related debt to the future viability of small and medium-sized businesses.
Here is some of our conversation:
Most of us are familiar with the term technical debt. What exactly do you mean by “Tech Debt 2.0”?
In the software industry, the term “technical debt,” also known as design debt or code debt, is widely used as a catchall to cover everything from bugs to legacy code to missing documentation. That definition is nearly 30 years old, and hadn’t evolved with the pace of technology changes, from mainframe computers to the Internet to the cloud, and much more.
In “Tech Debt 2.0®”, we offer an expanded definition that is more inclusive and contemporary with current technology, and shows the impact technical debt can have on an organization if it is not actively managed. My team and I felt it was important to revisit this definition, and in particular, with an emphasis on small to medium-sized businesses. For SMBs, tech debt is a potential existential threat that could impact their future viability and very survival.
Tech Debt 2.0 is any liability incurred in the development, acquisition, use, and retirement of technology — i.e. hardware and software systems, or the skills set needed to support them. And it’s something every business leader needs to be aware of.
How do small and medium-sized companies routinely accumulate tech debt, and often without realizing it? What are some common warning signs?
There are three types of tech debt: unplanned, creeping, and intentional. The first two can accrue undetected. Unplanned tech debt occurs because of an unplanned event, often caused by bad development practices, poor technique or poor communication of requirements. Creeping tech debt is caused by obsolescence of systems or equipment. Systems age because of improvements in upgrades or new products. Equipment ages over time or is obsoleted by new models with improved speed or functionality.
Right now, chances are tech debt is accruing in your business—and it is not showing up in your monthly variance reports or other accounting controls that your organization depends on for recognizing financial its well-being or warning signs of trouble. It is also likely that someone in your organization, without explicit or implicit authority or oversight, has taken action or made decisions that have added to the technical debt of your enterprise.
As it relates to symptoms, firstly, I would say a likely sign is that your underlying business could be underperforming, whether financially, servicing customers, or not being able to grow or expand. More specifically, tech debt can be detected internally before it escalates if leadership is paying attention to some of the early warning signs, such as:
- The majority of IT investments are focused on keeping the lights on vs. helping to achieve business objectives.
- Project are consistently delivered late and over budget.
- Data is hard to access, its quality is poor, and it doesn’t drive decision-making.
- Inability to attract and retain IT talent.
Rather than leave it up to leadership to connect these dots, my team and I wanted to develop a more intelligent way to uncover these underlying root causes. Therefore, we created the Tech Debt 2.0 Diagnostic to help organizations understand and measure their TD score.
We’re all familiar with high-profile cyberattacks on major business and government organizations. Why should small business leaders take cyber risks seriously? What are some simple ways to reduce them?
The reason cyber advisory is critical for every SMB is 60% of all targeted attacks are towards small to medium-sized organizations. And of those data breaches that are successful, 90% impact small to medium-sized companies. What explains the higher success rate? Research shows 82% of small to medium-sized businesses are not adequately protected from cyberattacks. And the data shows that most small business owners don’t have a plan for response if they’re hit. That’s a problem, because cyberattacks can range from the mildly annoying to the deeply destructive.
Here are a few ways SMBs can reduce cyber vulnerabilities:
– Outsource security monitoring and management to a dedicated resource or cloud provider with necessary resources.
– Establish, communicate, and enforce security policies governing passwords, policies, procedures, especially around physical access, network access, email policies, data security.
– Keep all systems and equipment patched and up to date on security upgrades, and discard equipment or systems that are no longer supported.
You mentioned intentional tech debt. When can tech debt be beneficial to a growing business?
Tech debt can be beneficial when it is deliberatively incurred with a specific goal in mind, such as speed to market for competitive advantage or release of prototypes to clarify customer requirements. It is essential that intentional tech debt incorporate a plan for remediation at some time in the future and that the organization has rationalized the consequences of performing that remediation.
In addition, tech debt can play a critical role if a business is in the process of being bought or sold. This can be a double-edged sword depending on whether you are buying or selling a company. For an investor or PE firm looking to purchase a company, it is very typical to review the amount of financial debt that you will be purchasing as part of the transaction. Tech debt is similar to financial debt, but you aren’t necessarily paying back someone other than yourself.
Conversely, if you are selling a company, and have managed your tech debt such that your liability or debt rating is low, this could create an advantage for you in negotiating a potential premium, as you have built tech equity rather than accrued debt.
How can small businesses stay up to speed on evolving technology and compete with large companies with IT staffs and state-of-the-art resources?
Staying on top of tech debt is especially difficult for SMBs that might not have the technology departments, CIOs, and CTOs of larger organizations. However, independent, experienced firms and individuals with no interest in promoting any one solution are poised to provide their expertise to help SMBs differentiate real technology advances from technology-of-the day solutions. They provide not only fractional services as traditional consultants but also often as virtual CIOs or CTOs, available on-demand to fill these roles for SMBs and help manage technology investment and technology strategies for the future.
Another path open to SMBs dealing with tech debt is collaboration. There can be substantial value in a collective approach to addressing shared issues. Collaboration opportunities come in a variety of forms and have different advantages. Vendor user groups, Chambers of Commerce, Roundtable Programs, and others, foster collaboration among similar organizations and peers sharing a particular technology, brand, or product, and in some cases, provide technology agnostic advice from peers.
For leaders of small and medium-sized businesses, it is crucial to both invest in consultants and seek out collaborators in successfully managing and leveraging tech debt 2.0.
[This article was originally published on youngupstarts.com.]
Recently Kevin Price, Host of the nationally syndicated Price of Business Show, interviewed Michael Fillios.
Michael Fillios, author of Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line discusses how leaders of small and mid-sized businesses can get the knowledge and tools to manage their technology investments, effectively and efficiently. Translating tech debt into basic financial terms, he shows SMB owners and C-suite execs how to keep on top of overall technology spending, minimize revenue losses, and maximize technology’s potential to increase market share and gain a competitive advantage against big global players. Learn more at www.itallyinstitute.org
LISTEN TO THE INTERVIEW IN ITS ENTIRETY HERE:
[This article was originally published on thedailyblaze.com.]
Search for quotes about debt and you will find this from American businessman and author, Robert Kiyosaki, “10% of the borrowers in the world use debt to get richer – 90% use debt to get poorer.” The glaring takeaway here, avoid debt at all cost. But wait a second. Can debt make you richer? Can debt be a good thing?
2020 has turned the world upside down. Small business owners are among the hardest hit. The pandemic and resulting economic disruption have challenged SMBs, undercutting established business plans and negating processes leaders have developed and relied on for the health of their businesses. Managing technology, where SMBs are typically at a disadvantage to large enterprises with greater resources, needs to be reevaluated. When disruption resets the score in competitive markets and everyone is, more-or-less starting over, there can be opportunity in reassessing strategies and assumptions.
Technical debt is a concept in technology management that is similar to financial debt. It is the backlog of work and support needed to correct errors and shortcomings in a product built by cutting corners and with other expedient measures to speed release to market. In effect the developers borrow time that would be spent on complete, error free design and development to get product to market early. The interest on that borrowed time is the added effort to work down the backlog that could be directed at new projects. The difference between technical debt and financial debt is that the interest is not paid to a bank or outside entity but is paid with the internal resources of the business.
Technical debt (Tech Debt 2.0®) can be unintentional (poor practices, inexperience), evolutionary (aged infrastructure, obsolescence) or intentional, a deliberate choice to borrow time for competitive advantage.
The disruption in today’s environment, given new customer needs and desires, the constraints on customers and providers brought on by the pandemic have created new market opportunities that will be lasting and lucrative. Timing is essential and the new market’s requirements are emerging and not clearly defined. An SMB could benefit with the assistance of a design and developer partner with an insider’s perspective.
In my research on Tech Debt, I interviewed a consultant who worked with a firm developing a mobile application for retail sales in the floral sector. The product had good prospects and the enthusiastic backing of investors. The development team however, were reluctant to release anything but a product complete with the full functionality they envisioned and superior performance and reliability. Projected deadlines were established and repeatedly missed as the team added feature upon feature and subjected each version to rigorous regression testing. Weeks turned to months as investors lost patience and interest and similar products began to surface in the market. Perfect had clearly become victor over good and an opportunity had wilted away.
Our interview then led to exploration of intentionally incurring Tech Debt via a design strategy known as Minimal Viable Product (MVP). An MVP strategy invites technical debt by borrowing the attention of the potential customer base to act as a partner in the design and development of the application. Careful and deliberate priority is given to the customer who is presented with an application pilot containing valuable but minimal features. The internal developers formalize a hypothesis about the value the pilot contains for the customer. The customer benefits from that initial valuable functionality and provides feedback as to how the pilot should evolve to provide the next incremental value.
From here on, developers follow the customer’s lead modifying the hypothesis, effectively testing the stream of high-fidelity feedback from the user community as the product evolves. It is important throughout this process that the developers concentrate on the needs of the customer and are not distracted by the underlying technology or changes in the technology environment. That focus on the customer is now the “interest” being paid to service the tech debt. If you pay down this debt and the application becomes a success in the market you will have successfully incurred tech debt and gained a return greater than if you had remained debt free. Likewise, if the potential customer base fragments or the requirements diffuse beyond capabilities to the point where your return on investment diminishes, you will have early warning and can disengage and apply resources to other projects and initiatives.
This example demonstrates how a business can use tech debt to their benefit. This is especially so in an unsettled environment where there is opportunity to strike out on new ground and leverage new factors in the marketplace. Similar to financial debt however, intentionally incurred Tech Debt needs to be carefully monitored and managed.
Here are some pointers to help when using intentional Tech Debt as a strategy for product development.
· With the customer driving product development, you will build a significant backlog of work that needs to be completed. That means you need to carefully scan and monitor the customer base and market.
· Formally identify the size of the initial opportunity you envision. Document the size and timing of the revenue opportunity.
· Track the participation and input of your development partners. Be aware of fragmentation or of one or more segments developing the need for specialization not shared by the general population. (Adobe Inc. encountered this as high-end commercial customers developed sophisticated graphic requirements not shared by desk-top-publishing consumers).
· Even though the customer is driving development, be wary of scope creep that could lead to requirements outside the bounds of the target opportunity.
· Monitor your Tech Debt backlog and make sure it is in proper balance with the market growth opportunity. Make sure your potential upside is worth more than your debt obligation.
· Avoid the temptation to capture the last marginal dollar. Obsolescence and advances in technology will add to the Tech Debt backlog and block new opportunities.
[This article was originally published on databirdjournal.com.]
The virus pandemic of 2020 is severely disrupting the economy and the large and small businesses that drive it. Poor practices such as ignoring safe distancing, insufficient sanitation, and not mandating mask-wearing open the door to infection of customers and staff and threaten the viability of a business.
Similarly, poor practices that allow a business to incur technical debt open the door to cybersecurity exploits that can bankrupt a business financially or through loss of trust and reputation in the eyes of its customers. Leaders of small and medium size businesses (SMBs) often think their size lets them operate under the radar, as less attractive targets to bad guys. But, actually, their lack of robust security strategy and resources make them easier to penetrate. And, sadly, the National Cyber Security Alliance (NCSA) reports that 60 percent of small companies are unable to sustain their business more than six months following a cyberattack.
Years of experience working and advising businesses domestically and internationally has shown that business leaders find it difficult to recognize tech debt and how it exposes cyber vulnerability. As technology has evolved over time from main frame to client server to the Internet and now the cloud, the impact of a new Tech Debt 2.0 has grown stealthier and more sinister. This is especially true for SMBs that lack the resources to apply to cybersecurity. CEOs and CFOs managing technology may not recognize tech debt building up in their SMBs—because it is not revealed in monthly variance reports or other accounting controls. Someone in their organization, without explicit or implicit authority or oversight, may be making decisions adding to the Tech Debt 2.0 load and increasing exposure to cyberattacks. Let’s look at how that might happen and how to prevent it.
Old and Obsolete Infrastructure:
Azeotrope, an aerospace firm in the Southeast, realized they were compromised when a number of clients complained of receiving invoices from Azeotrope that contained confidential information about their client’s orders and projects. Months of investigation by a cyber consulting firm finally determined the source of the vulnerability to Azotrope’s network: a combination printer/fax machine in their testing and QA area that engineers regularly used to fax lunch orders to a local Chinese restaurant. Because the device was connected to the company’s network for printing purposes, it provided network access using out-of-date insecure facsimile protocols. This gave the bad actors access to the company’s customer accounts and valuable data.
“Fax is an ancient technology; the protocols we use today haven’t been changed for the past 30 years,” notes Yaniv Balmas of Check Point Software, a leading provider of cyber threat intelligence. “Fax data is sent with no cryptographic protections; anyone who can tap a phone line can instantly intercept all data transmitted across it. Fax is always sent unauthenticated. There are absolutely no protections over fax.” Balmas advises: “If you can’t stop using fax, segregate the printers, put them on a separate network.”
The Tech-away: Identify and remove obsolete components from your network. Not just equipment with obvious vulnerabilities like fax, but all equipment no longer supported and updated by the manufacturer for cybersecurity risk.
A Stitch in Time . . .
Patches are often created after a software or hardware company has experienced a data breach or recognized a vulnerability that might allow one. The patch is issued to ensure other businesses’ data remains safe. Applying a patch as quickly as possible lessens the risk of your business becoming affected. But it is each business’s responsibility to know a patch has been issued and to apply it promptly. That is patch management—a relatively straightforward process, 10 or 20 years ago. Today, however, the vast proliferation of software and hardware components in our business environment have made patch management a complex, time- and resource- consuming necessity, critical to the cybersecurity of a business’s network. Failure to effectively manage patching is a main cause of accumulating excessive Tech Debt 2.0 and security penetration.
NETGEAR, a highly respected manufacturer of network equipment in data centers, offices, and the homes of hundreds of thousands of people working from home now, and, possibly, far into the future, recently sent an email alert to its customers. An excerpt is below. How would your CFO or CIO handle this?
Hello.
We have become aware of vulnerabilities involving certain NETGEAR products and have issued a security advisory.
We have released hotfixes addressing some of the vulnerabilities for certain impacted models and continue to work on hotfixes for the remaining vulnerabilities and models, which we will release on a rolling basis as they become available. We strongly recommend that you download the latest firmware containing the hotfixes as instructed in the security advisory. We plan to release firmware updates that fix all vulnerabilities for all affected products that are within the security support period.
Until a hotfix or firmware fix is available for your product, we strongly recommend turning off Remote Management in your product. Please follow the steps below to turn off Remote Management immediately. . .
The Tech-away: Take steps to reduce the burden and complexity of patch management. Adopt software and hardware that automatically detect and apply patches. Look for opportunities to shed responsibility for patch management through outsourcing cybersecurity responsibility or utilizing cloud services that provide monitoring and patch management services. Tech Debt accrued through failure to manage patching effectively can fatally compromise your network and business.
People, Policies and Processes
Of greater consequence than obsolescence and patch management to Tech Debt 2.0 and cybersecurity are the people, policies, and processes that make up the culture and collective mindset of a business organization. Properly patched, up-to-date infrastructure is not going to stand in the way of the accounts payable clerk or chief marketing officer who clicks on the attachment to an email from some bad actor posing as a trusted vendor or prospective customer. Equally dangerous is the computer operator who props open the data center door to make it easier to allow the guy who says he’s the A/C maintenance engineer get in and out. Or the CEO who shares her password with her husband and children so they can access her mail and messaging accounts.
Establishing a data security mindset from the bottom to the very top of an organization is a basic essential to safeguarding a business from cyberattacks. Policies and processes must instill in all the company’s people an always-on awareness of their responsibility to protect the physical and digital assets of the enterprise. That mindset needs to be reinforced frequently and backed up by actions that demonstrate commitment and consequence behind company policies and processes.
The Tech-away: Formulate and clearly communicate policies and processes governing any actions that involve cybersecurity. Visibly demonstrate across the organization the commitment to security.
Make cybersecurity awareness a visible priority for every person in the organization.
[This article was originally published on strategydriven.com.]
• How to spot the hidden technology reefs that could shipwreck your small business
• “You can be leveraging technology in the same way that a Fortune 500 company”
(Total Recorded Time is 13:35)
Let’s just add another major worry when it comes to keeping your small business afloat in these troubled times of recession and COVID pandemic. It’s trying to steer a company through the hidden reefs of using outdated software or hardware, says Michael Fillios, founder and CEO of the IT Ally Institute, a Mason, Ohio-based nonprofit organization helping small and medium-sized businesses.
“There’s a balance that you need to strike between keeping the lights on with technology investments as well as thinking about these investments mores strategically, ” says Mr. Fillios. “As we’ve learned in the most recent days with COVID, technology can really be utilized in more ways than we can ever imagine.
“You can be leveraging technology in the same way that a Fortune 500 company, ” Mt. Fillios says.
He warns that failure to pay attention to what he calls technology debt can run a company aground. “This now goes beyond just the traditional software defects into many other areas of a business including hardware and purchase application and talent and data and process,” he says.
Michael Fillios goes into detail about often overlooked problem and what business leaders should do about it in this exclusive CVBT Audio Interview Podcast via Skype:
Please click here to listen: https://tinyurl.com/y2hjm7ev
Mr. Fillios is author of the new book, “Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line, ” (IT Ally Institute; 2020).
[This article was originally published on the americanbizradio.net.]
Michael C. Fillios, the Founder and CEO of the IT Ally Institute, a nonprofit organization providing small and medium-sized businesses (SMBs) access to knowledge, research, and practical tools to improve their tech bottom line joins Enterprise Radio. His new book is called: Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line.
This episode of Enterprise Radio is working in conjunction with the Author Channel.
Listen to host Eric Dye & guest Michael C. Fillios discuss the following:
- The concept of technical debt has been around for several decades as it relates to managing software defects. How is Tech Debt 2.0 different and why was it important to expand the definition?
- As we know from financial debt, it is not all bad if deliberate for example in establishing credit worthiness. Similarly, not all technical debt is bad. In your book you define 3 types of Tech Debt 2.0, can you explain them and how they differ.
- Many internal users and external customers have experienced the impact of Tech Debt 2.0, however, the underlying symptoms are not always acknowledged. What are the symptoms in your organization that would potentially indicate signs of Tech Debt 2.0 and is there a root cause based on your research?
- In your book, you introduce the Tech Debt 2.0 diagnostic. What does this tool measure and how can this information be used to manage Tech Debt 2.0?
- How does the impact of Tech Debt 2.0 factor in when it comes to buying or selling a business or during the IT due diligence process?
Michael C. Fillios is the Founder and CEO of the IT Ally Institute, a nonprofit organization providing small and medium-sized businesses (SMBs) access to knowledge, research, and practical tools to improve their tech bottom line. A senior global business and technology executive with more than 25 years of experience in IT, finance, operations management, and change leadership, he lives in Mason, Ohio. He is the author of: Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line.
Website: www.itallyinstitute.org
Social Media Links: Twitter: @mcfillios LinkedIn: linkedin.com/in/michaelfillios Facebook: facebook.com/itallyllc [This article was originally published on epodcastnetwork.com.]
Michael Fillios joins Jim Blasingame to reveal the concept of “tech debt”, which is a 3-factor condition of allowing the cost of technology to move in a direction that doesn’t serve your evolving business model.
Listen below to learn more.
2020 has brought business leaders challenges, undercutting established business plans and negating processes and practices leaders have developed and relied on for the health and success of their business. The pandemic and resulting economic disruption have taken a toll on all businesses, but especially small and medium-sized businesses (SMBs), which typically do not have the resources available to large enterprises.
In this environment, technology is a double-edged sword, presenting an existential threat and, at the same time, an opportunity to reevaluate and reposition a business for competition in a changed world. Size and agility can work in favor of the SMB that is not burdened with entrenched technology permeating processes spread across many functional areas.
Repositioning a business will mean developing new capabilities. But, just as important is reevaluating, reprioritizing and purging obsolete, dysfunctional infrastructure and systems that no longer move the business in the desired direction at the right cost and proper speed. This means managing technical debt in a business.
Technical debt, or Tech Debt, is similar to financial debt, but paying it down drains internal resources as opposed to paying interest and principle to a bank. Tech Debt costs a business time, project funding, staff turnover and competitive standing. It can accumulate silently and become a threat to the future of a business.
Staying on top of Tech Debt is especially difficult for SMBs that might not have the technology departments, CIOs and CTOs of larger organizations. However, a successful campaign to manage Tech Debt can benefit from the assistance and guidance of outside resources that can extend your enterprise.
Assessment of technology currently used by a business can best be accomplished by an independent party who is not influenced by past history, pride of ownership or a protectionist bias.
A substantial portion of infrastructure and applications adopted by businesses in the last ten years and earlier is obsolete, functionality insufficient or supported at costs far out of proportion to the benefits provided. Servers, storage systems, some proprietary network and communications equipment, proprietary applications systems for back office, customer relations, sales and email have all evolved to alternative solutions that are cloud-based, shared, secure, on-demand, off-premise and third-party supported.
Independent, experienced firms and individuals with no interest in promoting any one solution are poised to provide their expertise to help SMBs differentiate real technology advances from technology-of-the day solutions. They have years of experience working in finance and technology with large and small companies and have helped develop technology management strategies that position these businesses for the future.
These resources represent a continuing trend in today’s workplace. The gig economy provides supertemps and experienced executives who have left corporate positions and become greypeneurs. They provide not only fractional services as traditional consultants but also often as virtual CIOs, CFOs or CTOs, available on-demand to fill these roles for SMBs and help manage technology investment and technology strategies for the future.
49 percent of self-employed workers are baby boomers who want to share their important life experiences and give back to businesses, especially SMBs, that appeal to their natural inclination toward independence and self-reliance.
Another path open to SMBs addressing Tech Debt is collaboration. There can be substantial value in a collective approach to addressing shared issues.
Collaboration opportunities come in a variety of forms and have different advantages. User groups foster collaboration among similar organizations sharing a particular technology or even a particular brand or product. These groups can exert powerful influence on the evolution and future direction of a technology. Industry sectors have broader, collaborative trade associations that address issues shared by businesses in that sector.
Geographically structured organizations such as regional chambers of commerce provide forums to inform and educate business leaders, promoting cross pollination and the sharing of ideas. A unique benefit of such organizations is the insight they provide to businesses confronting new issues or adopting technology early on, helping the community foresee issues and emerging trends. Collaboration allows an SMB to monitor competitive businesses and benchmark key performance indicators, including the variables that contribute to Tech Debt.
Today’s constraints on small and medium-sized businesses provide some advantages over established larger businesses heavily invested in the past and with large internal staffs needed to support processes and practices that have evolved over time. These larger companies are feeling pressure to look more like SMBs.
“The prevalence of lean management teams, the post-recession drive to cap costs, and the accelerating pace of change combine to make temporary solutions compelling,” as authors Jody Greenstone Miller and Matt Miller observe in their Harvard Business Review article, “The Rise of the Supertemp.” Extending the SMB enterprise through judicious use of external resources can be an effective and efficient means to manage Tech Debt and prepare for the future health and resilience of the business.
Here are some pointers to help when enlisting the assistance of external resources:
An independent perspective is a big advantage assessing the state of an organization. Use a combination of internal knowledge and outside perspective to evaluate the infrastructure, systems, processes, staff and technology investment strategy of the business.
Know the people, services and expertise level available to your business. Consider outsourcing non-core competencies and infrastructure components. Prepare for and use the shared and scalable cloud resources to limit capital and operating expense.
Become familiar with fractional expertise resources–virtual C-suite staff. Consider their use on major tech projects, investment planning, M&A due diligence and more.
Develop and use collaboration strategies with an ecosystem of providers, advisors, organizations and partners.
Lastly, value the resources that serve you the way you would have your customers value you. Do not underestimate the ability and willingness of people to understand and address your issues.
[This article was originally published on smallbizclub.com.]
Years of experience working in finance and technology at large, mid-sized, and small businesses have taught me that business leaders face real challenges managing the technology their company needs to operate effectively and stay competitive. This is especially the case for small and mid-sized businesses (SMBs), which typically do not have the resources available to large enterprises. The challenge has grown significantly in recent years as businesses have adopted technologies to meet the expectations of their customers and to compete for advantage in the digital world.
The challenge is not necessarily in deploying new applications or platforms but in managing investment in technology and balancing that investment with other business priorities. Striking that balance means recognizing and managing technical debt.
Technical debt is similar to the financial debt a business can incur through salary and benefit commitments, plant and equipment payments, and loans. But there are critical differences. Unlike financial debt, technical debt is not paid to outsiders: It is debt a business owes internally that needs to be paid with internal resources such as time, diverted funding, market opportunity, and competitive standing. Also, unlike financial debt, technical debt is not clearly identified by the reporting built into a business’ financial and accounting practices. Unless it is routinely monitored and measured, it can accumulate unchecked and become a destructive threat to the future of a business.
Initially, technical debt was defined as defective code released to rush a product to market. Today with the widespread adoption of technology, the expanded definition of tech debt, or Tech Debt 2.0®, includes any liability incurred in the development, acquisition, use, and retirement of technology, from hardware and software systems to the skillsets needed to support them. Just like the evolution of technology over the past several decades has occurred from mainframe to client server to the internet and now the cloud, Tech Debt 2.0 has steadily grown smarter, stealthier, and more sinister.
Tech Debt 2.0 can be broken down into three main types:
Unplanned Tech Debt is unintentional. It typically stems from flawed practices, such as insufficiently trained code developers using overly complicated, undocumented, and unsupervised coding techniques. Poor communication between parties in preparation of requirement specifications and unforeseen changes to product requirements can also be factors. Unplanned tech debt often occurs in the beginning stages of a project and, if recognized, can be corrected without overhauling or scrubbing a project.
Creeping Tech Debt is sneaky. It may initially be non-existent in a new application or piece of hardware infrastructure. Over time though, obsolescence takes its toll. Changes to the needs or size of the user base reveal weakness in the design. Performance issues begin to increase. Increased incidents of downtime and time spent on maintenance drain the productivity and morale of technicians and engineers. At the same time, CTOS and CIOs face an uphill battle convincing the C-Suite to invest in replacing an infrastructure that has worked in the past and continues to work, if not optimally.
The way to combat creeping tech debt is to highlight the creep and its costs. Track time spent on staff performing rework, doing maintenance, and fixing the same issues over and over again. Track the time this work takes away from progress on new projects and product development. Measure the number and duration of failures. Communicate the effect of these incidents on customers to departments throughout the business. Correlate rework time and downtime to staff turnover and productivity measures. Benchmark technology performance and investment against industry best practices. Periodically review application and equipment portfolios. Know and communicate the life cycle status of the business’ technology. Include phone systems, physical plant and electrical components.
Intentional Tech Debt has the potential to be good for a business — if approached with balance. There is a constant tug of war and tension between marketing and technical development. Marketing product managers want to move product to customers as quickly as possible. That is key to capturing market share and gaining competitive advantage. Technology developers want all the time and information necessary to design, build, and test products of the highest quality with all the performance characteristics and capabilities a customer could envision. Give developers their way and the “perfect” product might well be late to market and just one of a number of similar products among leading competitors. Oh, and in the time it took to build and exhaustively QA that product, customer requirements might well have shifted.
A middle ground addresses time-to-market considerations while delivering customers a minimally viable product, with full disclosure that it lacks certain desirable features or may contain “bugs.” Accepting intentional tech debt has let the product get to market first or, at least, early. It has let customers benefit from the initial product capability and has given them a powerful voice in the product’s evolution, letting their user experience refine further requirements and priorities. Intentional tech debt has recruited the customer as a key part of future development and freed the technology developers to concentrate on evolving features instead of trying to discern from afar what the customer might want next. Tech debt deployed in this manner places the technology developer in the perfect position to exercise the agile methodology.
Different kinds of Tech Debt 2.0 lurk in all kinds of businesses, and even the most brilliant among us can miss what’s right in front of us. Like other business disciplines, technology departments require monitoring, measurement, and management. Implementing a comprehensive diagnostic provides unique insights into the causes of Tech Debt 2.0 and highlights areas that need improvement. The results reflect your company’s level of technomic health:
- Excellent: Tech Debt 2.0 is being proactively managed jointly by the business and the tech team with a strong focus on innovation and customer experience while maintaining operational excellence.
- Good: Tech Debt 2.0 is proactively managed jointly by the business and the tech team and shows little or no negative impact on business performance.
- Fair: Tech Debt 2.0 management is a mix of reactive and proactive, is led by the tech team, and shows some signs of negative impact on business performance.
- Poor: Tech Debt 2.0 is reactively managed by the tech team and has significant impact on business performance.
Beyond any specific technology or group of technologies, Tech Debt 2.0 is about awareness of the role technology investment plays in determining the viability, success, and existence of an enterprise. Effective Tech Debt 2.0 management enables reaching a balance of investment and prioritization over time and in response to the dynamically changing environment — a priority for not only the CIO but all C-Suite occupants and stakeholders.
[This article was originally published on builtin.com.]