Years of experience working in finance and technology with small enterprises has shown that business leaders face real challenges managing the technology their companies need 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 in recent years as businesses have adopted technologies to meet the changing expectations of their customers and to compete for advantage in the digital world.

Recognizing Tech Debt and the Threat

The challenge is not necessarily in deploying new applications, new platforms, or new capabilities, but in managing investment in technology, balancing that investment with other business priorities. Striking that balance means recognizing and managing technical debt.

Technical debt is similar to financial debt. Unlike financial debt, however, technical debt is debt owed internally, to be paid with internal resources, such as time, diverted funding, market opportunity, and competitive standing. It is not identified in traditional financial and accounting reports. Unless it is monitored and measured, it can accumulate silently and become a destructive threat to the future of a business.

Initially, technical debt was defined as defective product rushed to the market. Today, with the widespread adoption of technology, the expanded Tech Debt 2.0® is any liability incurred in the development, acquisition, use, and retirement of technology, from hardware and software systems to the skills and people needed to support them.

Measure It to Manage It

Recognizing Tech Debt 2.0 and the harm it can do to a company is an important first step. This debt can be intentional, unplanned, or creeping. The next step is learning how to effectively manage that debt.

“Managing Tech Debt 2.0 of all types is critical for small businesses as they grow,” states Michael Swenson, experienced industry analyst and Director of the IT Ally Institute. “In the past, decisions about business processes and the technology to support them were made by one, two, or, at most, a small handful of people. Today, more people, complex processes, technology, and the debt incurred entangle and threaten businesses.”

At IT Ally, Swenson collaborated on the development of a tech debt diagnostic, a comprehensive measurement across nine dimensions of a business. “The IT Ally Tech Debt 2.0 diagnostic forces management to think systematically and stop reacting to the latest crisis or fad,” he explains. “Measuring the current state of technical debt prompts management to get more strategic about mitigating and managing the debt to enable the next phase of growth for a company.”

Assessment Framework – Nine Dimensions:

The diagnostic allows a business to undertake the practice of benchmarking. Benchmarking compliments and increases the value of measurement by introducing comparison. Management can compare measurement of tech debt over time to assess the progress they are making to achieve targets for controlling it.

Flattening-the-curve is a concept we have become painfully familiar with as of late. Benchmarking efforts to control technical debt lets a management team know how well they are doing flattening their Tech Debt 2.0 curve. It gives a business an all-important means of control. A company’s goal might be to bend that curve down year-over-year, maintain a flat curve, or manage its cyclic growth between upper and lower control limits.

Benchmarking also allows a business to compare itself with other businesses, whether that is within an industry sector or, more widely, with businesses known for best practices.

The 54 questions that constitute the diagnostic measure three distinct aspects of Tech Debt 2.0:

1. The presence of organizational structures, practices and attitudes that govern tech debt.
2. Evidence of tech debt that has already accumulated and its impact on business operations.
3. Capability of the organization to execute IT projects successfully and service tech debt.

Because the assessment is so comprehensive, extending into all facets of a business, leaders are encouraged to seek input from a diverse group. That might include technical SMEs, senior staff, functional area personnel, and even outside contacts who might bring a different perspective on an area.

Using the IT Ally Tech Debt 2.0 Diagnostic to Maximum Benefit

Here are pointers for getting the most from the diagnostic:

Tech Take-away 1: Conduct an initial assessment to establish a tech debt baseline for your business. Going through this exercise will familiarize key individuals with essential aspects of Tech Debt 2.0, how to recognize it and look for it.

Tech Take-away 2: When preparing for the initial assessment, cast a broad net for knowledgeable points of input. This eliminates bias and blind spots and reveals whether or not the emperor is wearing clothes.

Tech Take-away 3: Reassess your businesses’ tech debt periodically. Benchmark subsequent assessments against your baseline. Set goals to manage your curve—flat, down, or within limits you set. Correlate your tech debt assessments with other Key Performance Indicators, such as revenue, profit margins, employee retention and customer satisfaction.

Poorly managed IT and Tech Debt 2.0 can destroy a small business. Regular assessments with tools like the IT Ally Tech Debt 2.0 Diagnostic can enable you to proactively manage and meet the demands of a quickly evolving technology environment and keep your dream alive.

[This article was originally published on businessingmag.com.]

Whether it’s the cool craft brew pub on the corner or the hottest new app, it’s clear that Americans love the excitement, risk, and reward of creating the next big thing in a small package. What also is clear: the US economy loves small and medium-sized businesses because their innovations propel economic resilience, allow us to compete more successfully overseas, and create opportunities for diverse and inclusive business ownership. While many assume huge multinational corporations motor the marketplace, the truth is local SMBs do.

Until very recently, SMBs comprised 99.9 percent of businesses and 47.5 percent of private sector employment in the US. Sadly, SMBs have taken a tremendous hit in 2020, with the COVID-19 outbreak presenting unexpected obstacles to their success and survival. How SMB owners and C-suite leaders have deployed technology is turning out to be a major factor in how, or if, their company will survive those challenges.

Like large companies, SMBs have become dependent on technologies to support critical functions such as marketing, sales, manufacturing, and customer experience, in addition to traditional back office. Those SMBs that have managed their technology with oversight and efficiency are realizing opportunities for competitive advantage. Of those that haven’t, many are struggling to overcome the effects of technical debt—specifically, what I call “Tech Debt 2.0®.”

The concept of technical debt has been around for nearly three decades. Howard G. “Ward” Cunningham, a programmer known for developing the first wiki, is credited with coining the term. “Shipping first-time code is like going into debt,” according to Cunningham. “Every minute spent on not-quite-right code counts as interest on that debt.” In other words, a little debt speeds development, as long as it is paid back promptly with a rewrite. This description makes the trade-off clear: Speedier development time and the ability to rush to market is leveraged against future work to improve and support the first version’s imperfections. The “interest” is a stand-in for future development costs, increased support headaches, and potential hits on credibility.

In my book Tech Debt 2.0®, I compare the concept of technical debt to financial debt. One way in which the analogy doesn’t work quite as neatly is that financial debt is typically owed to someone else, usually a bank, credit union, or rich uncle. Tech Debt 2.0, however, is something your small business owes to itself.

Similar to the original definition, Tech Debt 2.0 refers to an imperfection in the state of technology that a business should rectify in the near future, causing interest to accrue that is either financial or non-financial in nature. But, the definition is not simply limited to software development—because the problem isn’t simple at all.

For example, Tech Debt 2.0 can be attributed to the version of software and operating systems, the level of security capabilities employed on systems, the age of networking equipment in the data center, or the compatibility of existing solutions with new, cutting edge technologies. If you know where to look, the effects of Tech Debt 2.0 can also be found in data quality, business processes, and even among IT talent. The effects can be compared to accrued interest and directly impact, or irrevocably threaten, the bottom line.

Tech Debt 2.0 can translate into excessive costs for businesses, whether from rectifying security breaches, recouping lost revenue, or increasing expenditures. It also comes with a significant non-financial price tag. Tech Debt 2.0 can drive down employee morale, inhibit the recruitment and retention of good talent, and negatively affect the merger and acquisition process. And, it can have disastrous effects on a company’s reputation.

SMBs may not recognize IT as the key strategic asset it is, and, therefore, may wind up underutilizing IT for competitive advantage. Another distinct challenge for SMBs is their ability to minimize the impact of Tech Debt 2.0. The challenges of proactively managing their company’s technology investments are aggravated as SMB leaders confront the challenges of COVID-19.

The first step for leaders is getting a firm grasp of tech debt, the intersection of technology and economics, and how to recognize the different types: unplanned, creeping, and intentional. With an understanding of tech debt, SMB leaders can then take steps to avoid it, eliminate, or use it to their advantage. In Tech Debt 2.0®, I offer SMB leaders a tool to measure their company’s tech debt to help guide the future direction of their business.

Every SMB leader has an opportunity to positively impact their organization during this time of crisis and throughout the uncertainty ahead. Following are offensive and defensive actions you can take today:

On Offense:

• Do a health check of your project portfolio and reprioritize backlog.
• Refocus IT governance to accelerate decision-making and maintain alignment.
• Develop an “acute” action plan with intent and purpose for the next 30, 60, 90, and 180 days.
• Prioritize actions that focus on revenue preservation and customer experience.

On Defense:

• Diagnose your tech debt and plan to address root causes.
• Conduct a business impact analysis to prioritize your cyber risks.
• Review and revise essential “pandemic” security policies and practices.
• Engage your team and external partners to identify cost-saving opportunities.
• Protect core operations and monitor critical infrastructure services of internal users.

Above all, stay healthy and stay positive—for the sake of your family as well as your business.

[This article was originally published on ceoworld.biz.]

By Michael C. Fillios
Author, Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line.

The impact of Covid-19 has had unprecedented implications on a global scale in both our personal and professional lives. Much of which today is blurred as we all adapt to changing behaviors such as working from home and being surrogate teachers for our children. Needless to say, we have all had to change in one way or another.

Covid-19 wasn’t on the radar when I was researching and writing my book, Tech Debt 2.0®, How to Future Proof Your Small Business and Improve Your Tech Bottom Line. However, now that it is so much a part of our daily lives, I wanted to share my thoughts on the parallels between Tech Debt 2.0® and in what ways the pandemic creates a unique paradox that every IT leader is facing during this crisis and for the years ahead.

I believe that every IT leader has a unique opportunity to positively impact their organization during this crisis and in many ways, they have already. The rapid movement to supporting the huge shift of employees to work remotely is just one small example that perhaps has elevated your IT reputation to your business counterparts to bask in a moment of unexpected glory.  In other cases, perhaps you were caught flat footed and had to scramble to purchase laptops at your local Best Buy or stock up on peripherals to support your end users. Perhaps your company already had a stockpile of Microsoft Teams licenses, but it was not being leveraged and users needed to be trained.   

These are just a few examples of paradoxes that either shine the light on you as an IT leader positively or perhaps expose some of your functional warts.  As I speak with dozens of IT and business leaders at small and mid sized businesses, I would say that the results are somewhat mixed.  However, as we learn more about the economic implications of the virus on businesses and individuals, we are just scratching the surface of challenges that lie ahead. 

I believe that this is a watershed moment for IT leaders to lean in, be proactive, and utilize this opportunity to redefine your individual and your functional brand reputation and to extend the short term accolades you might have received into a sustainable and earned seat at the board room table!

As far as dealing with the reputational paradox, I offer some suggestions in the form of a “top 10” list of offensive and defensive plays to consider as you navigate the challenges and opportunities ahead.   

Offensive Plays:

1. Stay healthy, your family and business needs you
2. Conduct a health check of your project portfolio and reprioritize backlog
3. Establish or refocus IT governance processes to accelerate decision making and keep alignment with business priorities
4. Develop and “acute” action plan with intention and purpose for the next 30, 60, 90, 120 days and execute flawlessly
5. Prioritize areas that focus on revenue preservation and the external customer experience

Defensive Plays:

1. Diagnose your Tech Debt 2.0® and set a plan to improve underlying root causes
2. Prioritize your cyber risks by conducting a business impact analysis with targeted penetration tests
3. Review and revise essential “pandemic” security policies and practices
4. Investigate and engage your internal team and external partners to identify potential cost savings opportunities
5. Protect core operations and monitor critical infrastructure services for internal end users

About the author

Michael C. Fillios is the founder and CEO of IT Ally, LLC., a C-Suite IT and Cyber Advisory firm for small and mid-size businesses. He is a four-time CIO and senior global business and technology executive with 25 years of experience in transformation, change leadership and operations management in the Pharmaceutical, Industrials, Automotive, Banking and Consulting Industries. His first book, Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line, was published in April 2020.

In 2020, he formed the IT Ally Institute to provide research, best practices, thought leadership and peer to peer programs for business and IT leaders at small and mid-sized businesses.

To learn more about IT Ally, please visit www.itallyllc.com.

To learn more about the IT Ally Institute and to take our Covid-19 SMB Survey, please visit www.itallyinstitute.org.

To start reading Tech Debt 2.0® for free, please visit https://a.co/9Y8f3Cx.

SMBs face many, if not more challenges than enterprise size businesses and have less resources to take on these challenges. As SMBs take greater advantage of technology to transform and grow their businesses they often incur another challenge that provides opportunity but is often fraught with peril. That challenge is the complex world of software licensing.

Over the years as technology has evolved from big mainframe computers to client server and network-based applications and today to cloud based applications software companies have evolved their pricing and licensing policies.

Making assumptions about how software licensing works or far worse ignoring software licensing can destroy an SMB, sucking up financial resources in fines, penalties, and unplanned licensing costs. Just as bad it can damage a company’s reputation exposing illegal license use or piracy.

The upside opportunities in software licensing are in taking advantage of software companies’ options for volume licensing, enterprise licensing and the world of open source. SMBs should make sure their CIO understands software licensing as it applies to your business and take all necessary steps to stay in compliance. Many 3rd party firms can provide guidance here including the software companies themselves. IT Ally™ is ready to assist you getting and staying on top of software licensing compliance.

Here are five key points about software licensing:

1. Look into volume licenses or site licenses whenever possible. These arrangements offer lower prices and often make administration tasks easier.

2. Know what “free” means. In the context of software licensing, free doesn’t refer to price. It means free in the sense of “free speech” and refers to the rights and restrictions imposed on using software.

3. Free or open-source software has fewer restrictions. If a program is released under a free software license or an open-source license, you generally don’t have to ask anyone’s permission to use it.

4. Read the End User License Agreement (EULA). It’s always a good idea to review these agreements, but it’s especially important to do so for one-off or small software purchases from less well-known companies. The EULA spells out what you can and can’t do with software. It covers everything from how many copies you can install to what the software company can do with your data and what additional software the company can install on your computer.

5. You may get secondary or home use rights. You may be able to install copies of the software on more than one computer, with certain restrictions. For example, you may be able to install a copy of the software on a home or portable computer, as long as it is not used at the same time as the software is used on your primary computer.

[This article was originally published on itallyllc.com.]

Establishing a successful business today involves undertaking projects to introduce innovation and achieve competitive advantage and differentiation. The Standish Group, a primary research advisory group reports that less than a third of IT projects were completed on time and on budget last year. For SMBs delivering successful projects is a major challenge. Wrike, the collaborative work management company says barely half IT project managers have any certification. That is quite often the case for small and medium size businesses. One key to meeting this challenge is to begin projects with a robust requirements gathering plan and process. Time spent gathering requirements can pay major dividends through the life cycle of the project. A multi-track approach to gathering requirements helps unearth hidden and hard to identify needs.

Here are eight techniques to use to identify requirements for your projects.

1 – Interviews – with a broad spectrum of stakeholders
2 – Questionnaires – carefully chosen, probing questions that allow respondents to reflect and put their thoughts in writing.
3 – Workshops – that will surface divergent opinions and contrasting views.
4 – User observation – ideally record the actions and activities that really take place during a process, look for artifacts posted in cubicles, keyboards, etc.
5 – Brainstorming – surface “what if” and blue-sky ideas that help break out of the current state context and consider new visionary ideas.
6 – Role playing – have people play different roles to understand how different parts of the system will need to work to support the integrated process.
7 – Use cases and scenarios – can be used to validate the envisioned process and identify exceptions and boundary cases that need to be considered.
8 – Prototyping – helps reverse engineer the requirements by identifying “I don’t know what I want but I don’t what that” features.

IT Ally™ has the resources and methodologies to help with requirement gathering and other critical phases of your IT project.

[This article was originally published on itallyllc.com.]