Technical Debt is the additional lifetime costs of a software implementation beyond what it cost to deploy. This includes the costs to maintain, support, and eventually decommission costs.

Imagine buying a simple filing cabinet when you first start your business, and instead of organizing it properly, you just throw all documents into one drawer to save time. This works fine with a few documents, but as your business grows, you waste more and more time searching for papers, some get lost, and adding new documents becomes a nightmare. Now you need to shut down for a week to reorganize everything properly - something that would have been much easier if done right from the start. This is exactly how technical debt works in your business software - quick fixes now often mean bigger messes to clean up later.

Understanding Technical Debt: The Hidden Cost of Quick Fixes

Technical debt is like taking out a high-interest loan on your technology systems. It is a fractional cost that accrues over time. The bigger your “loan”, the more you pay. The debt increases when businesses are not strategic in the solutions the implement over more appropriate long-term ones. While these shortcuts might help you launch faster or save money initially, they often lead to significantly higher costs and headaches down the road.

According to research by McKinsey & Company, businesses typically spend 20-40% of their technology budgets just dealing with these past shortcuts and quick fixes. That’s money that could have been spent on new features or improvements instead.

The True Cost of Technical Debt: Beyond the Initial Investment

When businesses invest in software, they often focus only on the initial purchase price. However, this is just the tip of the iceberg. The hidden costs include:

• Extra time spent working around system limitations
• Lost business opportunities due to inflexible systems
• Higher costs for future upgrades or changes
• Staff frustration and reduced productivity
• Increased risk of system failures or security issues

Why Software Platforms are Moving Targets

Think of your business software like a modern car. Cars today are constantly getting updates and new features, and if you modify your car in ways the manufacturer didn’t intend, you might have problems when it’s time for servicing or updates. Business software works the same way.

Here’s What Changes and Why:

1. Security Updates: When critical security updates come out (like when a bank updates their vault locks), they must be installed to keep your business safe. But if you’ve made unofficial changes to your system, these required security updates might break your customizations - forcing you to either rebuild your customizations or leave security gaps in your business.

2. New Features and Improvements: Imagine if you’re using a text messaging app, and one day they change how group messages work. If you’ve built any business processes around the old way of doing things, you’ll need to adjust. The same happens with business software - they regularly change features to make things better, but these changes can affect how your business operates.

3. Connected Systems: Picture your business systems like a chain of dominos. If you have your online store connected to your accounting software, and either one makes a change, it can affect the other. For example, if your accounting software updates how it handles tax calculations, your online store might suddenly start showing wrong prices unless you update the connection between them.

Real-World Example:

Remember our filing cabinet example? Now imagine if the cabinet manufacturer suddenly changed the size of their drawers in newer models. If you’ve been using custom-made folders that exactly fit the old drawers, you’ll have problems when you need to buy a new cabinet. This is exactly what happens with software - if you’ve created custom solutions that depend on things staying exactly the same, you’ll run into trouble when the software needs to be updated.

What This Means for Your Business:

• Software will keep changing whether you’re ready or not
• Quick fixes and workarounds become riskier over time
• The more systems you connect together, the more careful you need to be about changes
• Planning for these changes from the start saves money in the long run

Warning Signs Your Business Has Technical Debt

Watch out for these common signs:

1. Your team often says “there must be a better way to do this”
2. Simple tasks require multiple manual steps or workarounds
3. Making small changes to your system is becoming increasingly difficult
4. Your software frequently has errors or runs slowly
5. You’re afraid to update your software because it might break something

How to Manage and Minimize Technical Debt

1. Start Simple and Build Up

• Begin with basic features that meet your core needs
• Add complexity only when necessary
• Document why you make certain choices

2. Plan for Growth

• Choose software that can grow with your business
• Consider future needs when making technology decisions
• Budget for regular updates and improvements

3. Test Before You Commit

Before automating any process, ask:

• How often do we do this task?
• How serious are mistakes in this process?
• What’s the real benefit of automating this?
• Is this the right time to automate?

Final Thoughts: Smart Technical Choices for Your Business

Technical debt isn’t something you can completely avoid - every business has some. The key is making smart choices about when to take shortcuts and when to invest in doing things properly. Like our filing cabinet example, sometimes taking an extra day to set things up right can save weeks of hassle down the road.

One of the biggest traps businesses fall into is rushing implementation. When you’re excited about a new system, or feeling pressure to ‘go digital’ quickly, it’s tempting to race through setup and training. But rushing through implementation is like building a house on a shaky foundation - you might save a few weeks now, but you’ll pay for it many times over with problems down the road. Take the time to set things up properly, train your team thoroughly, and document your processes.

Remember: The goal isn’t to have perfect systems, but to make informed decisions about your technology choices. When you understand the true costs of quick fixes, you can better decide when they’re worth it and when they’re not.

Most importantly, don’t be afraid to ask questions and challenge solutions that seem too quick or easy. Sometimes the fastest way to get something done isn’t the best way for your business in the long run.