Get ready for efficient technical debt management

This article reveals the importance of technical debt assessment for organizations that undergo digital transformation.

Before making a major investment in the implementation of new technology, an organization should pay significant attention to its technical debt assessment.

Imagine that you are considering building a brand new skyscraper on top of an old, deteriorated building. In reality, you would never do that. You would, however, first and foremost, assess the physical site of the building, assess its condition, assess its infrastructure, and assess the surrounding area to make sure that preparations for construction activities are very well-analyzed and thoroughly-budgeted.

The same goes for investments in technologies.

5 min. read

Technical debt assessment

Before your investors make a decision to provide you with the funds you need to conduct a technical modernization of your business, you need to provide them with a detailed assessment of your technical debt because it will have a significant impact on the cost of the anticipated modernization.

Let’s imagine that you are going to implement an ERP (Enterprise Resource Management) system.

To assess technical debt, you will have to answer several key questions, such as:

Question #1

What kind of ERP system would you like to implement? More precisely: on the premises or cloud-based?

The answer to this question will lead you to a series of new questions and answers.

If you want to implement cloud-based software

This choice is very popular because it puts the responsibility for software maintenance on the shoulders of the software provider and decreases the pressure of assessing technical debt by the buyer.

Even though cloud-based software is an obvious choice, there will be a set of questions that you will need to answer first:

1. Who is going to control the cloud? In other words, who will be the host?

2. If you are going to be the host, what kind of cloud-based solution does your company need?

3. What kind of support does your company need to ensure 24-7-365 support for such a solution?

4. Does your company have the technical capacity to support that solution?

5. If your company doesn’t have the technical capacity, who is going to take care of it?

6. What are the gaps?

7. What efforts are needed to close those gaps?

Answering questions about existing gaps will reveal, to you, the situation with technical debt because those gaps give you a very accurate picture of the technical debt you have.

If you want to implement new software on the premises

1. What are the requirements for servers that should host my new software?

2. What kind of support should I ensure for this new software?

3. What kind of infrastructure does my company have today?

4. Are there gaps between the infrastructure my company has today and the infrastructure required to ensure the seamless and efficient functioning of the new software I’m going to implement?

As soon as we define gaps between “What we need” and “What we have”, we can define the technical debt that needs to be addressed before making a new implementation.

Question #2

Do you want to be able to customize and change the ERP system with any team of experts (internal and external), or would you like to purchase and implement an ERP system that will be changeable and integrated exclusively by the ERP system provider?

If you choose to proceed with a software provider who requires using their teams exclusively to make any changes and implementations, get ready to budget for the cost of their work.

The important questions here are:

1. With what elements of your digital ecosystem should your new software solution be integrated?

2. What data exchange will take place?

3. What is the tech stack of your current solutions that should be integrated with your new software and is this tech stack compatible with your new software?

4. How are you going to enable data exchange and seamless interaction between various elements of your digital ecosystem?

5. What are elements of your digital ecosystem that will be involved in the data exchange with your new software?

If you choose to proceed with a software provider who gives you freedom to work with his solution using your own experts, you still will have to answer the same questions related to the option “proceed with provider-allocated teams”.

All current characteristics of your existing digital ecosystem including the tech-stack, the possibility to integrate it with other software systems, and the possibility to ensure a multi-directional data exchange will represent the adequacy of the current state of your technology ecosystem.

All the gaps that you will need to close will represent your technical debt.

Assessment-based decision making

Technical debt evaluation

Once you have a detailed analysis of your technical debt, you will need to evaluate its cost; for example:

• The cost of purchasing equipment and the cost of the infrastructure changes you will need to put in place before integrating the new software

• The cost of time and the cost of people efforts you will need before integrating the new software

• The cost of internal education for your team members that will be involved in the implementation of the new software

Adding the cost of technical debt into the technology innovations budget

Once you know how much it will cost to “prepare the groundwork” to address the technical debt that stands between your current digital ecosystem and the new way of its functioning, including the new software, you will be ready to calculate a realistic budget for the implementation of the new software and be prepared to present it to your investors.

Informed decision-making is a key success factor for digital transformation

While working on this article, I recalled and analyzed numerous cases I had been involved in. I can divide them into several groups:

• An organization wants to invest its own money to implement new software or to build new technology

• An organization seeks financial support from various organizations, such as BDC (the Business Development Bank of Canada), Investissement Québec, etc.

• An organization seeks financial support from private investors

• An organization seeks financial support from banks and other financial institutions

• In any case, the accurate budgeting process was heavily influenced by the technical debt assessment that inevitably impacted the cost of the upcoming digital transformation.

The more accurately an organization approaches technical debt assessment, the more chances it has to avoid bad surprises during the digital transformation.

Our experts at Cyperᵀᴹ are qualified to perform a thorough assessment and then, help large organizations make informed decisions related to their digital transformation needs.

About the author

Elena (Olena) Pomazanova, Cyperᵀᴹ’s President and Founder, conducted her studies in several fields crucial for successful business administration and analysis including: MSc. in Banking, MSc. in International Economics, BAC in Economics and Entrepreneurship, and MBA for Executives.

Elena worked as the Chairman of the Board of an Insurance Company and as a Deputy Chairman in Finances in an Investment Company. During her career, she has conducted a series of analyses for companies undergoing M&A and orchestrated full business processes, including automation and digital ecosystems’ setup, for organizations working in the telecommunications, insurance, metal and retail industries.

Her objectives are to ensure a sustainable digital move for Cyperᵀᴹ’s clients and to provide them with an opportunity to make sound data-driven decisions.

Elena shares valuable data-driven insights with her audience to allow organizations to make better decisions and reduce decision-fatigue-related stress.

To contact Elena, please drop a line to elena.pomazanova@cyper.ca.