The pandemic has driven digital transformation in many companies; Now, the task is to develop sustainable strategies from ad hoc solutions.
Debt does not enjoy an outstanding reputation in private life, business, or politics. What is often overlooked is that debt can pay off, for example, to digital transformation. The “Reality Check 2022”, a survey commissioned by Software AGamong 738 IT decision-makers in Germany, the USA, Great Britain, and France, concluded that three-quarters of all companies (78 percent) took on more technical debt in the past year. And in 2022, only 15 percent of them have the highest priority to dismantle the same. But that’s not bad news.
Instead, such numbers show that the digital transformation is picking up speed – and many IT decision-makers increasingly understand the rules of this change.
When it comes to digital transformation, technologies or the implementation of different tools and platforms always come second. The focus is initially on a cultural change and a new way of thinking.
This includes a commitment to the Minimum Viable Product (MVP) – i.e., to a product design that is only equipped with rudimentary functions and is constantly being further developed in iterative processes. Meta Platforms co-CEO Sheryl Sandberg once summed up the philosophy behind it with the phrase: “Done is better than perfect.”
Static perfection vs. continuous innovation
In the past, such an approach was tough to reconcile with the demands of many German companies. A look at the automotive industry shows what consequences this can have. While competitors such as the US manufacturer Tesla constantly impress with new digital features, Germany’s car engineers still refer to the perfect gap as an expression of the engineering skill in vehicle construction. Of course, that has changed drastically in the recent past. The digital “experience” and challenges such as autonomous driving are increasingly focused.
Correct: MVPs generate technical debt. But they enable companies to react faster and better to customers’ and employees’ needs and take advantage of opportunities that arise without lengthy lead times. 86 percent of the IT decision-makers surveyed in the “Reality Check” consider technical debt to be justified if it helps bring products and services to the market faster.
At 44 percent, not even half of the companies attribute their technical debt to an infrastructure that has become more complex or something similar. In other words, technical debt has long since become a strategic asset that more and more companies know how to use to benefit their business development.
The art of keeping your debts under control
Anyone who finances a house as a private individual runs into debt. A company that takes out loans to invest in its production capacity runs into debt. In both cases, these liabilities are considered unproblematic as long as they can be managed. Technical debt is no different.
This is precisely where the real challenge lies in the coming years. Only 42 percent of the companies surveyed say they have a strategy for managing their technical debt.
With the onset of the pandemic, many companies have been forced to try a cold start on digital transformation to keep their workforce productive in a remote environment while meeting customers’ needs. Technical debt was often a necessity. With 83 percent, an absolute majority of those surveyed admit that the willingness to accept technical debt in their own company has increased in the course of the pandemic.
From ad hoc mode back to the new regular operation
So will the wheel be turned back after the crisis? Hardly likely. With 5G (45 percent), cloud computing (42 percent), and the Internet of Things (36 percent), the top investment projects of companies this year are precisely those technologies that contributed most to the build-up of technical debt in 2021.
However, it is now all the more urgent to get out of the pandemic’s ad hoc mode, define technical debt under certain conditions as part of one’s strategy, and constantly ask oneself the crucial question in this context: how do we keep it under control?
Because here, too, it is the same as with all other debts: Chaos threatens if there is no control.
By far, the most significant lever to avoid technical debt in the first place is to avoid developing your functions that already exist on the market. That means someone else has already paid off the technical debt. In this respect, the old alternative “build or buy” is no longer up-to-date. It should be better called “build AND buy” and thus less technical debt and faster market availability.