Tech debt: the hidden cost of innovation

Businesses are under relentless pressure to innovate and modernise, especially in today’s AI-driven environment. Recent research by Endava highlights that AI and generative AI are the top tech priorities globally, but business-grade AI requires far more than a freemium interface like ChatGPT. These advanced tools demand intensive computing power and intricate integrations with other applications.

However, a significant yet often overlooked challenge stands in the way: technical debt. This concept refers to the implied cost of additional rework a business risks when failing to conduct a thorough analysis of their current technology (and by extension, architectural decisions) before implementing new technologies.

While tech debt may seem like an unavoidable cost for any business heavily investing in innovation, delving deeper into its causes can reveal issues that may derail operations entirely. Many organisations struggle to find a solution, as the time required for risk analysis can seem unfeasible. Yet, by recognising early signs, businesses can leverage the right tools and find the right partners to facilitate a low-risk and controlled modernisation of legacy systems.

The maintenance trap

Any IT modernisation program requires a strategic, evidence-based approach, starting with a rigorous fact-finding process to identify opportunities and inefficiencies within legacy systems. Tech debt represents the unintended costs if this process is not executed efficiently.

A recent McKinsey report found that companies with the most tech debt diverted up to 20% of budgets earmarked for new product investment into addressing challenges related to that debt. When IT resources are freed from maintaining and fixing existing systems, the benefits quickly become apparent. Additional resources can support modernisation efforts, ensuring systems are maintained and can evolve with business needs. This enables the more efficient adoption of advanced technologies like AI and advanced data analytics, driving improved productivity and innovation. However, a correct enterprise transformation approach can amplify these benefits even further.

Sustainable modernisation for long-term success

Making a case for modernisation requires articulating the expected benefits, costs and challenges beforehand. This begins with a comprehensive analysis that identifies existing system functionality and data against business and technical requirements, highlighting any gaps or challenges. This process includes:

• Identifying the current state: Leaders need a comprehensive view of the architecture, components and integrations of its existing system.
• Identifying technical debt: The process must define the locations, sources and consequences of technical debt.
• Determining modernisation needs: This involves setting priorities for feasible upgrades, such as cloud migration or opportunities to replace parts — or the entirety of — the application portfolio, with an indication of costs and resource intensity.
• Establishing a roadmap for improvement: The software assessment process should facilitate a strategic roadmap for how to realise these upgrade priorities.
   

Often, businesses lack the time to acquire a complete view of operations and adoption risks, especially if there are already existing tech debt challenges. This is why turning to partners to ensure a thorough analysis of front- and back-end systems is crucial. While alone, a company would have to undertake these processes manually; finding the right partner experienced in managing modernisation projects can allow businesses to employ emerging AI and data-driven automated solutions and tools, particularly during discovery and execution phases. Tapping into these tools helps reduce the impact on teams and vastly increase the speed and accuracy of delivery; but it can also improve operational clarity and provide more control throughout the modernisation process.

Business-focused recommendations

Once an analysis of your existing systems is complete, it’s important to uncover business-focused recommendations based on a holistic understanding of your unique situation. You may need to replace unnecessary apps, rewrite some components, focus on testing to fix bugs and security vulnerabilities or create a maintenance schedule for dependencies from open-source code usage. Sometimes, delaying current modernisation projects to solve more critical issues first may be wise.

In extreme situations, it may be necessary to replace an entire system. This is always the last resort due to the large investment needed and the disruption it can cause. But if this is necessary, it should be managed with a roadmap for transition and support in upgrading the team to ensure the right knowledge within the organisation.

Modernising legacy systems alone is a daunting task, compounded by tech debt. Data migration, system integration and maintaining business stability during transitions add layers of difficulty. The solution is not to halt modernisation and innovation investments but to partner with experts who can support the business throughout the process. This ensures an enterprise modernisation approach that delivers high-speed, accurate and risk-free transformation, allowing the business to remain adaptable to a wide range of organisational needs and industry-specific challenges.

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