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The True Costs of Technical Debt

Technical debt affects enterprises in more ways than one—from opportunity costs to legal fees. Here's how no-code development can free your enterprise from the hefty bills associated with technical debt.

Despite the fact that it affects most modern organizations, technical debt is an often misunderstood concept. Is technical debt analogous to financial debt? Is the name just a metaphor, or does it literally refer to the debts incurred by purchasing expensive technology? How much damage can unchecked technical debt do? 

If you are an organization with an IT department, it’s likely that you’re currently dealing with at least some measure of technical debt. It’s critical to understand and proactively attack this debt—in fact, it’s one of the most important things you can do to protect the long-term success of your company. 

What Is Technical Debt?

Technical debt is a metaphor used to explain the negative impact that choosing short-term software solutions at the expense of the long term can have on an enterprise. The term, first coined by programmer Ward Cunningham in 1992, is often used to illustrate that when programmers settle for stop-gap, “okay for now” software solutions, they will inevitably pay the price—plus interest.  

Like financial debt, accruing technical debt is often the result of a series of small decisions, rather than one big one. In fact, most enterprises willingly take on technical debt as a calculated risk. For example, development teams faced with small budgets and tight deadlines might find themselves knowingly accruing technical debt so they can get new features to market in time. Unfortunately, without a defined plan to pay off their “balance” as soon as possible, a calculated risk snowballs into massive technical debt. 

When speed to market isn’t a factor, technical debt is most common in enterprises where there is a lack of infrastructure to support practices that would improve code quality, like a team dedicated solely to testing code.

Maintaining a legacy codebase with a lot of technical debt is like playing Whack-a-Mole: fix one issue and ten new ones will arise. What’s more, addressing technical debt only gets harder over time, since any additions to the codebase are made on top of a system that already wasn’t working—so bugs and glitches continually compound. 

When companies think about it this way, the most effective (and extreme) way to erase technical debt once and for all is to stop all other projects to focus on addressing the problem. But the fact of the matter is that doing so is simply not realistic for traditional development teams. The opportunity cost of halting all other projects is too high, which is why companies have no choice but to tackle it in small chunks—and inevitably get trapped in a continuous cycle as debt compounds.  

The truth is that all enterprises deal with a certain amount of technical debt, so much so that it’s considered a necessary cost of doing business. More importantly, it’s the cost of innovating. However, having any amount of technical debt can get expensive very quickly.

Breaking Down the Costs of Technical Debt

The costs of technical debt manifest in many ways, most notably maintenance costs. According to “The Cost of Poor Quality Software in the US”, a report published by the Consortium for IT Software Quality, the cost of buggy software in the United States totaled $2.26 trillion in 2018. That number did not include the cost of future technical debt. This data indicates why software developers spend 42% of their time fixing bugs, and why a whopping 80% of IT budgets go toward doing so.

Technical debt also directly contributes to an enterprise’s legal costs in the form of fines, compliance penalties, and even lawsuits. HIPAA and PCI violations alone can each cost up to $1.5 million. When you add in technical debt, a vicious cycle ensues. When enterprises have a lot of technical debt, it’s harder for them to fix software errors quickly, which results in time-based fines. Outstanding fines continue to increase until they are paid, which leads to more debt, and so on. Further, data breaches due to faulty code can cost as much as $8.9 million in lost business, legal fees, and other costs associated with a publicly damaged reputation.

Two other major costs of technical debt—opportunity costs and talent—are harder to quantify, but they still add up. Opportunity costs refer to the loss of potential gain when you choose one option over another. Enterprises with technical debt perpetually struggle with this dilemma because IT companies have finite resources—which is compounded by the ongoing IT skills shortage—and every operational decision will be informed by that debt. Every minute spent on maintenance due to technical debt is a lost opportunity for innovation or value-adding work.

Technical debt has human costs as well. Outdated technologies are hard to maintain, and it’s even harder to find software developers who can and are willing to work with these technologies. Enterprises with technical debt also experience higher turnover because talented developers are less inclined to stay at a company where they spend so much of their day fixing legacy code. This can have expensive consequences—studies estimate it costs 6 to 9 months of annual salary to replace the average salaried employee, and even more for high-earning or executive-level employees. 

How No-Code Can Help

Unfortunately, we’ve only scratched the surface. The above costs don’t even include direct loss of revenue from software glitches or the customers lost when vital services go offline. With these crippling costs in mind, it’s time to modernize, integrate your legacy systems into new technologies, and free your organization from technical debt. 

No-code application development offers a cost-effective way to move away from legacy systems that were built on shortcuts. The most obvious way that no-code eliminates technical debt is by removing code altogether. The Unqork platform doesn’t generate any legacy code—because it doesn’t generate code at all. 

But as we discussed above, there are a few other costs associated with technical debt that make it such a burden. Once a codebase is removed from the equation, no-code continues to tackle some of the secondary costs associated with technical debt. 

By building in enterprise-grade security features from the ground up, the Unqork platform ensures that your applications are compliant for any audits. By removing your organization’s reliance on code in one fell swoop, your team is immediately freed up to work on your project backlog—avoiding any opportunity costs typically associated with paying off technical debt. And finally, by empowering your employees with an intuitive tool to build complex applications, no-code can hopefully help you avoid turnover and increase employee satisfaction. 

Unqork can be seamlessly integrated with existing technology, which means no more struggling to configure a system you no longer use in order to unlock valuable data. It may not be possible to be 100% free of technical debt, but building apps with no-code goes a long way in decreasing your balance.