Blog | RevStar Consulting

Technical Debt: Why It Matters to CFOs & How to Tackle It

Written by Maria Clara Ussa Perna | Jan 18, 2023 1:00:00 PM

In a world where digital transformation is becoming the norm, understanding technical debt and its implications are critical for business success. Every organization faces this issue - from tech startups to well-established enterprises with multiple teams working on complex applications.

For CFOs, it’s important to look beyond short-term costs associated with software development in order to maximize return on investment over time. In this blog post, we’ll explore what technical debt is, why it matters to CFOs, as well as how proactive measures can help reduce or prevent it from becoming an issue within their enterprise.

What is Technical Debt?

Technical debt is a concept from the software development industry that describes the cost of technical shortcuts. It can occur when teams choose to move forward with technical solutions as quickly as possible and don't take the time to lay out a systematic process. As a result, technical debt accumulates over time and will eventually have to be paid off through additional design, planning, and resources. Not accounting for technical debt in long-term technical systems can lead to chasing down bugs and issues late in the process when much more efficient solutions could have been implemented initially. Technical debt can also be caused by changes in technology or architecture that need to go back and refactor old code bases to align with new standards, a process that requires both time and money. All technical projects should take technical debt into consideration and put resources toward eliminating it as quickly as possible.

Why Does Technical Debt Matter to CFOs?

Technical debt can be a major financial burden for CFOs, as its accumulation can put an unnecessary strain on resources and overall budgets. From the technical standpoint, technical debt is acquired when shortcuts are taken for development and technical issues go unresolved; however, in business terms, technical debt refers to the cost of re-work due to prior poor technical choices and decisions. Thus, having efficient technical processes from the get-go is essential in order to save money long-term. Prioritizing technical debt also allows a company's teams to focus on higher-value work and advancements which can result in greater traction and profitability when done right. When CFOs manage technical debt strategically, they can differentiate their companies from competitors with better risk management and increased operational efficiency. In conclusion, CFOs need to factor technical debt into their considerations, as it has real implications on resource allocation, budgetary concerns, and future growth goals.

How To Tackle Technical Debt?

Technical debt is a very real technical issue that needs to be addressed and resolved in order to maintain operational efficiency. One of the most effective methods for tackling technical debt is by first assessing the existing technical infrastructure and identifying areas where improvement can be made. Developing a plan for action and allocating adequate resources to implement the necessary improvements can help ensure that technical debt does not become unmanageable, as tackling growing technical debt becomes more difficult and costly over time. Carrying out regular technical assessments, audits and optimizations can not only determine ways to improve system performance but also help avoid technical debt from accruing and becoming a problem in the future.

Conclusion

As we have seen, technical debt can impact a company’s bottom line in a number of ways. It is therefore important for CFOs to be aware of this issue and take steps to address it. There are a number of strategies that can be used to tackle technical debt, and the approach that is most appropriate will vary from organization to organization. By working together with IT and other departments, CFOs can help ensure that their company’s technical debt does not become too costly or difficult to manage.