Technical Debt: how to avoid this trap and develop faster software

With advancing technology driving all aspects, from business operations to the products and services they offer, institutions across various sectors such as retail, manufacturing, and financial services are facing the need to acquire new competencies and skills. Apart from deeply understanding the intricacies of their segments, they must excel especially in software development. However, one obstacle that can hinder these companies is technical debt.

Wagner Fusca, an agile coach at Objective, draws an analogy of going to a restaurant to exemplify technical debt. In a restaurant, when paying for lunch, we have two payment options: debit and credit cards.

When making a transaction with a debit card, the amount is directly deducted from the checking account, avoiding future worries. However, when using a credit card, the payment is postponed, meaning dealing with the consequences later. However, if it’s not possible to pay the full bill, severe interest is applied.

Similarly, in software development, when a programmer chooses to ignore best programming and design practices, it results in accumulating technical debt that eventually needs to be repaid.

Technical debt is an inevitable burden in business and requires proper management to ensure the long-term sustainability of an organization. However, despite its importance, the term is still relatively unknown. According to research conducted by Wagner Fusca, nearly half of the people professionally working with software, including not only developers, are unaware of the term technical debt or interpret it incorrectly.

In this scenario, this article is worth reading as it addresses the concept of technical debt, its impacts, best practices, and how agile methodologies like Agile can contribute to its reduction. Additionally, we discuss how Microsoft tackled its technical debt.

What is Technical Debt?

Technical debt is a metaphor used in software engineering to describe the additional cost that a team faces in the future due to low-quality design or development choices made in the present. Similar to financial debt, technical debt accumulates over time if not addressed and can lead to significant problems in the project.

These low-quality choices may include poorly written code, lack of documentation, inadequate architectures, lack of testing, or delays in implementing necessary fixes. Although these choices may enable faster implementation in the short term, they often result in complications and additional costs in the future as the team needs to deal with maintenance issues, bug fixes, and difficulties in adding new features.

It is essential to recognize technical debt and actively work to manage and reduce it over time, whether through code refactoring, architecture improvements, implementation of automated tests, or other software engineering practices. Ignoring technical debt can lead to serious quality, productivity, and cost problems in the long run.

Origin and types of Technical Debt

Technical debt originates from decisions made during software development, where quick solutions are chosen over more robust and high-quality solutions.

Imagine the following scenario: a technology startup launching a new food delivery app. Due to pressure to quickly enter the market and compete with established companies, the development team opted for quick and temporary solutions to meet tight deadlines, such as ignoring automated testing, implementing a simplified architecture, and inadequately documenting the code.

However, the app gained popularity rapidly, and more features needed to be added; consequently, problems caused by technical debt began to arise, such as frequent bugs, low scalability, and difficulty in maintaining and expanding the app.

In this scenario, the company realized that prioritizing rapid deployment over the technical quality of the product was not sustainable in the long run, and they now have to work to resolve these issues and reduce technical debt.

This is a hypothetical example, but situations like this are more common than we imagine. According to the McKinsey research “Demystifying digital dark matter: A new standard to tame technical debt,” approximately 30% of Chief Information Officers (CIOs) reported that more than one-fifth of their budget allocated to new products is diverted to resolving technical debt-related issues. Additionally, they estimate that technical debt represents between 20% and 40% of the total value of their technological assets (before depreciation).

There are three common types of technical debt: code debt, design debt, and test debt. Learn more about each of these concepts:

Code Debt

Poorly written code, code duplication, lack of modularity, and hard-to-understand code are examples of code debt.

Design Debt

Inadequate architectures, lack of design patterns, and complex dependencies are examples of design debt.

Test Debt

Lack of automated tests, inadequate test coverage, and low-quality tests are examples of test debt.

Infrastructure Debt

Dependency on outdated technologies, lack of automation in deployment, and poorly optimized server configurations are examples of infrastructure debt.

Recognizing the origin and types of technical debt is essential to effectively manage it and minimize its negative impacts on software development projects.

Impacts of Technical Debt

McKinsey’s research developed the Tech Debt Score (TDS), a metric that allows companies to quantify their technical debt and compare it with their competitors. Companies ranked in the 80th percentile of TDS demonstrate a 20% increase in revenue compared to those in the percentile below 20.

This occurs because as technical debt accumulates, the cost of software maintenance increases, making it more time-consuming and complex to fix bugs, make changes to the code, and add new features due to the complexity of low-quality code. This results in reduced team productivity, leading to delays in schedules and poor software quality, prone to failures and difficult to maintain.

Additionally, there are significant security risks, with poorly written code leaving the software vulnerable to cyber-attacks and data breaches, negatively impacting the company’s reputation and leading to difficulties in recruiting and retaining talent. Lost opportunity cost is also a concern, as resources spent on resolving technical debt could be directed towards more strategic activities such as innovation and new product development.

Another study indicates that just over half of Fortune 100 CEOs have backgrounds in management, economics, or accounting, while 27% have backgrounds in engineering or sciences. During quarterly earnings conference calls, discussions about revenues, expenses, and geographic trends are common, but the quality of the company’s software is rarely addressed.

This does not imply that leaders need to be engineers, but few outside the engineering area have the knowledge to discuss critical software systems. As a result, software problems often go unnoticed by CEOs unless a significant incident occurs. Therefore, it is crucial for company leaders to be involved in software quality as they are in sales and finance areas. This includes being aware of the most common negative impacts, such as:

How to reduce Technical Debt?

Reducing technical debt requires an evolutionary approach, starting with simple actions that target the most impactful points from the beginning. Additionally, it is important to have the support of all company leaders to ensure the success of this process and to obtain effective strategies. For this, we have separated the following steps:

Prioritize and Identify Technical Debt

Conduct a comprehensive analysis of source code, architecture, and development processes to identify specific areas of technical debt. Prioritize these areas based on their severity and impact on the project.

Establish Coding Standards

Define and implement clear and consistent coding standards to ensure that all team members follow best software development practices. This includes standardizing naming, code structure, and documentation practices.

Refactor Code

Allocate time to refactor existing code, simplifying it, eliminating redundancies, and making it more readable and sustainable. This may involve restructuring classes, extracting methods, and eliminating dead or duplicate code.

Automate Tests

Implement comprehensive automated tests to ensure software stability and quality. This includes unit tests, integration tests, regression tests, and user acceptance tests. Automate as much as possible to facilitate frequent test execution.

Adopt Continuous Integration and Continuous Delivery (CI/CD)

Implement CI/CD practices to automate the software build, test, and deployment process. This allows for quickly identifying and fixing issues, reducing the time between code writing and delivery to users.

Establish a Code Review Culture

Encourage frequent code reviews among team members to identify and fix quality issues before they become critical. This promotes collaboration and knowledge sharing within the team.

By implementing these strategies, development teams can effectively reduce technical debt and improve software quality, stability, and sustainability over time.

Agile vs. Technical Debt

In the context of software development, the agile methodology seeks continuous delivery of value to the customer, prioritizing quality and maintaining flexibility for changes. The relationship between agile methodologies and technical debt can be significant, as agile methodologies offer an effective framework for dealing with technical debt. Here are some aspects of this relationship:

Early Identification

Agile methodologies emphasize the incremental and iterative delivery of software, meaning that issues, including technical debt, are often identified earlier in the development cycle. This occurs because the software is delivered in smaller parts, and users have the opportunity to provide feedback quickly.

Transparency and Visibility

Agile methodologies promote transparency and visibility of the development process. This includes exposing technical debt during daily meetings, sprint reviews, and other agile ceremonies. This allows the team and stakeholders to recognize and address technical debt proactively.

Value Prioritization

In Agile, the focus is on delivering value to the customer quickly and continuously. This means that technical debt is often prioritized based on its value to the business. If it is hindering the delivery of value to the customer, it is usually treated as a priority.

Flexibility for Adaptation

Agile methodologies are known for their flexibility and ability to adapt to changes in requirements and the development environment. This includes accommodating the need to address technical debt as it arises without significantly compromising the project’s schedule or scope.

Proactive Approach

This includes allocating time during the development cycle for refactoring, testing, and reducing technical debt. Agile teams are encouraged to identify and address continuously, rather than allowing it to accumulate over time.

Microsoft: A Success Case in Technical Debt Reduction

In the 1990s, Microsoft’s Windows operating systems had a series of flaws that resulted in frequent computer crashes. Despite being known as “blue screens of death,” Microsoft was impacted by other issues, such as hackers, viruses, and security concerns, due to the connection of Windows systems to the Internet.

In response to this crisis, Bill Gates issued a memo calling on all 50,000 employees of the company to improve product security and design through comprehensive “trustworthy computing” initiatives. These actions included changes to software design and development processes, improvements in error reporting, and updates. In 2000, Microsoft achieved revenue of over $20 billion, with customers praising Windows 2000 server as the most reliable version yet.

These cases highlight how leaders can reverse technical debt in engineering areas by asking simple questions, setting standards, and actively engaging in the process.

A CIO of a leading cloud provider states: “By reinventing our debt management, we’ve gone from engineers spending 75% of their time paying the ‘tax’ to 25%. This allowed us to be who we are today.” This company, whose identity was not disclosed, opted for a strategic approach that allows engineers to dedicate up to 50% more time to projects aligned with business objectives.

There is no guarantee that you will reach your company’s development level just by eliminating technical debt, as chance and circumstances also play an important role, but if you pay attention to this point, you will certainly increase your chances.

Therefore, having a partner like Objective, which is a reference in software development, is an interesting strategy. Contact our experts and learn how we can help you.