What Is Technical Debt and How Do Companies Manage It?

Every day, new software hits the market, and companies work tirelessly to keep up with evolving trends and technologies. Innovation is challenging, and the margin of error when developing a product can be slim, making efficiency in software development and planning crucial for success.

Using metrics that measure the performance of software can be vital to developing a product cost-effectively, prioritizing quality and allowing companies to get a product to market efficiently. When companies rush the development process, resulting in a suboptimal product that may be costly to operate or that may require updating, this is what is known as technical debt.

Managing technical debt is a balancing act that can make a huge impact on a product or an organization’s bottom line. Pursuing an advanced degree, such as an online master’s degree in software development, can help individuals learn how to limit technical debt, weighing the pros and cons of delaying a product for further development versus taking advantage of the market. This type of informed decision-making can help steer an organization toward success.

What Is Technical Debt?

Creating and debuting products to the market can be costly and challenging. The more efficiently and cost-effectively a company can develop a quality product, the better the bottom line, but with every new product, trade-offs must be considered.

Three software developers facing computer monitors discuss technical debt.

What technical debt is comes down to the costs and challenges of bringing a product to market. Distinct from financial debts like business loans, technical debt refers either to the costs incurred from delaying the release of a product or to the consequences arising from improper coding and development when a product is rushed to market.

Managing technical debt is essential to the success of a product and a company. With delays in production, companies can incur additional expenses that limit their margin of profitability and stifle the creative process for their designers. However, when the process is rushed, mistakes in programming may result in a faulty product or a product that requires updates and modifications, potentially harming a company’s reputation.

Balancing the demands of quality, budget, and timeline can be challenging for software developers and other computer science professionals, but it  can make all the difference in creating a successful product.

Technical Debt Examples

Technical debt can come in various forms and affect different stages of the product development process. Some technical debt examples follow:

  • Insufficient coding: Errors in programming can result in a faulty or subpar product.
  • Poor software design: When the fundamental design of a product is either incorrect or substandard, costly redesigns, updates, or product recalls may be required.
  • Restrictive timelines: Limiting the time and resources available to software developers may lead them to cut corners or rush the development process.
  • Errors in strategic development: Discrepancies in project management can introduce oversights, shortcuts, or missing steps in the development process, resulting in inferior products or an extended development period as compensation.

Whatever its causes, technical debt can incur huge costs. While it cannot be wholly avoided, it can be mitigated with the help of careful planning, the integration of flexibility into the strategic development timeline, and the use of skilled software developers.

Two categories are useful for understanding how technical debt is likely to affect a project: active (deliberate) debt or passive (inadvertent) debt.

Active Debt

Active debt represents a deliberate decision to delay product development or code improvement until later in the project. Active debt decisions can be cost-effective to a company in the short term, allowing it to meet deadlines and bring a product to market sooner, with the expectation that some issues will have to be dealt with in the future.

Passive Debt

Passive debt is an example of technical debt that was unintended and arises due to poor development, planning, or production. This type of technical debt includes unforeseen corrections, updates, or changes whose costs can ultimately derail a project budget.

How to Resolve Technical Debt

Taking control of technical debt is instrumental in the success of a company. While many techniques and tactics exist, what is vital to technical debt management is first to take it seriously, commissioning and undergoing a thorough debt assessment. With a comprehensive understanding of the main risks and weaknesses to a software development plan, company leaders can create and implement long-term strategies to reduce or eliminate technical debt.

Many of the most successful strategies are technology driven and automated, integrating systems, metrics, and analytics directly into a software development plan to monitor progress and assess performance. Automation allows skilled software developers to respond to the most up-to-date information, addressing problems before they escalate.

With the right skills, knowledge, and experience, software development degree holders can implement technical debt reduction strategies that are tailored to a product’s individual debt assessment. They can learn and adapt to new challenges, ensuring the development process and the product itself are functioning optimally.

Take Control of Your Future

Insight into what technical debt is and how it can be properly managed is fundamental to the development, delivery, and sustainability of a project. When used minimally and strategically, technical debt can be a tool to stay ahead of the competition, pushing innovation and allowing companies and developers to thrive at the forefront of their field.

Pursuing an advanced degree such as Maryville University’s online Master of Science in Software Development can make all the difference in building the skills to take on the challenges of product development. This fully online program was designed to provide the practical skills to advance your software development career in settings such as business and finance, research and development, or information technology. Discover how you can make a difference to your organization’s culture of innovation, reputation, and bottom line with an advanced degree in software development.

Recommended Reading

A Future in Tech: Software Development vs. Computer Science

Comparing Two Key Careers: Software Developer vs. Programmer

How Do the Jobs of a DevOps Engineer vs. Software Engineer Differ?


IBM, Pay Back Technical Debt

Imaginary Cloud, “What Is Technical Debt and How Can You Manage It?”

Indeed, What Are Software Metrics and Why Should You Track Them?

InfoWorld, “Technical Debt Will Sink You”

PhoenixNAP, “Technical Debt: Definition, Examples, and Types”

The Enterprisers Project, “How to Explain Technical Debt in Plain English”

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