Custom Software Apps & SharePoint Consulting

Nate Richards on Technology Debt and Custom Software Modernization

“As we’re getting to know them and talking about building new applications or modernizing old applications, clients are surprised at how much this will cost. For years they’ve had one or two support or freelance developers, or even specialized engineers coding on the side. And it’s just worked for the last ten years. The question is ‘Why, all of a sudden, do we need to change everything and rewrite? Why have we reached the end of the road?’

And the answer to that is that while they’ve been designing and building the application only looking at what was immediately in front of them, they have neglected to look down the road and consider total cost of ownership. Because they’ve only looked at immediate cost of the features they needed today, it’s seemed cheap and easy.

 

When you add up the net effect of those small changes over ten or 15 years done by dozens of programmers, none of which were a coordinated effort, you get a mess. And the financial implication of that mess is that the client has been accruing an off balance sheet liability that we like to call technology debt. Sometimes in the industry it’s called software debt or tech debt.  By investing in a poor asset that’s depreciating and continuing to invest there’s a replacement cost liability that they have been building up over time. The more they build on this old asset the more it costs to replace.

A lot of times they are building on old technology or even technologies that were fads. Maybe these technologies had a period of popularity, but they never gained enough market share to go mainstream. So now they are having problems finding the skillset of developers to work on it, and they’ve simply just stretched it as far as the technology will take them.

What happens is eventually you have to pay off that debt. So rather than thinking about this cost as a new investment, what you’re really doing is paying down a liability that you’ve been accruing off the balance sheet for years and years. And what you’ll end up with by investing is something that might do the exact same thing –  but better – and will last you the next ten to 15 years.”

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