Feature Story

Accounting for Technical Debt

Dion Hinchcliffe, Wayne Sadin

CIOs must do the math and pay down debt before it hobbles business performance.

Wayne Sadin, a veteran CIO and current chief digital officer and CTO for senior living provider Affinitas Life, doesn’t mince words describing the scale of technical debt in most companies:

“It’s a bigger off balance sheet liability than Enron or Worldcom.”

Wayne Sadin

The term ‘technical debt’ was first used in software development in the early 1990s, to describe the costs incurred when an expedient route is chosen instead of a better long-term approach that would take more time and effort.

In recent years, enterprise IT organizations have co-opted the concept to describe the debt incurred as a result of choices such as deferring systems maintenance or upgrades — ‘deferred’ often being a euphemism for ‘never going to happen’.

Over the years, many CIOs have found it difficult to obtain funding for infrastructure and application maintenance. The catch, of course, is that the impact of those decisions could remain hidden for years — until the derelict systems begin failing or otherwise prevent the enterprise from moving forward.

“It’s an off balance sheet liability that’s growing and has not been accounted for as it should be to stakeholders,” said Dion Hinchcliffe, vice president and principal analyst at Constellation Research.

The pressure to digitally transform the organization is shining a spotlight on the issue, revealing a legacy of short-sighted choices is standing in the way of organizations moving toward the future.

PLEASE COPY FROM SOURCE LINK : https://connectedfutures.cisco.com/article/accounting-technical-debt/