Technical Debt: What It Is, Types, and Examples

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Rafael Timbó
Rafael Timbó
Chief Technology Officer

Table of Contents

Learn what technical debt is, how software development teams incur it, and how to stop accruing tech debt.
Published on
October 23, 2023
Updated on
April 11, 2024

"An ounce of prevention is worth a pound of cure," the adage goes, and the saying certainly holds true in tech. 

Whenever you compromise on code and system quality to opt for a short-term fix, inefficiencies creep in. Those inefficiencies compound as your system and product lifecycle mature, eating up efficiency and valuable assets. Most often, they can be prevented and will eventually have to be resolved. The cost of fixing them is technical debt. 

Technical debt is a phrase originally coined by renowned programmer Ward Cunningham in the "Agile Manifesto" in the early '90s, referring to the long-term costs you incur from taking shortcuts just to meet the deadline. Examples could range from letting bugs go unchecked in your code to keeping those legacy servers in your data center — and just like financial debt, the amount of technical debt you accrue adds up if you don't pay it off. 

In this article, we'll define and explain technical debt more precisely and dive into its causes and effects. We'll also provide examples to prove how costly technical debt can be and offer solutions to help pay it down. 

What Is Technical Debt?

Simply put, technical debt is the cost of taking shortcuts or quick fixes. Also called designed debt or code debt, it refers to the drawbacks associated with keeping defects in your infrastructure for the sake of getting the job done. These inefficiencies propagate the longer they go unresolved and can eventually cost you valuable productivity and profit. 

When Cunningham first used the analogy of going into debt, he had code specifically in mind. Nowadays, it can also refer to outdated hardware, legacy software, or antiquated tools that slow your team down. Citing the upfront investment in deploying a product that can continually be improved, Cunningham said

“Shipping first-time code is like going into debt...A little debt speeds development so long as it is paid back promptly with refactoring. The danger occurs when the debt is not repaid. Every minute spent on code that is not quite right for the programming task of the moment counts as interest on that debt.”

Like financial debt, tech debt can't always be avoided, which isn't necessarily bad. Some products just have to launch before they're perfect, and it's impractical to update your hardware every time the newest version comes out. As with financial debt, the key to managing technical debt is using it wisely and keeping it to a minimum. 

How Tech Debt Impacts Business

Just as financial debt may be necessary as a business grows, some technical debt is bound to be tied into your system. And just as financial debt can potentially sink a company, tech debt can seriously damage your stack. 

A business's digital infrastructure can impact nearly every phase of its operations. It, therefore, stands to reason that tech debt can hinder many components of your business processes. A few impacts of technical debt include:

  • Reduced productivity: In their report "Business Costs of Technical Debt," found that tech debt forces companies to waste around 23 to 42% of their development time. For example, if a company hires 100 developers, the equivalent productivity is as if they only had 75. 
  • Less innovation: If your development team wastes time fixing bugs that should have already been resolved, they won't be able to prioritize building new products. Legacy hardware may also force your operations to perform below par, making it harder to drive innovation. 
  • Higher operational costs: When businesses fail to update their hardware, they spend more on operations and repairs. Some outdated equipment may even become damaged or fail, resulting in costly downtime.
  • Inferior performance: Obsolete systems fail to perform as well as those that have been kept up to date. The results can range from system errors to security vulnerabilities to poor user experience — all of which can cost you a client. 
  • Greater security risks: Legacy software often contains vulnerabilities to digital threats that weren't around at its inception. Failure to apply patches or software updates could leave you vulnerable to a cyberattack or result in fines for non-compliance.
  • Dampened employee morale: Employees get frustrated when they're forced to work with outdated tools, and the right tech talent is already hard to come by. Keeping your workforce happy is better than weighing them down with tech debt.

While some technical debt may be unavoidable, it creates enough impact that you still need to know where it lies. You can use software development analytics tools to track how much of your team's development process is spent on fixing bugs and other components of technical debt, which will help you keep it to a minimum. As any good budgeter knows, identifying where you're spending the most is the first step in driving down your debt. 

Types of Tech Debt 

There are several different types of technical debt, which can be classified in multiple ways. One strategy is dividing them by their source — namely, software or infrastructure. Others classify tech debt according to management intentions: reckless and deliberate, reckless and inadvertent, prudent and deliberate, or prudent and inadvertent. However you categorize your tech debt, ensuring that you're accounting for every cost you incur is important. 

Software Debt

As its name implies, software debt is the cost that accumulates from your apps or products needing a refresher. 

One of its most common forms is the hindrance of debugging your code later on when problems could have been resolved in earlier phases of the development, essentially prioritizing speed over quality. You'll often see this when teams attempt to implement new features and pass them off to QA for testing rather than building quality directly into their agile development processes. If you want to keep your software or Agile tech debt down, make sure your development team only considers a new feature complete once they know it passes the necessary quality tests.

Infrastructure Debt

While software debt pertains more to your team's code, infrastructure debt is the price you pay for outdated hardware and systems. 

Your digital environment has many hardware components, and if they're not kept up to date, system errors, downtime, maintenance and repairs, and even safety hazards can result. These are all infrastructure debts, and while getting the newest piece of equipment is not always necessary or feasible, the costs associated with this type of debt are sometimes more expensive than the investment. To keep your infrastructure debt to a minimum, make sure your hardware is sufficiently current, and your teams' tools are up to date. 

Management Intentions

Rather than taking inventory of their software and infrastructure assets, some organizations prefer to think about how (or if) their debt was planned. Experts such as developer Martin Fowler have argued that there are four types of tech debt in this system, and while it applies to infrastructure debt, too, they're most easily seen in the example of writing good code. They are:

  • Reckless and deliberate, when teams know how to produce the best code but intentionally proceed with suboptimal code for the sake of faster product delivery
  • Reckless and inadvertent, when teams lack the skills to produce the best code and make unforeseen errors in the process
  • Prudent and deliberate, when teams anticipate the consequences of suboptimal code but, after careful cost-benefit analysis, decide to handle any problems that arise later on
  • Prudent and inadvertent, when teams desire to produce the best code but see a better solution after the fact

Assessing your technical debt this way can be beneficial because it highlights which debt is necessary and expected and which is unintentional and a surprise. If your technical debt is mostly reckless and inadvertent, you might have inexperienced developers or managers and may need to hire new developers.

Causes of Tech Debt

The two primary sources of tech debt are software and infrastructure, but several causes exist within each. Some of them are:

  • Rushed development cycles
  • Lack of technical skills
  • Code quality
  • Outdated equipment
  • Antiquated software
  • Obsolete processes

Another cause of tech debt that's less commonly considered is non-compliance with regulations and standards. When companies choose to ignore the best practices or legal requirements of industry leaders, they put themselves at risk for cyberattacks and costly fines — another type of technical debt.

Technical Debt Examples

One reason tech debt plagues so many businesses is that non-technical executives may overlook its actual cost. Managers without a tech background might not see how much these inefficiencies weigh them down, so giving real-world scenarios may help them grasp the urgency of outstanding tech debt.

For example, a survey from the UpTime Institute found that 45% of data center managers said that their most recent outage cost them between $100,000 and $1,000,000. Most of these losses could have been prevented with the proper maintenance and repairs, but technical debt eroded their profits instead. 

But technical debt isn't just about the direct cost of downtime; it includes time, energy, and lost productivity. A way of forcing you to do less with more, tech debt requires you to hire more developers to get the job done. However, Brooks' Law — an axiom coined by project management expert Fred Brooks in his book “The Mythical Man-Month” — shows that the added need for communication makes this counterproductive. There's a saturation point to the number of developers you hire, meaning you'll have to pay down that debt sooner or later.

Hire Skilled Developers to Reduce Technical Debt

From wasted time debugging code to reduced innovation to lower employee morale, technical debt can harm your team in more ways than you might think — but Revelo can help.  

Revelo is a leading talent marketplace that matches businesses with Latin American developers who have the skills to reduce your technical debt. They are time-zone-aligned and rigorously vetted for technical skills, soft skills, and English proficiency. We also handle HR services, including onboarding, payroll, benefits administration, taxes, and local compliance, and offer support throughout the developer’s time with your company to ensure engagement and retention. Contact us today to find developers that can help you pay down your debt.




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