Technical debt. It’s a word that should be used more often by Not for Profits, who have not strategically invested in their IT infrastructure over the years.
In plain English, technical debt is the additional cost that’s created when an organisation chooses a technical solution based on short-sighted decisions, resulting in more work and costs later.
Why does technical debt occur?
Here are a few factors that can influence such decisions:
- Ease of purchase – It’s easy to buy a cloud-based solution to meet an immediate need with just a credit card.
- Departmental purchases – Decisions are made in siloed departments because it’s easier to meet their needs rather than to consider other parts of the organisation with similar ones.
- Ease of implementation – No need to think about processes, workflows or data integration requirements. Just log in and start using it.
- Budget – It’s cheap enough to buy now, perhaps without additional approvals.
- System by system – It’s common to look at technical investments in isolation of other systems that may contribute to pain points.
In addition, I often see technical debt occur by the failure to properly fund operational IT budgets. Years of underfunded maintenance and the replacement of ageing infrastructure builds over time.
Unfortunately, technical debt will have to be repaid at some point. And while it may not appear as debt on the balance sheet by accounting standards, it will eventually show itself as a major capital expenditure or expense.
So, how do you know if you have technical debt?
Look for the symptoms!
- Does your staff complain about significant manual processes?
- Is data located in so many places that reporting take forever each month?
- Is your system maintenance cost significant?
- Do employees scream about slow computers or latency when they access your systems?
- Has your internal team or managed service provider warned you about unsupported systems and computers?
- Has it been a while since you’ve made a significant IT investment?
- Have you done a cybersecurity risk assessment (free one here) and realised that you don’t know what you don’t know about your IT infrastructure?
If you can say “yes” to one or many of the questions above, then you probably have some technical debt. The question then is how much?
I often help Not for Profits with a current state analysis of their enterprise architecture. Let me know if you need some help.
Tammy Ven Dange is a former charity CEO, Association President, Not for Profit Board Member and IT Executive. Today she helps NFPs with strategic IT decisions, especially around investments.
If you found this article helpful, you may want to read this one: Why NFPs will fail if they don’t increase their annual IT operating budgets