And it’s not on your balance sheet.
And it probably isn’t baked into your 3-year plan, 1-year operating plan, or OKRs.
Every CTO knows the challenge of prioritizing this investment. Yes, some areas of tech debt (e.g. security) are top of mind, mainly because of the demands of both customers and boards of directors.
However, there is a lot more investment that is difficult to quantify and easy to postpone: upgrading/maintaining/“hoping they keep working” legacy systems. Open source dependencies (the CISQ estimates that even medium-weight applications carry between 200-300 third-party components). And of course, that long and growing list of low-priority bugs that keeps growing in your backlog.
As an operator, the biggest challenge is prioritizing activities with long-term payback periods that aren’t perfectly measurable. Prioritizing software quality doesn’t shrink your CAC or boost your current-year growth rates.
But when your tech debt hits a certain point, you are vulnerable. Your operations may be disrupted (which might trigger customer refunds and lost sales/renewals), or your engineering and product teams may need to be more efficient.
Unfortunately, there is no quick “hack” for your technical debt.
But there are things you SHOULD be doing:
- Include tech debt discussions in your 3-year and 1-year planning process. 3-year plans provide visibility into future “re-writes” and “re-platforming” initiatives. 1-year plans help you allocate the time, energy, and OKRs to your software quality.
- Include your CTO (or head of engineering) as a partner in your Executive Leadership Team.
- Hire a CTO who understands the language of finance.
- Hire a CFO who understands how software is built and maintained. It’s not about lines of code per FTE.
- You, as CEO, should make this a priority.
And you say, “But we don’t have technical debt because we are a startup.” Bollocks. Technical debt is either part of your present or your future. And it will slow you down.