What Is Tech Debt? A Straightforward Guide To How It Impacts Your Business
As revenue leaders become increasingly pressured to deliver efficient growth and profitability, the reliance on their tech stack has also increased significantly. As such, RevOps has become increasingly important as the function that connects people and processes with technology.
At large, most tech companies today manage a plethora of tools with the aim of fueling marketing and sales growth. According to Scott Brinker, there were almost 10,000 marketing and sales tech tools in 2022. From CRM and marketing automation platforms to sales engagement and conversational intelligence applications, much of this investment in tech will incur significant technical debt that can erode ROI (return on investment) and hinder overall business performance.
My name is Mohammed Abukar and I currently lead the sales technology strategy at one of Canada's largest and flagship tech and telecom companies. Over the past decade, the growth in the usage of business applications particularly in the technology sector has been quite the spectacle. While this phenomenon has led to accelerated growth for some, for others, technical debt has become a burden that hinders their ability to scale.
I wrote this article to explore the concept of technical debt—both the good and the bad, as it relates to revenue operations. I will dive into aspects of scalability, data quality, and overall business efficiency. Lastly, I will share some practical insights and strategies for both managing and mitigating tech debt.
What Is Technical Debt?
The term technical debt was coined by a software developer named Ward Cunningham in 1992 making reference to code debt within software engineering. Cunningham was one of the authors who wrote the Agile Manifesto which is widely quoted today.
Cunningham once wrote “Shipping first-time code is like going into debt. A little debt speeds development so long as it is paid back promptly with a rewrite. … The danger occurs when the debt is not repaid. Every minute spent on not-quite-right code counts as interest on that debt.”
Analyzing this statement from Cunningham, it is clear that tech debt in itself is not an inherently good or bad thing. On the contrary, just like any other financial debt, if used prudently and strategically, tech debt can be used as leverage to propel your business forward.
In other words, tech debt can be a tool your organization leverages for better or for worse.
In the context of revenue operations, tech debt is the cost a company incurs by inefficiencies connected with technology. For example, a poorly implemented CRM or a system integration that was not optimally constructed will count as tech debt.
This cost is often referred to in the world of Revops as Revenue Leakage. My favorite explanation of what revenue leakage means is well described in The Atlantic.
“Revenue Leak is the avoidable loss of revenue due to systemic failures in visibility, process, and execution. It is revenue you did the work to earn, that your team’s sunk time and effort into, but that doesn’t land on the balance sheet. …This lost revenue is growth that has vanished”
Why Is Tech Debt Important To Understand?
Just like with any other debt, if tech debt is not repaid, it will accumulate over time. This accumulation will make implementing process changes or experimenting with new initiatives extremely difficult. As your organization scales and adds more processes and people, this problem becomes compounded.
Ensuring you maintain awareness of where your organization is with tech debt is important as it will allow you to operate within a comfortable threshold and take action if that threshold is exceeded.
Understanding The Cycle Of Tech Debt
“This tool will help me build pipeline faster” or “This application can help improve our sales win rate.” If you are in RevOps, you’ve probably heard some iteration of these statements before. In efforts to enhance sales or marketing performance, business leaders sometimes make bad purchasing decisions that have long-term implications in exchange for short-term gains.
The truth is that if long-term scalability is not taken into consideration, over time these new systems will lose synergy with the overall revenue engine, which will result in decreased efficiency over time.
This situation necessitates more resources to manage all the inefficiencies within the systems rather than using that time and effort to develop new features and unlock additional productivity. This leads to significant losses in revenue and unfortunately, vendors end up taking much of the blame for this.
According to Gartner, this can turn into a vicious cycle of revenue tech investments.
Ultimately the cost of maintaining these underperforming components will surpass their expected ROI. Leaving your organization struggling to serve your customers effectively and keep up with competitors.
Common Causes Of Tech Debt
In the context of Revops, there are a number of causes of technical debt. It’s important to understand these causes so that you can avoid adding unintentional debt to your tech stack. Here are three causes to keep in mind with examples of technical debt.
Lack of good business process
The most common source of tech debt that I have seen over the years ties back to poorly built processes within organizations. This is a huge problem that I’ve seen intensify within smaller organizations where processes are being built for the first time.
Take for example something as complex as sales forecasting. If your sales leadership team does not have SOPs (standard operating procedures) and an established operational cadence for how forecasting is done, buying a new system to help improve forecasting is quite the long shot.
What generally happens in a scenario like this, is that the tool itself establishes the process for sales leaders. This is problematic as there is never a one-size-fits-all approach to how something as complex as sales forecasting should be done. The most likely outcome? The tool does not serve its intended purpose and eventually will require further configuration as processes become better defined.
For something as critical as sales forecasting, you may run into unintended consequences and revenue leakage related to inaccurate data, poor adoption, or even inaccurate revenue predictions.
Buying new systems before you have well-established business processes in place is like planting a seed in unprepared or infertile soil—the potential for growth is there, but without good soil (well-defined processes), it will be hard for these new systems to flourish, and yield positive results.
Duplication and redundancy in tech
Tech redundancy can also be a significant source of tech debt and pose multifaceted challenges for organizations. Duplication or redundancy in tech can be described as having two or more systems that have similar functionality. These systems can be used independently or may even be integrated with each other.
This issue commonly presents itself when organizations have siloed departments. Organizations that do not invest in Revenue Operations tend to be most impacted by this particular source of tech debt.
There is an inherent added layer of complexity when it comes to having redundancies in your tech stack. These complexities can cause issues like data inconsistencies as each system generates its own output.
Redundancy in your tech stack might not always be a negative thing. At times, businesses may make intentional choices to procure systems that have similar functions. They may choose to prudently take on tech debt as a tradeoff for solving a critical business need.
For example, businesses that intentionally choose to have multiple data enrichment tools for different applications. You may need to use one data enrichment solution because it offers better coverage for contact emails and phone numbers. Alongside this, you may use another data enrichment solution because it offers better coverage for account data i.e. company industry or employee count.
If your organization is strategic about how they intentionally take on this tech debt, it may be the leverage needed to unlock new opportunities.
Disjointed tech stack
Another common source of tech debt can be attributed to how systems and solutions are integrated or in many cases the lack of integration between them. This issue arises when your tech stack consists of various tools that operate in isolation without communicating with one another effectively.
When different tools within your tech stack fail to communicate effectively, data and information gaps emerge. Your teams will find it increasingly challenging to access and share critical data which will lead to poor decision making.
Disjointed systems also often create inefficient workflows. For example, the workflow required to hand off a newly acquired customer from your sales organization to your customer success team. Is there a seamless transfer of information that occurs between these two groups or is there some manual effort required to transfer data from one platform to another?
More often than not, companies look to procure systems that have out-of-the-box integration with other tools in their tech stack. When these integrations do not exist, it will require some custom configuration and code to connect these systems. This custom configuration can also be a source of tech debt as the code requires internal upkeep and maintenance.
Summary of Impacts of Tech Debt
Poor Data Quality - Inconsistent or inaccurate data will result in poor decision-making for your organization.
Bad Customer Experience - Tech debt can impact customer-facing systems and processes. This debt, if not repaid, will lead to things like service disruptions, unfulfilled promises, and negative experiences.
Operational Inefficiencies - Tech debt that goes unmonitored will introduce inefficiencies between teams. Having a Revops team that oversees and implements end-to-end processes will help elevate some of the burden produced by the debt.
Collaboration and Team Morale - Technical debt can lead to overburdened team members causing frustration and a decrease in team morale. This decrease in morale will disrupt cross-functional collaboration and may even result in finger-pointing between sales and marketing or sales and customer success.
These impacts, if left untreated, can have significant impacts on your organization’s ability to scale. Make sure to monitor and manage this debt prudently as its unintended consequences may be significant enough to alter the course of a company’s growth for years to come.
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5 Ways To Manage Technical Debt
In order to effectively manage technical debt, organizations must be able to first recognize and assess the extent of the problem. Here are five ways your organization can both identify and manage tech debt going forward:
- Conduct System Audits - Start by evaluating the current state of your systems. This will include identifying legacy solutions, inefficient processes, and areas where poor data is being generated.
- Prioritize Bad Tech Debt - After auditing your systems and uncovering areas for improvement, start to prioritize the tech debt that is becoming the most costly for your organization. Remember, all debt is not created equally. Focus on reducing technical debt where revenue leakage is most problematic.
- Allocate Resources - Ensure you have the right resources required to manage your debt. Use business planning cycles to consider what specific roles you would like to hire for and what budget may be required to reduce the negative impacts of tech debt.
- Implement Best Practices - Make it part of your organization’s DNA to implement best practices when it comes to managing your tech debt. Ensure you are following these best practices and holding your team accountable for not.
- Ensure Regular Maintenance - As part of your best practices, ensuring regular maintenance is an important way to manage your technical debt. Along with setting aside specific times throughout the year for maintenance, create a regular cadence where system vulnerabilities are reviewed and bug fixes are prioritized.
In The End…
In order for organizations to realize a ROI in their tech stack investment, it is important for them to understand the impacts of technical debt while proactively managing it. By addressing technical debt in a systematic way, organizations can use it to gain a competitive edge within their market.
If you enjoyed this article or found it useful in explaining technical debt, let me know in the comments. While you’re here, be sure to sign up for The RevOps Team newsletter for all the latest insights straight to your inbox.