Clear technical debt to reduce risk and increase revenue

Reliance on legacy technologies can create business risks and inhibit revenue growth. Information technology leaders must highlight the opportunities presented by addressing technical debt.

in confrontation Inflation economic headwinds, businesses need to innovate and grow more than ever. However, technical debt often creates unnecessary costs and risks, hindering business opportunities to optimize and increase revenue.

Technical debt arises when legacy assets are used beyond their valuable lifespan. This creates the risk of business function failure when the technology eventually fails. Continually reinvesting in technology and updating it with newer innovations can protect organizations from costly downtime.

The topic of technical debt is often sidelined compared to issues that competitive organizations deem more valuable. Many organizations struggle to account for the cost of technical failures or breaches. However, if processes fail, data can be lost or orders lost, impacting an organization’s bottom line.

If every business today is a digital business, then “digital” must be taken as seriously as any other business CEO’s core concerns. Reducing technical debt helps achieve three positive outcomes: revenue growth, risk reduction, and increased innovation. Instead of viewing technical debt as a burden, CIOs and IT leaders Attention should be paid to the new opportunities presented by addressing technical debt.

Why legacy technologies inhibit growth and innovation

if The pace of technological change is accelerating, inaction on depreciable assets and legacy contract renewals becomes more dangerous. This reactive decision-making may directly or indirectly cost the organization more. These costs are often not well recognized and attributed, but are equally important.

For example, competitors that deliver a faster, smoother, and more efficient customer experience will earn more than businesses that rely on outdated, aging technology. Investors also see more profitable growth opportunities for organizations making technology investments.As newer, smarter systems are dealing with issues such as supply chain and market chaosit also makes the delivery of products and services more resilient.

The latest solutions are also actively being improved, patched and updated to reduce cybersecurity risk, thereby reducing security costs and reducing reputational risk. Ensuring that legacy solutions that are no longer in development conform to the latest standards is often much more difficult. Work with newer solutions and their suppliers to reduce downtime risk with greater resiliency.

While it may cost more to initially source and procure a new solution than to let an old solution rot, much of the cost impact of legacy technologies is less well understood. Legacy assets often require additional labor costs to support, maintain, secure, adapt and integrate compared to more modern composable solutions. It can also be a problem for organizations struggling to fill open positions in a challenging labor market, not to mention increased competition as they compete for a shrinking talent pool with traditional solutions skills and experience.

Finally, outdated or outdated technology inhibits talent growth, stifling transformation and innovation. In the 2022 Gartner IT Workforce Report, IT workers say growth and development opportunities are important, but many express dissatisfaction with these opportunities in their current roles. In today’s talent shortage, organizations that offer growth opportunities through digital investments can attract talent compared to organizations that continue to use traditional processes.

Addressing capability gaps to increase revenue

Proactively reducing technical debt improves adaptability, i.e. Essential for digital business. There may be no added cost to using legacy systems, which is a short-term payoff that often creates an environment where stakeholders are passively resisted to reduce technical debt. However, this approach that values ​​speed over long-term vision can lead to the accumulation of technical debt and inhibit revenue and growth potential.

Legacy systems are retained because change is considered difficult or risky. CIOs and IT leaders can help stakeholders overcome these concerns by implementing a rigorous spend analysis program using data-driven decisions. IT staff should aggregate all relevant financial data, such as replacement cost of depreciated assets in the IT asset management system, cost of IT service desk incidents related to legacy systems, and IT service and operational management costs for legacy systems.

Then, compare the costs of traditional upgrades versus digital modernization, including:

  • Benefit analysis to identify value gaps between legacy and proposed solutions
  • A risk analysis comparing the security, usability and business risks of these solutions
  • A cash flow analysis that removes bias against debt through capitalization
  • Time-to-time analysis comparing benefit realization speed, taking into account supply chain and value realization delays

Evaluate an inferred total cost of ownership (TCO) model to predict future increases in the cost of retaining legacy systems. Alleviate stakeholder concerns by calculating the cost and inconvenience cost of solution switching. For example, planned downtime required to migrate to a new system may not impact customers if it is done during times of low or no use.

Invest in cost-effective solutions for increased agility

Faster, better, stronger and leaner are common focus areas for executives. However, discussions around addressing outdated technologies or systems that run the most critical business processes are often stalled by the unfounded belief that current technology is sufficient.

CIOs and CTOs can alleviate these concerns by investing in proven, composable solutions with relatively low up-front implementation and configuration costs. Mission stakeholders choose the cost-effective solution that provides the highest return. Technical debt cannot be resolved without action, but even small steps will advance the initiative.

Brett Sparks is a Senior Director Analyst at Gartner Inc. Covers the IT managed services market, including managed services and trends, vendor selection, procurement strategies, contracts and negotiations, and cost optimization. He wrote this article for SiliconANGLE. Gartner analysts discuss IT cost optimization Gartner IT Symposium/Xpo Happening October 17-20 in Orlando, Florida.

Photo: dokumol/Pixabay

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