The Internet of Things (IoT) placed third in a list of technology investments that created technical debt for 56% of companies polled in a recent global survey, according to annual Situation Report released today by Software AG.
A technical debt is defined as coding or development that is left undone or unfinished at the time that the application/platform goes live. It is the result of the software development approach that prioritises a quick delivery of a project with expectation that there will be an additional cost down the road as the development team rework on the program – as they learn more about how it interacts with other applications.
Like monetary debt, a technical debt is not necessarily a bad thing. Cash that has been acquired with a loan can be spent right away. Similarly, a software product that ships quickly can provide immediate benefit to the business that needs it -- while also providing the program's developers with valuable feedback about how their code is working in the real world.
Technical debt is a reality traditionally given a low-priority in companies’ strategy. However, figures from newly-released Software AG Situation Report 2022 showed that 78% of organisations have taken on greater levels of technical debt in the last 12 months.
The annual Situation Report surveyed over 700 IT decision makers from the U.S., U.K., Germany and France, and shows that global IT professionals feel that technical debt plays an important role in their digital transformation efforts. They also have a greater acceptance of it now, because of the pandemic.
“The pandemic has dramatically accelerated many things when it comes to technology and transformation. Technical debt is just one of them,” said Sanjay Brahmawar, CEO, Software AG.
He added: “Organisations that are resilient, digital and connected are well positioned to use technical debt positively, to become more agile and responsive to customers, employees and market conditions. Connected infrastructure and digital culture are going to be crucial, which is why becoming a truly connected enterprise has to be a high priority for every organisation.”
More open to accruing technical debt
According to the latest Software AG Situation Report, nine in 10 (88%) organisations say that the pandemic has made them more aware of technical debt, with 83% saying that they are now more open to accruing it.
Accruing technical debt can help organizations quickly solve challenges around efficiency or operational procedures, as well as capitalise on opportunities to win new customers or capture new markets. As a result, 94% of organisations believe that technical debt is an important part of their transformation strategy, allowing them to launch products and services faster and capitalise on market opportunities.
Despite its importance, and even though 82% say they can assess all or most of their technical debt, more than half (58%) do not have a formal strategy for managing it. This will become a crucial issue in the future as two thirds (69%) fear that technical debt could slow down their transformation progress.
Technical debts and investment priorities
According to the report, the increase in technical debt can be seen as both intentional and unintentional.
Just under half (44%) of companies say that part of their debt simply build up over time as their infrastructure became more complex. A similar number (48%) said that some of their technical debt was a deliberate and considered method for capitalising on opportunities. However more than half (56%) said that they have been required to act quickly and forced to accept technical debt. This blend of reasoning behind technical debt is why companies need to have formal approaches to manage it.
“There are plenty of positive reasons for companies taking on more technical debt. The problem for companies in the next year or two is that only 58% would say that they have a formal strategy for managing it. This is despite 82% of companies saying that they can assess all (42%) or most (40%) of their technical debt,” the report said.
It added that technical debt is important and challenging. Two thirds (68%) will spend more on it in 2022 than in 2021.
In terms of technology investment priorities, the report ranked IoT in the third spot, with 36% of companies polled saying that they plan to spend on the technology in the next 12 months. IoT ranked behind 5G and cloud computing, which placed first and second respectively in technology investments in 2022.
“With more companies willing to take on technical debt, having seen it’s benefit during the pandemic, being able to map out where that technical debt will arise amid future investment strategies will put organisations on the front foot,” the report said.