Using the cloud to transform technical debt into technical wealth

Written by Kelly Woods, Senior Product Marketing Manager, Core Infrastructure, Amazon Web Services (AWS)

“Technical debt is a universal problem,” says Nurani Parasuraman, principal customer solutions manager at Amazon Web Services (AWS).

Technical debt happens when organizations make technology decisions that cause deficiencies or risks to accumulate over time. Gaps in skills, testing, documentation, or application best practices can introduce these deficiencies in an application as it is updated and maintained over time. Take “cruft”, for example. It’s a niche word for badly designed, unnecessarily complicated, or unwanted code that gradually creeps into software.

“As the wear and tear of the software over a period of time increases, this ‘cruft’ makes it harder and harder to make changes,” says Parasuraman. As workarounds pile up, making changes and responding to the market becomes more difficult. For example, many organizations rely on Enterprise Resource Planning (ERP) systems for inventory management, human resources, finances, and so on. However, as the business grows and regulations change over time, these systems can prove difficult to scale and evolve. The organization is then stuck with an obsolete system that doesn’t meet new use cases and the requirements of the business.

In contrast, cloud-based ERP systems are not limited by scaling, and their flexible nature means they’re easily changed over time. Beyond adding flexibility, cloud services also improve performance, reducing the pressure on IT. When the Nissan Europe IT team migrated their SAP infrastructure to AWS, performance improved by 63 percent. Moving ERP applications to the cloud also brings other benefits, such as improved availability, faster recovery time, and the ability to leverage newer technologies to create value for the business.

While moving to the cloud helps address the tech debt a company has already accrued, much of that debt could have been avoided in the first place. “If we’re measuring tech debt all along, the decision to migrate to a new cloud-based composable ERP would have been taken three years back,” explains Siraj Gadne, senior leader for the customer solutions management team at AWS. So, while it’s true that businesses should use the cloud to address existing tech debt, a cloud-based approach also helps avoid future tech debt.

Ultimately, technical debt is unavoidable, particularly given how rapidly the IT industry and a business evolves. That said, organizations can make better decisions about when to take on tech debt. Companies can reduce the amount they already have both by leveraging the cloud and approaching technical debt as an opportunity for continuous improvement. Most importantly, technology and business leaders need to align on how they will acknowledge, plan for, and address technical debt together.

According to a McKinsey study, IT devotes up to 20 percent of its budget to dealing with technical debt. But it shouldn’t just fall on IT to care about and manage tech debt; both the business and IT need to be in it together and understand how unchecked tech debt hampers innovation.

Typically, business leaders focus on features and capabilities that are end user facing, while IT is concerned with how those features and capabilities actually work on the backend — things often considered more implicit, hidden, or taken for granted. For example, if a business wants to launch e-commerce, IT’s first concern will likely be ensuring secure payments. The business wants to have a marketplace, whereas IT is focused on making that marketplace secure so payments and customer data are protected. One is focused on the end user experience, and the other on what it takes to run it securely, reliably, and at the right level of performance. Both matter.

It is critical that the business and IT respect each other’s needs and wants, and that they are aligned on what features should be prioritized, what technical debt might be incurred, and what risks the organization is willing to accept.

So how can both teams work together to acknowledge and mitigate tech debt — in other words, the amount of risk — they’re taking on? The key is understanding how IT metrics impact business outcomes such as revenue or retention, and leaning on IT to communicate tech debt in terms of those business outcomes. For example, metrics such as release cycles and time spent testing and fixing defects can provide insight into staff productivity.

IT must communicate technical debt in terms of business outcomes, such as the inability to change an application in the future because of code deficiencies or long release cycles that risk not getting the application to market in time to meet demand. Brand reputation is also at play here; the inability to support changing compliance or security regulations can result in fines or impacts to how the brand is perceived.

Technical debt isn’t necessarily all bad. Taking it on thoughtfully and deliberately can make sense in the right situations. For example, a startup might decide to build a demo with only core functionality to pitch to investors, then build a more polished product once funding is secured. Or, an organization might take on technical debt to test and evaluate emerging tech such as generative AI before scaling it broadly.

IT and the business must align on when to take technical debt on, as well as a plan to address the technical debt they’ve already accrued. When everyone is on the same page, it’s easier to manage and reverse technical debt that has the most impact on customer experience.

The planning process should include upskilling team members to build a culture of mature software development practices, including adopting Agile and DevOps methodology, monitoring software, conducting regular code reviews, and testing software before it’s released. The Agile methodology is particularly significant in this context. It’s a process that uses an iterative and incremental approach, where work is broken down into smaller, manageable tasks that are delivered in a series of iterations. This approach allows for rapid feedback from customers and stakeholders, which helps to ensure that the product meets their needs. It also emphasizes continuous collaboration and improvement.

Teams follow a cycle of planning, executing, and evaluating, while technical debt is tracked in the project backlog along with new features. “The Agile methodology brings business and IT teams together,” says Gadne. “It becomes easy to prioritize which features make sense when you’re looking at a common backlog.”

Increasing agility and flexibility by embracing cloud computing and a culture of modernized IT can help avoid tech debt in the first place. The cloud offers built in security, compliance, and availability, as well as transparency. Plus, it enables modern application approaches such as microservices or containers, all while supporting agile development best practices and upskilling.

It’s important to prioritize application modernization, which can support business initiatives by accelerating innovation and improving performance, security, and reliability, all while lowering total cost of ownership. A modern application blends advanced technologies, architectures, and processes to enable rapid, consistent value delivery. Modernization enables faster release cycles through automation, providing tools that remove overhead and undifferentiated heavy lifting, and building security and compliance into app development practices. Be prudent, not reckless, when taking on technical debt. Consider whether a shortcut is worthwhile and how and when to “repay” the debt it creates.

Of course, the execution of the plan is key to addressing tech debt — and this is where the benefits of cloud computing take center stage. Cloud platforms provide the ready-made building blocks needed for building and maintaining applications, allowing teams to focus on innovation. Infrastructure provisioning, code deployment, testing, threat detection, monitoring and alerting, and disaster recovery can all be fully automated on the cloud. Leveraging the cloud is paramount to helping businesses address and reduce technical debt, while IT and the business adopt an approach of continuous improvement, acknowledgment, planning for, and addressing of technical debt on an ongoing basis.

Migrating on-premises infrastructure to the cloud can realize savings through cost optimization, reducing 3-year total cost of ownership by up to 66%. These savings can then be reinvested back into the business. IT can instead focus on innovation and create value for the business and its customers, such as interactive features and personalized experiences that increase user engagement. The cloud also enables the organization to deliver customer value faster, and more frequently. Teams can test, add, and remove capabilities easily, then launch globally with the click of a button. The cloud can help ensure their applications are maintainable, scalable, resilient, simple, well architected, and secure. And, it delivers benefits of improved operational efficiency, faster time to value, increased business agility, and reduced risk — all of which help the organization avoid and reduce technical debt.

Think of the best practices for reducing technical debt as a continuous loop. Addressing technical debt is really about continuous improvement; by exposing it and understanding its implications for both IT and the business, it can facilitate better alignment, so the organization can make more informed decisions and deliver better customer experiences. Once the organization has visibility to technical debt and agrees that it is not just a technology issue, they can address it by leveraging cloud services, adopting agile practices, modern application development, and employee training. Treating technical debt as an opportunity for continuous improvement enables continuous innovation that will deliver better customer engagement and a competitive advantage.

Learn more about how AWS cloud infrastructure and modern application practices can help you transform technical debt into technical wealth.