How to recognize the symptoms of technical and organizational debt? | Human Capital | Deloitte Netherlands


How to recognize the symptoms of technical and organizational debt?

Business agility transformations cannot accelerate fully without tackling ‘burdens from the past’ that reside in ‘technical and organizational debt’

We see an undisputed urgency for organizations to adopt business agility, yet many are succeeding very slowly. Two often overlooked blockers are technical and organizational debt. As with financial debt, this is a costly burden that impacts organizational performance, but it is not yet clearly visible on the balance sheet.

Technology landscapes have become highly complex, tightly coupled and are rapidly changing. This causes some to lose a complete and correct overview over all dependencies that exist between business critical IT components. The traditional IT or Enterprise Architecture teams are not sufficiently equipped to deliver real-time transparency on the landscape as-is, let alone provide a clear transition path to a future proof IT landscape.

Examples are plenty showing how this lack of visibility on the technology stack directly affects the business continuity and agility of a company and its impact on customers. One example at a transshipment company showed the challenge to get insight in the necessary equipment maintenance, ultimately leading to costly down-time in necessary maintenance activities. This was caused by the “spaghetti” data warehouse solutions being built over the years that prevented generating correct and timely insights to handle maintenance activities.

Another technology development that adds up to this complexity is the ability to launch new functionality needed by the business via Software as a Service (SaaS) solutions. Often poorly integrated with the slower moving traditional legacy IT components these solutions cause severe risks and issues around data compliance and security. All these new capabilities ultimately end up as ‘Shadow-IT’ outside of the control of the CIO or CTO office, responsible for the stability, security and continuity of the entire organization technology stack. Many organizations are now investing heavily in regaining control over the rapid growth of SaaS solutions. The business needs for technology SaaS solutions are addressed more effectively with support from Enterprise Architects and Data Security Officers, who also help taking care of preventing data compliance and cyber security risks. This ensures the necessary safety and stability needed in the technology landscape to allow the organization as a whole to adapt more flexibly to market fluctuations.

These examples illustrate various symptoms that should raise a red flag on an ever increasing technical debt within an organization:

  • Pending decommissioning of systems as they need to be kept alive and integrated to satisfy a minimal set of requirements and use cases
  • High cost for maintenance and support because specialized vendor knowledge is needed to add or refine functionality in the legacy code or system
  • Rigid vendor and supplier behavior and inflexibility to adjust delivery frequency caused by traditional lump sum contracting instead of outcome based contracting 
  • Slow time to market of customer facing IT services and products because of tightly coupled integrations with the back-end and no test automation applied across IT components
  • Inability to satisfy regulatory requirements as no Master Data Management practice exist and data quality across the organization and the IT stack is poorly maintained
  • Slow turn-around time on incidents around security and availability of systems as end to end visibility on landscape is lacking and weak spots are hard to identify (proactively)

Many of these symptoms of technical debt go hand in hand with symptoms of organizational debt. When organizations are not managed holistically and restructuring has happened in parts without further alignment with the organization at large, inconsistencies gradually pile up. This impacts collaboration in and across units (‘silos’) which employees experience as complex and cumbersome. When aiming to increase business agility, these issues seriously hinder faster delivery of products and services to customers (time to market), continuous improvement of the employee experience, as well as opportunities to realize cost efficiencies.

Recent high-impact global events like the pandemic and low oil prices only bring more urgency to tackling technical and organizational debt. A global oil & gas company has responded to these events by connecting some of its key capabilities in so called virtual ‘networks of teams’. The organization first assessed its critical competencies and capabilities and how these are spread across the global organization. It then designed ways to connect these competencies more effectively, allowing people to work together more effectively in a virtual world. This has resulted in more focus for expert teams (on delivering value to internal or external ‘customers’), and reduced duplication of work across locations. The teams now have better and faster access to expertise across the world, and their work is designed to deliver better outcomes, aligned with what business and external markets need most. This enables teams to get work done more effectively in their highly complex and dynamic environment, and helps to gradually break down the organizational ‘silos’. These type of organizational redesign efforts help improving the employee experience and drive business agility.

Insight 1: Organizational and technical debt are caused by inefficiencies left unaddressed, that have grown over time at all levels in an organization. It is interesting to see that organizations all monitor financial debt on an ongoing basis, but not many use quantitative measure to keep track of the impact of technical and organizational debt. It is time that we also quantify technology and organizational debt, as they can put significant pressure on the bottom line.

Some symptoms of organizational debt are:

  • Organizations with many management layers (bureaucracies) have difficulties aligning execution of work with realizing strategic priorities
  • With multiple management layers in place, lead times for decision making are usually longer than in ‘flatter’ organizational structures, with less hierarchy. Complex decision making may cause frustration with teams that see their work flow interrupted while having to wait for decisions
  • Leaders who get too many direct reports added to their teams have a span of control that is too wide, causing work load inefficiencies
  • A span of control that is too narrow may lead to micromanagement and drives up labor cost
  • In large organizations where restructuring has taken place in parts without much alignment to other entities, overview on the whole is lacking. This shows up in org charts in duplication of roles across entities, as well as in functions that collaborate ineffectively across organizational ‘silos’, causing inconsistencies and waste of effort
  • If processes, procedures and controls are not optimized frequently this causes a high risk on obsolete steps still being conducted wasting time and effort

These symptoms of technical and organizational debt all show how operational efficiency, business continuity and performance are impacted if measures are not taken regularly and holistically to prevent the consequences. All of these heavily impact the value delivery of teams and collaboration across an organization, as well as the organization’s impact on society.

Why have technical and organizational debt been ignored for so long?
The main reason why much of this legacy has never been removed are that companies are trying to balance too many competing priorities. It is a difficult balance to strike between keeping a business running satisfying customers with better service and products on the one hand, while preparing it adequately for the future. Also, removing legacy is complex, causes risks, and is seldomly recognized as rewarding work that requires true experts, and courageous leadership decisions to take risk and tackle complexity. Short term business results seem to matter more than big complex, high risk interventions like decoupling technology via an API 1st approach, application landscape simplifications and or restructuring organizational units. Quick fixes have done the trick in many cases. Other bigger consequences were often left for later, for example ‘solved’ with a work-around, avoiding formal reorganization processes. Many organizations have had the financial means to look away from this, and build workarounds instead.

By the time an organization actually embarks on a business agility journey, the symptoms of technical and organizational debt become key blockers to reap the full benefits of the transformation efforts. These technical and organizational related symptoms need to be diagnosed and resolved across entire value chains in the organization. It is oftentimes not within the mandate of Agile/Digital Transformation Leaders to rigorously tackle these types of ‘‘burdens from the past’ and it takes a tremendous effort to mobilize buy-in from executive leadership.

This is the second blog in a series of three. The first blog  focuses on how technical and organizational debt are key blockers on the Business Agility journey. In this second blog we covered how to recognize the symptoms. In the final blog we will share some practical insights to start tackling your organization and technical debt.

Insight 2:  When organizations approach business agility without putting deliberate effort and investment in optimizing the technology landscape and organizational structures in a holistic manner, technology and organizational debt will affect the pace of change on a business agility transformation journey. When met ‘unexpectedly’ these challenges are complex to solve, and will hold up the pace to realizing the transformation benefits significantly.


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