Technical debt threatens innovation

Technical debt threatens innovation

Companies spend almost a third of their IT budget on technical debt and its consequences. This is evident from an investigation by OutSystems. […]

The impact of the Covid-19 pandemic on the economy is evident in many areas. While companies are trying to reposition themselves in response, two out of three IT executives (69 percent) see technical debt as a major threat to their ability to innovate. This is the result of a study by OutSystems, a platform provider for application development. The report” The Growing Threat of Technical Debt ” examined the costs, causes and associated challenges for companies. 500 IT executives worldwide were surveyed across industries.

Technical debt is proving to be a major obstacle to innovation and recovery, especially in growth – oriented companies. This refers to technical design or development decisions that not only bring short-term benefits, but also long-term, undesirable consequences.

Deadline pressure and outdated technologies

They result from the development of solutions in which future-proof optimization has been neglected in favor of rapid implementation. The now presented OutSystems report shows the – cross-industry-challenges of companies that face the diverse causes of technical debt. These include deadline pressure, constant changes in the market and outdated technologies.

“The combination of old code on the one hand and the new generation of mobile apps, stack applications and SaaS proliferation on the other hand robs companies of resources, time and the ability to innovate,” comments Paulo Rosado, CEO and Founder of OutSystems. “The report shows that technical debt continues to accumulate – and that companies need a new approach to overcome it and innovate at the speed and scale that allows for a competitive advantage.“

The most important results at a glance

  • Two-thirds of IT executives (69 percent) said that technical debt fundamentally limits their ability to innovate. Slightly less (61 percent) said that these affect their company’s performance. 64 Percent, on the other hand, are of the opinion that the topic will continue to have a great influence in the future.
  • Companies of all sizes and industries invest time – and therefore money – in technical debt instead of in innovation and complain about the resulting opportunity costs (lost income compared to the best, unrealized alternative to action).
  • On average, companies spend about a third of their IT budget on dealing with technical debt-for large companies, it is as much as four – tenths (41 percent).
  • Technical debt cannot be attributed to a single cause. IT executives cite the presence of too many programming languages/frameworks (52 percent), fluctuation within the development team (49 percent) and the acceptance of known errors to meet release dates (43 percent) as important reasons.
  • Companies are still reluctant to reduce technical debt-and thus exacerbate the problem. Only a fifth of respondents (20 percent) think that their company is currently getting technical debt under control. However, a third (36 percent) are optimistic that this will be well managed in the future.
  • Technical debt accumulates as companies grow. Large companies spend 41 percent of their IT budget on the topic, smaller companies 27 percent.

Rui Gonçalves, Partner at KPMG Portugal, said: “We have been observing for years how technical debt negatively affects companies’ ability to prioritise innovation and flexibility. These are crucial factors in gaining and maintaining a competitive advantage. Through our long-standing partnership with OutSystems, we have seen the significant opportunities that modern application development offers to eliminate technical debt and help companies use their resources wisely and successfully for innovation.“

“In the financial services industry, technical debt can be particularly costly,” adds Izak Joubert, CTO of JTC Group. “This is where companies thrive on their ability to innovate while delivering fast and reliable services. At JTC Americas, we have been working with OutSystems for years to develop software products that optimize financial transactions for our customers. OutSystems has helped us overcome technical debt issues. This allows us to focus on building software that is predictable, secure, and quick and easy to update.“

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