How to Measure Technical Debt: a Step-By-Step Introduction

Generative AI is causing a ripple of new software being built at break-neck speeds. But as companies double down on producing code faster, they are creating a considerable amount of technical debt in the process.

Read on to learn why technical debt is a problem and how to measure and take control of it so that it doesn’t impact your operations.

What Is Technical Debt?

Technical debt in software development is the extra work that builds up over time when software development teams search for a quick and easy solution to a problem instead of spending the time needed to pick the best solution.

Engineers and operations teams today are under rising pressure to meet deadlines and keep their users happy. As a result, they often delay important tasks in order to complete their work and ship new releases.

Rushing a project quickly to meet a deadline can please stakeholders in the short term. However, it can also lead to significant rework down the line. And when rework accumulates, it results in technical debt.

Almost every business has a certain level of technical debt. But the problem is becoming much worse, with companies increasingly adopting cutting-edge technologies and abandoning legacy processes.

In a McKinsey study, for example, CIOs report that technical debt amounts to 20 percent to 40 percent of their entire technology estate before depreciation. What’s more, 60 percent of CIOs claim their company’s technical debt is higher than it was three years ago.

The Heavy Cost of Technical Debt

In many ways, technical debt is like financial debt. It’s similar to taking out a loan or pushing a credit card payment to the next billing cycle.

But part of what makes technical debt so challenging is that it can sneak up on your organization and accumulate over time. And eventually, your company can lose control of it.

Unfortunately, technical debt results in more than just high operational and engineering costs. It can also contribute to a variety of additional issues that can negatively impact operations and cause teams to fall behind.

 In many ways, technical debt is like financial debt. It’s similar to taking out a loan or pushing a credit card payment to the next billing cycle.

Security Vulnerabilities

One of the most common types of technical debt takes place during software development. In traditional software development, engineers typically avoid security testing until the very end of the process.

Security engineers perform testing before a software release—and oftentimes, security issues become too costly or complex to address.

When this happens, vulnerabilities often wind up sneaking into production. This results in an endless process of software patching and higher end-to-end development costs.

Weak Access Management and Governance

Despite the clear and present need for strong access controls in the cloud, companies often have minimal safeguards in place to reduce friction for workers.

Unfortunately, weak access management and data governance can lead to privilege escalation and grant authorized and unauthorized identities access to sensitive systems and databases. Revoking access and remediating security issues can take a considerable amount of time and lead to irrevocable brand damage and reputational harm.

Higher Complexity

It’s common for technical teams to take on multiple technologies, languages, and strategies. But over time, this can lead to significant complexity.

High complexity is especially dangerous when a technical team inherits another company’s systems and tools during a merger or acquisition. This can cause technical debt to double and spiral out of control.

Project Backlogs

IT departments are currently dealing with widespread staffing shortages. As a result, teams often wind up triaging problems and working quickly to keep systems and applications functioning. Doing so can create project backlogs and delay releases and updates.

Project backlogs can lead to unhappy internal stakeholders and customers. Additionally, they can also lead to gaping security and operational vulnerabilities.

 It’s imperative to try and maintain consistency when bringing software to market or when maintaining internal IT systems or cloud environments.

Sloppy Development

When you consistently allow technical debt to accumulate, it can send the message that speed and efficiency are more important than quality. And this is a very slippery slope.

It’s imperative to try and maintain consistency when bringing software to market or when maintaining internal IT systems or cloud environments.

Without enforcing best practices and detailed policies, taking a fast way out can become a standard operating procedure. Once that happens, it can be very hard to change from a cultural perspective.

How to Measure Technical Debt in Your Company, Step by Step

As you can see, technical debt is something that you should try to keep to a minimum at the very least. But to do this, you need to have a system in place for measuring it. Here’s how to start calculating technical debt.

1. Measure the Technical Debt Ratio (TDR)

Just as the name suggests, TDR is a measurement of the amount you pay to fix your software compared to the amount you spend on developing it. It’s the radio of remediation cost to development cost.

By tracking TDR, you can have a clearer understanding of how much time and effort your team puts into quality improvement.

Suffice it to say that you should strive to have a minimal TDR of less than 5 percent. Of course, most companies have a TDR of 10 percent or above.

2. Form a Debt Reduction Plan

Once you have a clear understanding of how much technical debt you have and where it exists, the next step is to prioritize your debt and form a plan to reduce it.

To accomplish this, round up various department heads—including security, engineering, and operations leads. Analyze your available resources and form a plan to try and eliminate the debt from your workflows.

3. Change Your Culture

Companies often run into issues because they attempt to fix technical debt without addressing the underlying cultural issues that contribute to it.

It’s critical to build a culture of excellence and encourage team members to avoid debt—even if it means pushing back deadlines or spending more time on a project. In the long run, it’s usually better to focus on quality than speed.

4. Track Technical Debt Metrics Over Time

Over time, technical debt can lead to significantly higher costs, lower quality software, and more performance issues. As such, it’s something that you absolutely need to stay on top of.

Consider using automation to track technical debt over time. This way, you can benchmark debt reduction and also have an easier time understanding how your efforts are paying off.

Some example technical debt metrics to measure over time:

• Technical Debt Ratio (TDR)
• Lead time
• Change failure rate
• Defect ratio

5. Prioritize Technical Debt

Technical debt isn’t usually a glaring problem until it starts negatively impacting operations. For this reason, you need to make technical debt a priority.

One easy solution is to factor debt reduction into your sprint backlogs. Give your developers extra time to perform additional testing and remediate issues.

By prioritizing technical debt, you can prevent problems from occurring later in the development cycle. This can save time and reduce headaches for your team members.

Reduce Technical Debt With OpsLevel

As you can see, technical debt is a major problem for digital companies. That being the case, it’s something you should try and minimize at all costs. The best way to eliminate technical debt is to avoid situations where it can accumulate. To accomplish this, you need to have full visibility into your engineering environment. And this is where OpsLevel comes into play.

OpsLevel offers a single portal for inventorying architecture. You can use OpsLevel to centralize your operations and enforce best engineering best practices.

By gaining deeper visibility into your environment with OpsLevel, you can prevent technical debt from occurring and quickly remediate it when it starts to happen.

To learn more about the easiest way to stop technical debt from slowing you down, schedule a demo of OpsLevel today.

This post was written by Justin Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can help workers be more productive. In his spare time, he likes seeing or playing live music, hiking, and traveling.