Want to tackle technical debt? Sell it as business risk

Opinion

Jan 02, 20245 mins

BudgetBusiness IT AlignmentInfrastructure Management

Why is upgrading IT infrastructure still a ‘tough sell’? Likely because you haven’t adequately tied tech debt to tangible business consequences.

Whenever IT infrastructure upgrades are mentioned, it’s often in the same sentence as technical debt.

Technical debt is what accrues when IT teams borrow against future performance to meet demands and deadlines today. That includes maintenance and upgrades deferred in favor of other projects or priorities, which can result in high future costs when those actions can no longer by avoided, often when a solution reaches end-of-life.

A recent example is Windows Server 2012, which was sunsetted by Microsoft in October 2023. Despite this sunsetting, companies still run the platform, primarily because they want to defer investing or can’t afford to invest in the upgrade.

Windows Server 2012 is not alone. There are myriad systems kept on life support in every enterprise because companies delay replacing them, resulting in downtime and the continual need for time-consuming fixes, which consume resources and continue to build technical debt.

At the center of this are not only strategic decisions that, intentionally or not, accrue technical debt but also financial issues around how technical debt is pitched for budgetary investment. Here’s where CIOs can rethink their approach to the long-term benefit of their organizations.

Reframing technical debt

There is no magic potion that can eliminate all technical debt, but technical debt can be attacked via budgeting if technical debt is not just perceived as upgrading IT infrastructure.

What CIOs need to do instead is to present IT infrastructure investment as an important corporate financial and risk management issue that the business can’t afford to ignore.

Consider, for example, a school building that contains asbestos. To address this, the school district must raise funds and budget for replacing or modernizing the building. From a financial and risk management standpoint, the building is a useless (and hazardous) asset that must be written off the books and remedied.

When IT infrastructure is viewed like any other corporate physical asset that is suddenly too expensive or hazardous to maintain, getting budget approvals is easier because other corporate executives (like the CFO) will also see inadequate IT infrastructure as risky and hazardous for the company.

The “catch” in this is that CFOs and other corporate leaders don’t see aging IT infrastructure as risky and hazardous today — and IT has contributed to this thinking.

How? Through IT’s long history of presenting infrastructure upgrade requests in separate hardware and software line-item budgets, alongside technical justifications — e.g., maxed out processing, end of vendor support, too many users on the network, etc. — that don’t mean much to key financial decision-makers.

Changing the IT infrastructure conversation

Technical budget justifications for IT infrastructure upgrades, which are seldom linked to end business strategies, make it easy for budget decision-makers to defer IT infrastructure investment. Instead, budget decision-makers figure that the company can “make do” because IT will somehow find a way to keep systems running.

CIOs must change this thinking. They can start the process by changing IT infrastructure investment justifications from technical explanations to corporate financial and risk management explanations.

For example, instead of stating that processing on a sales server needs to be stepped up because the processor is “maxing out,” CIOs can talk about the risks to corporate revenue because it’s estimated that the server is missing out on one thousand sales transactions each minute because it can’t keep up with sales volume. Instead of saying that more investments into zero-trust networks are needed, CIOs can talk about how the company’s strategy of decentralizing operations has created greater security end-point vulnerabilities, opening the company to security breaches that threaten company revenues and reputation, and that will also lead to increases in business and cyber liability coverages.

CIOs should also team with the CFO to help reframe the tech debt narrative, because CFOs are always on the lookout for new corporate financial and risk management scenarios. CIOs and CFOs working together can create an end-to-end corporate risk and financial management picture that shows IT infrastructure’s relevance to the wellness of the business — and where IT infrastructure fits in.

According to McKinsey, companies that are managing their technical debt will experience revenue growth 20% higher than those in the bottom 20th percentile of technical debt reduction. That speaks directly to IT infrastructure, and may or may not resonate with every corporate budget decision-maker — but it can take on real meaning if these same budget decision-makers understand the links between modernizing IT infrastructure and business efficacy.

It is up to CIOs to make it “real.”

SUBSCRIBE TO OUR NEWSLETTER