Five Tips to Manage Tech Debt

IT spending is frustrating. It’s often hard to get good return on investment estimates. Even when you do, it takes time for technology to prove its value. Even worse, there are countless tech traps and pitfalls along the way. Many businesses today lose money every year through IT problems. If you want to get in front of this issue, you need to learn how to streamline your IT spending and manage tech debt.

Understand Technical Debt

Let’s assume you have a good understanding of monetary debt. You can apply that understanding to a concept that is often referred to as technical debt. CIO goes into the concept in pretty good detail, but we can summarize for a bit. Technical debt is a way to try and understand how far behind your infrastructure or business can be in maintaining modern technology.

Here’s an example. Let’s say you invest in productivity software. Two years later, it’s clear that your software is going down a different path from mainstream demands, so eventually it won’t be compatible with what everyone else uses. You’ve accrued technical debt. Overcoming the debt isn’t as simple as replacing your software with something more popular. You’ve probably already lost productivity to making the wrong choice, and now you’re also going to have to pay to retrain staff and play catchup. You can think of those extra expenses as interest on your technical debt.

In most cases, technical debt accrues when you adopt new technology too soon or too late. When you go too soon, you run the risk of that technology never properly maturing. When you go too late, you lose potential business to competitors who made the most of that tech sooner. You’ll never hit the golden zone on adopting tech, but being aware of the tradeoff can help you make informed decisions. Taking stock of technical debt is important to understanding and managing it, and it can help you choose which upgrade paths will be the most cost-effective.

Negotiate With Vendors

Veering away from abstract concepts, let’s look at vendor contracts. No matter your business, you need things from tech vendors. The most common of those things are software licenses, cloud services, servers and IT support. You may have other specific vendor expenses, and they can be treated the same way.

The key to keeping vendor costs down is to exploit competition. Without being obnoxious, you can make it clear to your current vendors that you’re open to switching for a better deal. That proactive mindset can prevent you from overspending when you fall into a pattern of inertia. It’s easy to stick with what you know, but it can also be pricey. Never stop negotiating.

Never Stop Learning

Calling back to the previous two tips, knowledge is vital. You have to have at least some understanding of the technology and services you are contracting through your vendors or your negotiations will fail. Similarly, you can’t really take stock of technical debt unless you have a clear working knowledge of your IT infrastructure. In fact, the majority of technical debt is accrued through ignorance. Finding the right time to adopt or change your technology is dependent on that fundamental understanding of how it works and what it can do for your business.

Know Your Budget

Some of you just scoffed. Of course you know your budget. It’s a pretty basic part of the job. Then again, there’s a difference between knowing the numbers on a spreadsheet and understanding the true value of all of your technology and its impact on business. In reality, knowing your budget is an extension of learning about technology.

Do you know how much most businesses spend on IT? According to research from CIO, it averages between four and six percent of revenue. That’s revenue, not profit. Also, this is just the large average. Tech spending will have to fluctuate from year to year. Occasionally, you have to bite the bullet and make large tech investments. Those are the years that drag your average up.

The point behind this conversation is that tech spending is persistent, and it’s likely to grow over time. The amount you spent last year doesn’t always inform how much you should spend this year. Instead, focus needs to be on expectations and ROIs. It also helps to keep a long-term IT spending map in the picture.

Tag the Intangibles

This is the hardest part of budgeting for IT. There are too many parts of the equation that aren’t clearly, numerically defined. How much is your brand worth? How about customer satisfaction? Sense of security? These intangibles are essential to business, but we struggle to put a hard price tag on them. If you want to manage tech debt, you need to overcome that struggle. The intangibles need those price tags.

When you can provide at least a ballpark value to the intangibles, you can better direct your tech spending. If your brand is great, then staying on top of security might be more valuable than squeaking out a few more positive reviews in customer satisfaction. You get the idea.

Overall, quantifying and managing an IT budget is a challenging task. It’s going to take more than a single blog post to get you there. Nothing shy of dedicating serious time and effort will empower you to fully master tech spending. Even then, there will always be room for improvement. Despite that, any step forward is a good step, and hopefully this has served in that capacity.

Outsource Expertise

We wouldn’t be doing our due diligence if we don’t express how important it is to ensure your organization has the knowledge and expertise to manage tech debt. At Valicom, we provide Telecom and Technology Expense Management solutions to return a 30% savings with an upfront commitment cost for these services at only ~3%. That’s a massive Return on Investment.

For customers that are too nervous about a change like TEM, we offer a savings share. No costs up front. Just savings, shared between you and us. Contact a Valicom expert today and let’s get started.

About the Author: Chantel Soumis

Chantel Soumis brings over a decade of knowledge in workflow enhancement through the use of technology. Chantel studied marketing communications and business administration at Franklin University and proceeded to work in a fast, ambitious environment, assuring client delight in the healthcare and pharmaceutical industries. Passionate about project productivity and streamlining workflows through the use of technology, Chantel strives to inform organizations of Valicom’s advanced telecom expense management software and services by mastering communications and messaging while delivering helpful information and supporting resources.