How to Get Rid of Digital Debt
How can you identify, manage and reduce digital debt before it slows growth and innovation?
Debt can be a bummer — and so can technical or digital debt. These are the “hidden loans” in your IT systems, which may seem manageable at first but build up over time, with interest in the form of increased costs, slower processes, security risks and reduced competitiveness.
Is the future debt-free?
Digital debt can never be completely eliminated. In a constantly changing market, some compromises will always be necessary. But with a deliberate strategy, business can minimise the burden, reduce risk and ensure systems support growth and innovation. The key? Don't see digital debt as a technical issue, but as a strategic challenge that affects the entire business — from customer experience at the top to the bottom line.
What is digital debt?
The term technical debt, often referred to as digital debt today, was first introduced by Ward Cunningham (https://no.wikipedia.org/wiki/Ward_Cunningham) - the pioneer behind the first wiki and one of the brains behind the Agile manifesto. He compared taking shortcuts in code and systems development to taking out a loan: It offers an immediate gain but comes with a future cost in the form of interest. The longer one waits to pay off the debt, the more expensive it becomes.
Today, the term is used in a broader sense and encompasses situations where IT systems are not kept up to date, integrations are not maintained, or technological solutions no longer support business needs. The result? Decreased efficiency, increased risk and lost innovation opportunities.
How does digital debt arise?
Digital debt occurs when organizations (consciously or unconsciously) take shortcuts. Some choose to postpone investments with the thought “Will it last another year?”, while others settle for temporary solutions and cut costs by skipping management and maintenance. Or that one makes bad choices and chooses closed, non-scalable and forward-looking solutions.
From a managerial perspective, this is a classic dilemma - capitalize on what you have, or invest in something new? Short-term or long-term gain? A demanding balancing act and a difficult problem.
What are you risking?
As in the private economy, high debt offers reduced room for manoeuvre. Digital debt can create several serious consequences:
Loss of competitiveness
Companies that are stuck in outdated and closed systems lose the ability to innovate quickly. Say you run an online store and want to implement an AI-based personalization solution, but your system is outdated, architecture inflexible, and data closed. Then you have to either initiate a comprehensive development project or drop the solution. Meanwhile, the competitor has launched its solution and is stealing sales and market share.
Higher operating costs and security risks
Maintenance of outdated systems requires additional time and resources. At the same time, the risk of security breaches increases, which can lead to data leaks and reputational loss. In an era of AI-driven cybercrime, security should be a priority.
Poor customer experience
A deteriorating customer experience through slowness, errors and lack of functionality, directly affects customer satisfaction - which can result in lost revenue and reputation.
How to reduce future digital debt?
Choose a modern architecture. In the field of web, the acronym MACH can be a good rule of mind:
- Microservices: Use specialized services instead of monolithic systems.
- API-First: Ensure open and flexible integration options.
- Cloud-native: Go for scalable and flexible infrastructure.
- Headless: Create agile solutions independent of back-end systems.
Conduct regular technology assessments. In the same way that you take your car on EU control, the business should have an annual “health check” of the technology. This ensures that you discover and manage technical debt before it becomes critical.
Then prioritize correctly, because not all debts need to be paid immediately. It is neither realistic nor profitable to clear all digital debt overnight. We can have some debt, as long as the risk is low.
When assessing your company's digital debt, you can rank your technical solutions according to three key factors:
- Risk: the likelihood of failure, downtime or security breach.
- Cost: direct and indirect costs of living with the debt, or “paying it down”.
- Business impact: the impact on customer experience, revenue and innovation ability.
Is the future debt-free?
Digital debt can never be completely eliminated. In a constantly changing market, some compromises will always be necessary. But with a deliberate strategy, business can minimise the burden, reduce risk and ensure systems support growth and innovation. The key? Don't see digital debt as a technical issue, but as a strategic challenge that affects the entire business — from customer experience at the top to the bottom line.
What are you risking?
As in the private economy, high debt offers reduced room for manoeuvre. Digital debt can create several serious consequences:
Loss of competitiveness
Companies that are stuck in outdated and closed systems lose the ability to innovate quickly. Say you run an online store and want to implement an AI-based personalization solution, but your system is outdated, architecture inflexible, and data closed. Then you have to either initiate a comprehensive development project or drop the solution. Meanwhile, the competitor has launched its solution and is stealing sales and market share.
Higher operating costs and security risks
Maintenance of outdated systems requires additional time and resources. At the same time, the risk of security breaches increases, which can lead to data leaks and reputational loss. In an era of AI-driven cybercrime, security should be a priority.
Poor customer experience
A deteriorating customer experience through slowness, errors and lack of functionality, directly affects customer satisfaction - which can result in lost revenue and reputation.
How to reduce future digital debt?
Choose a modern architecture. In the field of web, the acronym MACH can be a good rule of mind:
- Microservices: Use specialized services instead of monolithic systems.
- API-First: Ensure open and flexible integration options.
- Cloud-native: Go for scalable and flexible infrastructure.
- Headless: Create agile solutions independent of back-end systems.
Conduct regular technology assessments. In the same way that you take your car on EU control, the business should have an annual “health check” of the technology. This ensures that you discover and manage technical debt before it becomes critical.
Then prioritize correctly, because not all debts need to be paid immediately. It is neither realistic nor profitable to clear all digital debt overnight. We can have some debt, as long as the risk is low.
When assessing your company's digital debt, you can rank your technical solutions according to three key factors:
- Risk: the likelihood of failure, downtime or security breach.
- Cost: direct and indirect costs of living with the debt, or “paying it down”.
- Business impact: the impact on customer experience, revenue and innovation ability.
