Last updated on December 22nd, 2017 at 12:17 pm
The metaphorical interest charges (MICs) and metaphorical principal (MPrin) of a particular class of technical debt can change as a result of retiring other seemingly unrelated classes of technical debt. In most cases, engineering expertise is required to determine technical debt retirement strategies that can exploit this property of some kinds of technical debt.
Financial debts usually have associated interest rates that are used to compute the periodic interest charges. Typically, the interest charge on a financial debt for a given period is the periodic interest rate multiplied by the principal, and then scaled for the length of the time period.
But there are no “rates” for technical debt. Their existence would imply that MICs were proportional to the analog of “principal,” which, in the case of technical debt, is the cost of retiring the debt — the MPrin. MICs depend only weakly on the cost of retiring the debt. Instead, they depend more strongly on the impact of the debt on ongoing operations.
Decision-makers who understand the world of financial instruments at a very sophisticated level might tend to overvalue arguments favoring technical debt management in ways analogous to the ways we manage financial debts. Financial sophisticates might find appealing any argument for a technical debt management program that parallels financial approaches. Such programs are unlikely to work, for two reasons. First, as we’ve already noted, the uncertainties associated with estimating MPrin and MICs make technical debt management decisions more dependent on engineering and project management judgment than they are on the results of calculations and projections (see MPrin uncertainties and MICs uncertainties).
Second, as noted above, the familiar concept of interest rate is inapplicable to technical debt, because the MICs depend on the degree of interaction between ongoing activities and the debt itself, rather than the cost of retiring the debt. And that means that MICs (and MPrin) of one class of debt can change when another class is retired.
Implications of this effect
The possibility that retiring one class of technical debt can alter the financial burdens presented by another class of technical debt has both favorable and unfavorable implications.
As an example of a favorable implication, consider software remodularization. Suppose we have a software asset A that depends on another software asset B. As shown in the left image of the figure, asset A, of which there are many copies, bears two classes of technical debt, D1 and D2. As shown, there is only one copy of asset B. Suppose further that an asset that bears debt D2 also bears debt D1, but an asset that bears D1 might or might not bear debt D2.
To retire D2, engineers have decided to modify B by having it assume responsibility for the tasks that formerly bore debt type D2. They do this even though, as a consequence of this change, B will now bear debt of type D1. Next, debt type D2 is retired. The right half of the figure shows the resulting implementation. The system still bears debt D1, but now it’s located in B instead of A. All instances of type A assets change, and those modifications relieve them of both types of debt. This is a sensible approach, because there are several assets of type A and only one of type B. The end result is that D2 vanishes, and only a single instance of D1 remains. In this way, retiring debt D2 has reduced the MICs and MPrin for D1.
Policymakers can help
Exploiting the salutary opportunities of this property of technical debt provides an example of the risks of adhering too closely to the financial model of debt.
Many different scenarios have the property that retiring one kind of technical debt can reduce the MICs associated with other kinds of debt. Because technologists understandably tend to be more concerned with technical debt retirement strategies that emphasize short-term improvement of their own productivity, policymakers can provide guidance that steers the organization in the direction of enterprise benefits.