Last updated on July 8th, 2021 at 12:48 pm
For financial debts, creditors regularly inform debtors of interest charges, principal remaining, and other loan parameters. Laws usually require reports and explicit statements about interest charges. By contrast, for technical debt, MICs can be difficult to compute with useful precision, even if we know they’re accumulating. Many decision makers are actually unaware that MICs are accumulating. For an organization to appreciate the full financial consequences of carrying technical debt, everyone in the enterprise must appreciate the concept of MICs.
The heart of the problemUnlike financial debt, for technical debt there are no legally required reports or disclosures. We can sometimes estimate MICs, but most organizations don’t track the data necessary to estimate MICs with useful precision. Indeed, developing useful estimates is often technically impossible.
The difficulty of measuring MICs arises from three sources. First, people whose productivity is most directly affected by technical debt—usually engineers—often have difficulty determining with precision the extent of the impact of technical debt on their efforts.
Second, many people are unaware of the impact technical debt has on their results. For example, if a product arrives late to market, we could compute the financial costs attributable to technical debt if we knew that technical debt is partially—or wholly—responsible for the delay. Too often, those who could perform such calculations aren’t sufficiently familiar with the concept of MICs. In any case, the data they would need for calculating a useful estimate is rarely available.
This brings us to the third source of difficulty.
The terrifying opportunity
Finally, a more insidious form of the consequences of technical debt is what we might call the terrifying opportunity. This situation arises when the organization rejects (or fails to recognize) a market opportunity because exploiting it would involve modifying an existing asset. The modification is terrifying because the asset harbors a heavy load of technical debt. The debt causes decision makers to assess that the probability of success is so low that the opportunity seems terrifying. They therefore reject the opportunity. Typically, terrifying opportunities would be exploitable if the debt-bearing assets didn’t exist at all. Then we would be starting fresh. But when opportunities require modifying assets that bear technical debt, commitment requires faith that we can address the technical debt successfully.
The sense of risk isn’t a reflection on the capabilities of the technical organization. Rather, it’s a result of the challenges involved in working with assets that bear high levels of technical debt. Given past performance of the technical organization relative to these debt-bearing assets, success can seem unlikely.
Computing the cost of a terrifying opportunity requires estimating the cost of not exploiting the opportunity, a difficult task in the best of circumstances. But whatever that cost is, it’s a form of MICs that we rarely recognize.
Building expertise in estimating MICs in all their forms is advantageous to any organization that seeks to make its technical debt more manageable. By making MICs visible, we can bring about better recognition of the cost of carrying technical debt, thereby providing an appropriate motivator for retiring technical debt.