Policy implications of the properties of MPrin

Last updated on December 11th, 2018 at 09:46 am

Formulating sound policy vis-à-vis technical debt requires a thorough understanding of the distinction between the MPrin associated with a technical debt and the principal amount of a financial debt. There are three fundamental differences between them.

MPrin can change spontaneously

For most financial debts, the principal amount is determined by formula, or by voluntary actions of the debtor, such as making periodic payments on an installment loan, or new purchases on a credit card account. By contrast, MPrin can change absent any action by the “borrower.” For example, changes in regulations, standards, or technologies can all cause changes in MPrin. More: “How MPrin can change spontaneously”

Technical debt can create more technical debt

Technical debt left in place can create more technical debt without the knowledge or consent of the debtor organization. By contrast, the principal amount of a financial debt can grow, but law or regulation requires notification—and in some cases consent—of the debtor. More: “How MPrin can change spontaneously”

Projecting MPrin with useful precision might not be possible

The cost of retiring a technical debt can depend on how the asset bearing the debt has changed over the life of the debt. And it can depend on how the enterprise is engaged at debt retirement time. These factors are difficult to predict. By contrast, projecting the principal amount of a financial debt is formulaic. More: “Useful projections of MPrin might not be attainable”

The policy implications of these properties of MPrin can be profound. The possibility of spontaneous change in MPrin implies a need for investments in market and technological intelligence focused specifically on potential effects on technical debt. The possibility that existing technical debt can cause the creation of new instances of that debt or other debts implies a need for awareness of what kinds of technical debt are most likely to exhibit this phenomenon. Finally, the difficulty of projecting MPrin implies that typical reliance on analytical modeling of enterprise asset evolution in preference to human judgment may be misplaced. A wiser course might be investment in employee retention programs focused on the individuals who can provide the necessary wisdom.

This is just a sketch of the problems policymakers confront when dealing with the properties of MPrin. I’ll be addressing them in more detail in future posts.

Related posts

• MPrin for missing or incompletely implemented capability
  In some instances, technical debt is actually a missing or incompletely implemented capability. If we retire the debt by completing the implementation, the MPrin is the cost of that effort, plus any training, testing, and lost revenue. If we retire the debt by halting or withdrawing the capability, the MPrin is the total cost of removal, plus testing and lost revenue.
• MPrin when standards or regulations change
  The Metaphorical Principal of a technical debt that’s incurred as a result of a change in standards or regulations, internal or external, is the cost of bringing all affected assets into full compliance. Properly accounted for, however, the MPrin should include ripple effects, which are the changes in other assets that are required to keep them compatible with the assets that are directly affected.
• MPrin in platform component upgrades
  Platform component upgrades often trigger the need to make changes in whatever sits atop the platform, to maintain compatibility with the platform. Those changes obviously contribute to MPrin. But less obvious are the contributions that arise from deferring the upgrade.
• MPrin in a development project
  The MPrin of an asset that is subjected to new development or enhancement has some special characteristics. For an existing asset, new development can lead to duplication of capability. For new assets, unanticipated opportunities can transform into technical debt components that were not viewed as technical debt, without ever changing them in any way.
• Examples of MPrin in four scenarios
  Some examples might help to clarify the differences between the principal of financial debts and the Metaphorical Principal of a technical debt. The examples to come in the next four posts are designed to illustrate the unique properties of MPrins of technical debts.
• The metaphorical principal of a technical debt
  The principal amount of a financial debt and the metaphorical principal of a technical debt have very different properties. They are so different that it’s wise to avoid using the term “principal” to refer to the metaphorical principal of a technical debt. We use the term MPrin.