Self-sustaining technical knowledge deficits during contract negotiations

Last updated on July 7th, 2021 at 07:56 pm

Avoid technical knowledge deficits in important contract negotiations
Contract negotiations can be complex

Enterprises that grow by acquisition inevitably acquire the technological assets of the organizations they acquire. And most enterprises acquire technological assets by other means as well. The contract negotiation teams need technical knowledge to accurately project the effects of these acquisitions on enterprise technical debt. But as total enterprise technical debt grows, the capacity of enterprise technologists to support new contract negotiations declines. That leads to a self-sustaining cycle of technical knowledge deficits. Hiring more technologists is the way to break the cycle. And policymakers and strategic planners are likely the most effective possible advocates for adopting that solution.

Negotiating contracts with significant technological content relating to acquiring assets can require special expertise. In the asset acquisition process, assessing the technical debt status of the assets is often necessary. Such contracts include contracts with vendors that provide outsourcing services or subcontracting work, or contracts with organizations to be acquired. Moreover, the technical debt in question includes more than just the debt the asset carries as it stands in its pre-acquisition context. It also includes the debt that the asset will carry after insertion into the asset portfolio of the acquiring enterprise.

These two debts—pre-acquisition and post-acquisition—can differ. The main source of difference is that the interfaces, standards, and approaches of the acquiring organization likely differ from those prevailing within the vendor organization or the acquired organization. Making a valid assessment of the post-acquisition levels of technical debt requires knowledge of the interfaces, standards, and approaches of both organizations.

A vicious cycle

The enterprise negotiation team therefore requires the services of technologists. These technologists must be familiar with the modifications the acquired assets will need after the acquisition. But problems can arise. Specifically, resource contention occurs when technical debt levels in the enterprise reach a level so serious that debt service requires the full attention of all available technologists. If that happens negotiating contracts usually gets less attention. Contract negotiation teams then experience a deficit of knowledge concerning the consequences of acquiring assets laden with technical debt. That leads to increasing levels of nonstrategic technical debt. And that condition has the potential to exacerbate the technical knowledge deficit for the negotiating teams.

This situation is an example of a dynamic widely known as a vicious cycle. After technical debt has reached a critical level, there are really only two tactics that can break the cycle—get more engineers, or suspend some work.

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