Last updated on July 7th, 2021 at 03:16 pm
When some organizations first realize that technical debt is limiting their performance, they begin by chartering a “technical debt inventory.” They try to determine how much technical debt they’re carrying, where it is, and how much retiring it would cost. They really want to know how fast they can retire it. That’s understandable. It’s not too different from how one would approach an out-of-control financial debt situation. It might be understandable, but in most cases, inventorying all technical debt is ineffective. For technical debt we need a different approach, because technical debt is different from financial debt. With technical debt, we must be follow what I call the Principal Principle, which is:
The Metaphorical Principal (MPrin) of a technical debt, which is the cost of retiring it, isn’t what matters most. What usually matters most is the Metaphorical Interest Charges—the MICs.
Why MICs matter more
MICs on technical debt can vary dramatically. For assets that aren’t undergoing maintenance or enhancement, the MICs can be Zero for extended periods. And for retiring assets, any technical debt they carry can vanish when the asset passes out of service. For other assets, MICs can be dramatically higher—beyond the total cost of replacing the asset.
Most people regard the sole effect of MICs as reduction in engineering productivity. I take a different approach. I include in MICs anything associated with technical debt and which depresses net income. That would include lost or delayed revenue, increased expenses—anything. For example, suppose technical debt causes a two-month delay in reaching a market. IN that case, its effect on revenues can be substantial for years to come. I regard all of that total effect as contributing to MICs.
So the Principal Principle is that a focus on Principal can be your undoing. Focus on MICs instead. Drive them to Zero and keep them there.
Other posts in this thread
- How financial interest charges differ from interest charges on technical debt
- The concept of MICs
- MICs can fluctuate dramatically
- MICs on technical debt can be unpredictable
- MICs can differ for different instances of the same kind of technical debt
- MICs can sometimes be deferred or advanced without penalty
- MICs on technical debt can be difficult to measure
- MICs can change when other debts are retired
- Where the misunderstandings about MICs come from
