Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.
Tracking, Tackling, and Transforming Technical Debt: The New Challenge To AI
Technical debt is the hidden roadblock to rapid innovation. Leaders who strategically balance debt remediation with future-focused investments in their digital core are more likely to grow revenue and profits.
5 Min Read
adempercem via Alamy Stock
We seem to have entered a brave new world. A world being redefined by technological innovations at the speed of light, changing our reality and exerting a centrifugal force on companies. Generative AI is the new engine powering these innovations -- much like electricity once sparked the industrial age. It’s reinventing processes, businesses, and entire industries at an unprecedented pace. Recent research from Accenture found that nearly all organizations (98%) now see technology as their top tool for reinvention, with 82% identifying generative AI as the driving force behind this shift.
But to succeed, generative AI needs a robust digital core, built on a continuum of cloud capabilities across the enterprise, that integrates a secure digital foundation and digital platforms and creates seamless data and AI connections. All of this comes together through innovative engineering principles, and powers reinvention like an engine propels a car.
The benefits are immediate and significant. Our research found that organizations with an advanced digital core, investments in strategic innovation, and a balanced approach to their technical debt achieved 60% higher revenue growth rate and 40% higher profits.
Technical debt -- the accumulated cost of outdated technology -- is an important element to track and manage. As companies rush to adopt AI-driven innovations, technical debt grows alongside. But when used appropriately, generative AI can be a vehicle for remediating tech debt as well as minimizing tech debt creation.
The Cost of Technical Debt
Imagine a software engineer racing against an impossible deadline. To get the code into production by month’s end, the engineer skips error handling and documentation, cutting every corner to deliver something functional. This might seem like a quick win, but with each shortcut taken, the future cost mounts: Code becomes harder to maintain as errors pile up, and flexibility erodes. As new updates or fixes are needed, that initial debt goes into overdrive, slowing down progress and dragging innovation to a crawl.
The cost of maintaining rushed decisions and outmoded systems is enormous. In the US alone, the price of technical debt has climbed to a staggering $2.41 trillion annually. This goes beyond a financial drain; it clogs IT systems, limits agility, and hinders innovation. Generative AI, while transformative, adds complexity to tech debt as companies integrate it with legacy systems that may lack the compatibility and security necessary to manage both human and AI interactions.
But technical debt doesn’t have to be inherently negative. Even when it is an inadvertent means to an end, it can be balanced. We found that investing about 15% of the IT budget in debt remediation is the most effective way to sustain a modern digital core, while continuing to focus on innovation.
3 Ways To Drive Down Tech Debt
Looking beyond, the pace and proliferation of tech innovations, and therefore technical debt, calls for new and strategic approaches to strike a balance and enable reinvention.
Here’s how leaders can act today:
1. Focus on the principal
Effective management of technical debt begins with focusing on the “principal” -- the outdated technology that directly impacts current operations. Tracking and tackling principal debt first helps prevent “interest” costs, which accrue as organizations use workarounds and quick fixes to maintain outdated systems.
For instance, Correios de Portugal (CTT), Portugal’s national postal service, addressed its technical debt by migrating to a hybrid, cloud-first infrastructure. CTT worked with Avanade, a joint venture between Accenture and Microsoft, to enhance and modernize its digital core. Just migrating to the cloud reduced costs by 15% and provided the flexibility to scale capacity up or down as needed. By focusing on the principal debt through a targeted cloud strategy, CTT was able to reduce technical debt while simultaneously enhancing operational agility.
As an essential part of a digital core, a cloud-first strategy will consolidate and optimize workloads, add flexibility and innovation capabilities, and cut costs in the process. Cloud-native practices such as pervasive automation, microservices, and continuous delivery can build systems that remove silos and remain consistent across a hybrid, multi-cloud estate.
2. Create an inventory and trace debt to source
Building a clear inventory of tech debt allows organizations to trace its origins and impact across code, architecture, data, and processes. This comprehensive inventory makes it easier to prioritize updates based on potential business value and technical risk. For instance, a major benefit of migrating to cloud as it relates to technical debt is that you can transfer some responsibility for handling technical debt -- such as patching -- to the cloud provider who can do it more consistently and more efficiently.
Mondelēz International demonstrates the value of this approach. Mondelēz faced a complex IT environment with over 1,000 applications, creating inefficiencies and driving up operational expenses. Accenture worked with Mondelēz to conduct a full assessment of each application, identifying those that were outdated or redundant, and charting a roadmap for remediation. This initiative has significantly lowered Mondelēz’s total cost of ownership, allowing the company to refocus resources on innovation.
3. Use the right metrics
You can’t manage what you can’t measure, especially key if there are compliance requirements from sovereign clouds or intelligence from edge networks. Effective technical debt management relies on measurable insights, with metrics like technical debt density -- such as cost per line of code --providing a clear view of code health.
Tech debt is not always a bad thing. If your tech debt remediation budget is increasing and your innovation and the business value you are delivering is outpacing that debt, that’s a positive sign of the success of your strategic efforts.
Being Reinvention Ready
As generative AI’s adoption continues to scale, companies need to actively manage their technical debt to prevent it from ballooning, especially relevant in modernization across public, private, hybrid, and multi-cloud options. Organizations that build their digital core, boost innovation, and focus on these three actions to balance tech debt can achieve remarkable results in streamlined operations, new opportunities, and revenue growth.
The writing is on the wall: In today’s fast-paced environment, a future-ready mindset is crucial. It’s essential to scale GenAI securely, responsibly, cost-effectively, and in a manner that delivers real business value. It’s time for C-suite leaders to think bigger, modernize across the enterprise, and employ a controlled, intentional reinvention strategy that leverages new technology capabilities to achieve not just faster outcomes, but better ones.
About the Author
You May Also Like
More Insights
