By Tim Beerman, Chief Technology Officer, Ensono It’s time to see the full financial upside in tackling one of the enterprise’s most persistent challenges.
Technical debt is a common and pervasive problem within large enterprises, impacting everything from end-user experience to the efficiency of the company’s technical teams. It’s a costly issue, hindering both current and future performance.
According to global management consultant McKinsey & Company, technical debt can account for as much as 40 percent of the total value of the technology estate within large enterprises, with one company reporting that they spend anywhere between 15 and 60 percent of every IT dollar on maintaining technical debt.1 This burden directly impacts a company’s growth and agility.
As a result, Accenture reports that 84 percent of surveyed companies acknowledge that technical debt significantly impairs their ability to innovate. The business benefits are clear as well—that same research also found that companies with more advanced technical debt strategies foresaw a 32 percent increase in their speed to market.2
Most companies look at the business value of technical debt reduction through the lens of those immediate hard costs. But there’s another angle here that’s often missed—one that relates to sustainability. Bloated systems and software consume significant amounts of energy and resources. That has a direct impact on the environment and broader sustainability efforts with associated costs of their own. When thinking about technical debt reduction, companies should widen their gaze and consider the full range of benefits—environmental and economic—that more agile technology and processes can bring.
1“Demystifying digital dark matter: A new standard to tame technical debt,” McKinsey Digital, June 2022. 2“From survive to thrive: Tech transformation for CSPs’ future,” Accenture, February 2024.
Traditionally, evaluating the impact of technical debt has focused on the quantifiable (i.e., monetary) cost of overloaded technical systems, specifically:
Maintenance costs, quantified by the time and resources spent on fixing bugs and making updates, rather than on new development.
System inefficiencies, such as slow response times and frequent downtimes.
Technical debt ratio, which measures the cost of remediations against the cost of development, with the goal of quantifying the level of technical debt in relation to the entire code base.
Dependencies within a tech stack, with the goal of identifying areas of high coupling and complex dependencies that make the codebase hard to maintain and evolve.
Frequency of bugs, tracked via the volume and frequency of reported issues from developers and end-users.
Architectural efficiency, specifically focusing on the tech stack’s scalability, performance and alignment with current business needs.
While these traditional methods of measuring technical debt are effective at quantifying hard costs and impact on business output, they overlook the wider and more long-term issues of operational agility and environmental impact. Specific limitations of this traditional approach include:
Overemphasis on immediate cost – They often focus solely on direct financial metrics, rather than how technical debt restricts the company’s ability to innovate.
Neglect of system scalability and flexibility – They may not adequately measure technical debt’s impact on the system’s scalability and flexibility in the long term, which is crucial for operational agility.
Lack of focus on proactive management – The focus is often on reactive measurements and interventions once problems have already affected system performance, rather than proactive steps to mitigate barriers to performance in the future.
Failure to consider environmental impact – They rarely consider the energy consumption, resource usage and carbon footprint associated with maintaining inefficient and outdated systems.
By expanding their impact assessment of technical debt, and having an eye on the long-term, companies can not only solve for immediate costs, but create more agile and sustainable IT practices for the future.
3Navarro, Rodrigo, “The Carbon Emissions of Big Tech,” ElectronicsHub, February 2023.
The energy costs associated with technical debt are taking on more urgency for many enterprise organizations in the face of growing traction around ESG initiatives. According to a recent report, the global technology industry accounts for roughly two to three percent of the world’s CO2 emissions—primarily from any consumption related to maintaining data servers and other infrastructure.3
As a result, many companies have committed to working toward net-zero sustainability strategies, along with e-waste initiatives to reduce their carbon footprints. Reducing technical debt is a major piece of this quest toward net-zero. Maintaining old hardware, running legacy data centers, and maintaining inefficient codebases incur significant energy costs, which widens a company’s carbon footprint. Here’s how:
Outdated technology – Systems dragged down by technical debt are generally less efficient than modern equivalents. As a result, they require more power to perform the same tasks.
Increased cooling needs – Legacy hardware often requires more processing power and longer run times, meaning that they generate more heat than newer, more efficient systems. This requires more energy-intensive cooling solutions to prevent overheating, adding to overall energy consumption.
Inefficient resource usage – Systems burdened with technical debt may not optimize their resource allocation efficiently, leading to underutilized data centers running at a capacity below optimal capacity. That leads to energy waste, as resources are consumed without an efficient level of output.
Lack of integration – Systems with significant technical debt are often much harder to integrate with newer, energy-efficient technologies, and lack of integration can prevent the adoption of more energy-efficient management and automation systems that can help reduce overall energy usage in a tech stack.
Failing to get a handle on technical debt prolongs and worsens the issues mentioned above, increasing a company’s carbon footprint over time. This is particularly problematic for companies that need to deploy hundreds or thousands of applications or workflows on a continuous basis, leading to a compounding effect of energy usage.
Thinking of technical debt reduction alongside sustainability goals helps to expand and clarify the importance of these initiatives, and drive interest and adoption across the organization. Infrastructure consolidation, platform modernization and reducing technical debt are three ways that companies can positively influence their immediate and long-term environmental impact and drive sustainability. This can come from modernization and consolidation initiatives like:
Server virtualization – Consolidating multiple older servers onto a single, more powerful and energy-efficient server using virtualization technology, thereby reducing the overall physical infrastructure and energy consumption.
Cloud migration – Transitioning from on-premise data centers to cloud services where and when it makes sense, leveraging the scale and efficiency of modern cloud providers who deploy advanced cooling and energy management technologies.
Storage optimization – Implementing data deduplication and compression techniques to reduce the storage footprint, allowing for the decommissioning of excess storage devices which directly lowers energy usage.
Network upgrades – Upgrading to newer networking technologies that support better energy management features such as advanced power saving modes, leading to reduced power consumption during periods of low data traffic.
Together, technical debt reduction and platform modernization have a direct impact on both wider ESG goals and cost savings by creating more energy efficient systems, optimizing resource allocation, maintaining environmental compliance and extending the lifespan of technical assets and platforms. (See also, “Six steps to creating a more sustainable data center,”.)
Green IT initiatives have become increasingly popular vehicles through which large enterprises can make their technology platforms and infrastructure more environmentally friendly. This is the process of incorporating environmental sustainability goals into the purview of IT asset management, thereby prioritizing and incentivizing more energy-efficient hardware and software.
Reducing technical debt should be a core component of any green IT initiative. This is a bottom-up effort that helps companies identify and solve inefficiencies, and build a more stable foundation on which to deploy future products and technologies.
Understanding the scale of the challenge and setting a roadmap for success is easier said than done. The very definition of technical debt means that a company’s systems are likely tangled up in cobbled-together codebases and complex infrastructure. Change one and several others might fail. To solve for this, companies need to develop a comprehensive technical debt retirement plan that balances risk and reward by carefully planning the cost and effort associated with the intervention. Structured through a sustainability lens, such a plan might include the following steps:
Conduct a comprehensive audit – Begin by assessing the entire IT infrastructure to flag outdated systems, redundant processes and energy-inefficient technologies. This audit should note all systems and hardware showing signs of technical debt and note their associated energy usage and environmental impact.
Prioritize interventions based on energy consumption – Evaluate the energy consumption of different systems and prioritize the retirement or upgrade of those that consume the most energy.
Identify and assess compliance risks – Consider the environmental regulations and compliance risks associated with the chosen intervention and technical debt retirement strategy. Prioritize projects that will align the company’s operations with current and upcoming environmental laws, such as the EU Ecodesign Directive or the U.S. Clean Air Act.
Evaluate the scalability and flexibility of new solutions – When planning to retire technical debt, choose solutions that are not only more energy efficient but also scalable and flexible. This ensures that the new systems can adapt to future environmental standards and technologies without accumulating new technical debts.
Implement sustainable procurement policies – Integrate sustainability criteria into the procurement process for new IT systems. Opt for vendors and products that have strong environmental credentials, such as energy-efficiency certifications or those made from recyclable materials.
Monitor and report on progress – Establish monitoring systems to continuously assess the performance and environmental impact of IT systems. Regular reporting on these metrics can help maintain transparency with stakeholders and guide further improvements in sustainability practices.
Reducing technical debt isn’t just about immediate cost savings, reducing bugs and addressing customer consumers. Inefficient systems have wide reaching impacts that touch everything from quarterly revenue reports to ongoing operational efficiency to the sustainability initiatives at a company.
IT leaders are well positioned to take a significant role in driving corporate sustainability through green IT initiatives that reduce technical debt and improve energy efficiency from technology platforms and infrastructure. More than an ethical consideration, this is a strategic investment in the company’s future and the planet’s health.
Start small, with a targeted and manageable project that aims to modernize a particularly energy-intensive system or piece of hardware. Learn from that process and note the immediate and long-term benefits of that effort. Make this the catalyst for large technical debt retirement initiatives in the future.
