The term "technical debt" was coined by Ward Cunningham to describe the obligation that a software organization incurs when it chooses a design or construction approach thats expedient in the short term but that increases complexity and is more costly in the long term.
Ward didnt develop the metaphor in very much depth. The few other people who have discussed technical debt seem to use the metaphor mainly to communicate the concept to technical staff. I agree that its a useful metaphor for communicating with technical staff, but Im more interested in the metaphors incredibly rich ability to explain a critical technical concept to non-technical project stakeholders.
What is Technical Debt? Two Basic Kinds
The first kind of technical debt is the kind that is incurred unintentionally. For example, a design approach just turns out to be error-prone or a junior programmer just writes bad code. This technical debt is the non-strategic result of doing a poor job. In some cases, this kind of debt can be incurred unknowingly, for example, your company might acquire a company that has accumulated significant technical debt that you dont identify until after the acquisition. Sometimes, ironically, this debt can be created when a team stumbles in its efforts to rewrite a debt-laden platform and inadvertently creates more debt. Well call this general category of debt Type I.
The second kind of technical debt is the kind that is incurred intentionally. This commonly occurs when an organization makes a conscious decision to optimize for the present rather than for the future. "If we dont get this release done on time, there wont be a next release" is a common refrain—and often a compelling one. This leads to decisions like, "We dont have time to reconcile these two databases, so well write some glue code that keeps them synchronized for now and reconcile them after we ship." Or "We have some code written by a contractor that doesnt follow our coding standards; well clean that up later." Or "We didnt have time to write all the unit tests for the code we wrote the last 2 months of the project. Well right those tests after the release." (Well call this Type II.)
The rest of my comments focus on the kind of technical debt thats incurred for strategic reasons (Type II).
Short-Term vs. Long-Term Debt
With real debt, a company will maintain both short-term and long-term debt. You use short-term debt to cover things like gaps between your receivables (payments from customers) and expenses (payroll). You take on short term debt when you have the money, you just dont have it now. Short-term debt is expected to be paid off frequently. The technical equivalent seems straightforward. Short-term debt is the debt thats taken on tactically and reactively, usually as a late-stage measure to get a specific release out the door. (Well call this Type II.A.)
Long term debt is the debt a company takes on strategically and proactively--investing in new capital equipment, like a new factory, or a new corporate campus. Again, the technical equivalent seems straightforward: "We dont think were going to need to support a second platform for at least five years, so this release can be built on the assumption that were supporting only one platform." (Well call this Type II.B.)
The implication is that short-term debt should be paid off quickly, perhaps as the first part of the next release cycle, whereas long-term debt can be carried for a few years or longer.
Incurring Technical Debt
When technical debt is incurred for strategic reasons, the fundamental reason is always that the cost of development work today is seen as more expensive than the cost will be in the future. This can be true for any of several reasons.
Time to Market. When time to market is critical, incurring an extra $1 in development might equate to a loss of $10 in revenue. Even if the development cost for the same work rises to $5 later, incurring the $1 debt now is a good business decision.
Preservation of Startup Capital. In a startup environment you have a fixed amount of seed money, and every dollar counts. If you can delay an expense for a year or two you can pay for that expense out of a greater amount of money later rather than out of precious startup funds now.
Delaying Development Expense. When a system is retired, all of the systems technical debt is retired with it. Once a system has been taken out of production, theres no difference between a "clean and correct" solution and a "quick and dirty" solution. Unlike financial debt, when a system is retired all its technical debt is retired with it. Consequently near the end of a systems service life it becomes increasingly difficult to cost-justify investing in anything other than whats most expedient.
Be Sure You Are Incurring The Right Kind of Technical Debt
Some debt is taken on in large chunks: "We dont have time to implement this the right way; just hack it in and well fix it after we ship." Conceptually this is like buying a car—its a large debt that can be tracked and managed. (Well call this Type II.A.1.)
Other debt accumulates from taking hundreds or thousands of small shortcuts--generic variable names, sparse comments, creating one class in a case where you should create two, not following coding conventions, and so on. This kind of debt is like credit card debt. Its easy to incur unintentionally, it adds up faster than you think, and its harder to track and manage after it has been incurred. (Well call this Type II.A.2.)
Both of these kinds of debt are commonly incurred in response to the directive to "Get it out the door as quickly as possible." However, the second kind (II.A.2) doesnt pay off even in the short term of an initial development cycle and should be avoided.
One of the important implications of technical debt is that it must be serviced, i.e., once you incur a debt there will be interest charges.
If the debt grows large enough, eventually the company will spend more on servicing its debt than it invests in increasing the value of its other assets. A common example is a legacy code base in which so much work goes into keeping a production system running (i.e., "servicing the debt") that there is little time left over to add new capabilities to the system. With financial debt, analysts talk about the "debt ratio," which is equal to total debt divided by total assets. Higher debt ratios are seen as more risky, which seems true for technical debt, too.
Attitudes Toward Technical Debt
Like financial debt, different companies have different philosophies about the usefulness of debt. Some companies want to avoid taking on any debt at all; others see debt as a useful tool and just want to know how to use debt wisely.
Ive found that business staff generally seems to have a higher tolerance for technical debt than technical staff does. Business executives tend to want to understand the tradeoffs involved, whereas some technical staff seem to believe that the only correct amount of technical debt is zero.
The reason most often cited by technical staff for avoiding debt altogether is the challenge of communicating the existence of technical debt to business staff and the challenge of helping business staff remember the implications of the technical debt that has previously been incurred. Everyone agrees that its a good idea to incur debt late in a release cycle, but business staff can sometimes resist accounting for the time needed to pay off the debt on the next release cycle. The main issue seems to be that, unlike financial debt, technical debt is much less visible, and so people have an easier time ignoring it.
How do You Make an Organizations Debt Load More Visible?
One organization weve worked with maintains a debt list within its defect tracking system. Each time a debt is incurred, the tasks needed to pay off that debt are entered into the system along with an estimated effort and schedule. The debt backlog is then tracked, and any unresolved debt more than 90 days old is treated as critical.
Another organization maintains its debt list as part of its Scrum product backlog, with similar estimates of effort required to pay off each debt.
Either of these approaches can be used to increase visibility into the debt load and into the debt service work that needs to occur within or across release cycles. Each also provides a useful safeguard against accumulating the "credit card debt" of a mountain of tiny shortcuts mentioned earlier. You can simply tell the team, "If the shortcut you are considering taking is too minor to add to the debt-service defect list/product backlog, then its too minor to make a difference; dont take that shortcut. We only want to take shortcuts that we can track and repair later."
Ability to Take on Debt Safely Varies
Different teams will have different technical debt credit ratings. The credit rating reflects a teams ability to pay off technical debt after it has been incurred.
A key factor in ability to pay off technical debt is the level of debt a team takes on unintentionally, i.e., how much of its debt is Type I? The less debt a team creates for itself through unintentional low-quality work, the more debt a team can safely absorb for strategic reasons. This is true regardless of whether were talking about taking on Type I vs. Type II debt or whether were talking about taking on Type II.A.1 vs. Type II.A.2 debt.
One company tracks debt vs. team velocity. Once a teams velocity begins to drop as a result of servicing its technical debt, the team focuses on reducing its debt until its velocity recovers. Another approach is to track rework, and use that as a measure of how much debt a team is accumulating.
"Working off debt" can be motivational and good for team morale. A good approach when short-term debt has been incurred is to take the first development iteration after a release and devote that to paying off short-term technical debt.
The ability to pay off debt depends at least in part on the kind of software the team is working on. If a team incurs short-term debt on a web application, a new release can easily be rolled up after the team backfills its debt-reduction work. If a team incurs short-term debt in avionics firmware— the pay off of which which requires replacing a box on an airplane— that team should have a higher bar for taking on any short-term debt. This is like a minimum payment--if your minimum payment is 3% of your balance, thats no problem. If the minimum payment is $1000 regardless of your balance, youd think hard about taking on any debt at all.
Communicating about Technical Debt
The technical debt vocabulary provides a way to communicate with non-technical staff in an area that has traditionally suffered from a lack of transparency. Shifting the dialog from a technical vocabulary to a financial vocabulary provides a clearer, more understandable framework for these discussions. Although the technical debt terminology is not currently in widespread use, Ive found that it resonates immediately with every executive Ive presented it to as well as other non-technical stakeholders. It also makes sense to technical staff who are often all-too-aware of the debt load their organization is carrying.
Here are some suggestions for communicating about debt with non-technical stakeholders:
Use an organizations maintenance budget as a rough proxy for its technical debt service load. However you will need to differentiate between maintenance that keeps a production system running vs. maintenance that extends the capabilities of a production system. Only the first category counts as technical debt.
Discuss debt in terms of money rather than in terms of features. For example, "40% of our current R&D budget is going into supporting previous releases" or "Were currently spending $2.3 million per year servicing our technical debt."
Be sure youre taking on the right kind of debt. Not all debts are equal. Some debts are the result of good business decisions; others are the result of sloppy technical practices or bad communication about what debt the business intends to take on. The only kinds that are really healthy are Types II.A.1 and II.B.
Treat the discussion about debt as an ongoing dialog rather than a single discussion. You might need several discussions before the nuances of the metaphor fully sink in.
Technical Debt Taxonomy
Heres a summary of the kinds of technical debt:
Feature backlog, deferred features, cut features, etc. Not all incomplete work is debt. These arent debt, because they dont require interest payments.
I. Debt incurred unintentionally due to low quality work
II. Debt incurred intentionally
II.A. Short-term debt, usually incurred reactively, for tactical reasons
II.A.1. Individually identifiable shortcuts (like a car loan)
II.A.2. Numerous tiny shortcuts (like credit card debt)
II.B. Long-term debt, usually incurred proactively, for strategic reasons
What do you think? Do you like the technical debt metaphor? Do you think its a useful way to communicate the implications of technical/business decision making to non-technical project stakeholders? Whats your experience? I look forward to your thoughts.