Technical debt is a term that refers to the ‘debt’ accrued by a department who are looking for investment in a number of projects that sit awaiting sign off by either the CEO or another board member with P&L responsibility. Quite a number of companies that I’ve previously worked with have faced this challenge. They know that the business needs to invest in these projects to improve the service that they deliver but have the challenge of convincing the ‘non-technical’ members of the board. To begin with you need to make clear what the quantifiable return on investment will deliver and secondly how to justify the priority of those investments. It’s important to recognise that boards (generally) speak in financial terms as do the CEO’s, who in most cases have final sign off on large investments. A high majority of CEO’s come from CFO’s, so tailoring the business case will always give a higher rate of success for sign off.

The industry we work in is changing, technology now more than ever is becoming more and more commoditised and easier to consume. The result of this transition is that business cases are no longer about the technical USP’s that a given product will bring, cases need to be more aligned to the benefits they bring as a quantified outcome to the business. For example, moving an ecommerce application to a more ‘scalable’ platform will enable higher number of transactions, at greater efficiency during peak periods, whilst scaling back during non-peak periods thus lowering the cost of sale and ultimately driving profitability for said organisation. This ‘profitability’ number can be easily calculable and presented as a figure to the board.

Figuring out where to start sometimes can be the biggest hurdle so below are my 5 ‘top tips’ on how to prioritise and justify your investments and ultimately work on eradicating the ‘technical debt’ within your department.

  1. Alignment to the Business

The majority of CIO’s I’ve worked with and continue to do so will have a solid grasp on how they need to run their departments and understand what they need to do to continue to service the business in the right way. However, when asked the simple question of ‘explain to me how the service your delivering to your business (your strategy) is enabling the business to achieve its goal of X’ there are few who have a solid answer. Having a mission statement here is critical, not only does it demonstrate to the board and department heads that you fully understand the business goals, it also demonstrates that your investments are managed and prioritised in accordance with the quickest and most profitable wins for the organisation. A higher level of confidence will give you less resistance when it comes to project sign off.

  1. Proactive alignment to Departmental or Business Unit (BU) strategies (working collectively)

Every organisation will have a head of department who will carry their own P&L and have their own strategies therefore, they will also be looking to erode their own ‘departmental debt’ by gaining investment from the business. This is where CIO’s can play clever; technology now more than ever permeates everything we do, this means that technology now plays a crucial role in every department within an organisation. If you can start to become more proactive in understanding what the individual strategies are amongst your departments heads, you can work together with them to achieve their goals and double up when making an investment case to the board. The more influential people you have on board when looking for investment the higher the chances of success you have.

  1. Measure and Report on Success

This sounds simple, but it still surprises me the number of organisations that have no real SLA’s with the business and therefore have no means as to how they report back to the board on the great work that they are delivering. Alongside this, I’ve witnessed even less number of CIO’s who will proactively follow up and quantify the outcome of a successful project and stand up proud and celebrate that with their businesses. Generally, it’s not in a CIO’s genetic make up to want to shout about success, they tend to want to sit back and be pround of their achievements. Unfortunately, without the celebrations people just see this as the norm and continue to expect this from you. Proactively following up and celebrating your wins with the business will help raise your profile and confidence within the organisation and will help you achieve a higher success rate when looking for future investments.

  1. Application Profitability Analysis

All organisations can, simply put, split their application estate into two main pots, Intrinsic and extrinsic. Intrinsic are those applications which are ‘non-customer facing’ so for example finance and HR systems. Extrinsic are those applications which are ‘customer facing’ these are any applications which in general will enable or process a client’s transaction.

A great exercise to go through is to look at a ‘profitability matrix’ of your extrinsic applications. A basic look at TCO vs number of transactions (monetised) will give you an indicator of profitability against that application. From this you can draw many justifications for investment in those applications and the platforms upon which they reside.

For example, you can take a product or service that your company delivers to its customers, look at the customer journey and the applications which that customer will use and:

  • Divide the revenue stream across the applications which ‘enable’ that transaction
  • Then divide the revenue as a percentage across the dependant applications
  • Finally, map this against the TCO of the application which will give you your indicator of profitability for that application

This exercise can also be done across the whole estate of product or services. To the board this shows a profitability rating and financially demonstrates the requirement for an application to be up to date, still in support, resilient, secure, whilst operating in the right environment. The mistake of under investment could be extremely costly to the business.

This process will also enable you to prioritise your investments by giving you a demonstrable, tangible return. The analysis can also be performed against projected business revenue (for example 18-24 months out) to show how applications will rise or fall in profitability and thus enable a stronger justification case. Prioritisation by quantification in technical investments will always lead to a quicker approval.

  1. Speak a common language

In its essence, this sounds simple but it’s surprising how many businesses I’ve come across where the ‘language’ they use across departments varies. It’s a cultural change, but in part can be driven by the IT department. The reason IT can be such a great leader in this field is because everyone in the business will use its services. Driving a common language will better engage and bring together different ‘cultures’ and help align everyone to a common, understandable goal. If CIO’s can lead and drive this change their profile and credibility raises with it and so gaining investment becomes an easier task. Become a leader for cultural change.

As organisations develop and adapt, technology will always be at the centre of that change and a huge enabler. It’s time we lead from the front and continue to be the driving force for the organisations within which we work!