Technical debt is a major impediment for businesses, often being the silent killer of opportunity. Mike Baker, the chief information and technology officer at PGIM, highlights how outdated technology can be overlooked in favor of more immediate business needs like launching new products or making deals. However, the true cost of technical debt is revealed when a significant opportunity arises, such as the integration of new technologies like generative AI, and substantial time and resources must be allocated to reorganize data, onboard new vendors, or update outdated systems. Technical debt can cost between 15% and 60% of every dollar spent on IT. Baker asserts that an IT organization lacking a strategy to mitigate technical debt is doomed to fail. Fortunately, companies can harness their talent, not just within the IT department but across the entire organization, to tackle this issue effectively. A strategic approach to talent, with an emphasis on innovation, can help identify and mitigate technical debt before it escalates.
Empowering Employees to Innovate
Breaking Down Barriers Between Business and Technology
Empowering employees to innovate is crucial. Often, technologists feel like mere order takers, unable to advocate for system upgrades or address long-term issues due to cost constraints. This creates a demoralizing environment where staff is primarily occupied with fixing bugs, addressing performance problems, and maintaining outdated platforms, leaving little room for adopting new technologies that could propel the business forward. To address this, a cultural shift is necessary—one that breaks down barriers between business and technology, allowing everyone to contribute to technological advancements.
One of the significant challenges in addressing technical debt is the disconnect between business units and IT departments. Often, the IT team is seen as a separate entity responsible for fixing issues rather than being an integral part of business innovation. By promoting a culture of collaboration and open communication, organizations can ensure that technical concerns are addressed proactively rather than reactively. Encouraging technologists and business leaders to work together on identifying potential areas of technological improvement can help prevent the accumulation of technical debt.
Fostering Cross-Functional Collaboration
At PGIM, the global asset management arm of Prudential Financial, a recent hackathon invited employees from various business units to collaborate using no-code tools and AI to develop solutions to business challenges. This event not only fostered cross-functional relationships but also encouraged open, collaborative conversations about technology. The winning teams included employees with no prior experience in coding or technology, demonstrating the value of diverse perspectives.
These hackathons and collaborative events serve as an excellent example of how organizations can break down silos and encourage innovation. By involving employees from different departments in technology initiatives, companies can leverage a wide range of skills and knowledge. Such initiatives not only lead to innovative solutions but also help create a sense of ownership among employees. When employees feel their contributions are valued and that they have the autonomy to create and implement new ideas, they are more likely to be engaged and committed to the organization’s success.
Continuous Upskilling
Maintaining a Competitive Edge
Continuous upskilling is essential for maintaining a competitive edge, both in terms of customer satisfaction and employee retention. Even the most skilled professionals can accrue technical debt if they become complacent in their expertise. Technologists must focus on leveraging technology to differentiate business capabilities and achieve a competitive advantage. This means creating lasting changes rather than temporary fixes. An organization that prioritizes upskilling ensures its employees have the necessary tools to drive long-term improvements.
Organizations that invest in continuous learning and development programs position themselves to stay ahead of technological advancements. This commitment to upskilling not only benefits the company but also enhances employee satisfaction and retention. When employees are given opportunities to expand their skill sets and stay current with industry trends, they feel more confident in their roles and are better equipped to contribute to the company’s success. Additionally, a focus on upskilling can help companies attract top talent who are eager to work in an environment that prioritizes professional growth.
Creating Lasting Changes
Technologists must focus on leveraging technology to differentiate business capabilities and achieve a competitive advantage. This means creating lasting changes rather than temporary fixes. An organization that prioritizes upskilling ensures its employees have the necessary tools to drive long-term improvements. The rapid pace of technological change means that what is considered cutting-edge today can quickly become outdated.
By fostering a culture of continuous learning, organizations can ensure that their staff remains at the forefront of technological advancements. This dedication to ongoing education and development helps prevent the accumulation of technical debt, as employees are better equipped to implement sustainable solutions rather than short-term fixes. Moreover, a commitment to upskilling can lead to a more innovative and dynamic workforce, capable of adapting to new challenges and opportunities as they arise.
Knowing When to Outsource
Balancing Bespoke Solutions and Third-Party Options
Knowing when to outsource is vital. While bespoke solutions tailored to specific business needs may seem ideal, they often contribute significantly to technical debt. In contrast, third-party solutions, though not always a perfect fit, are maintained by companies with a vested interest in keeping their systems updated and customers satisfied. Relying on in-house solutions can create challenges when specialized staff, essential for maintaining these systems, leave the company. Over time, the company may find it increasingly difficult to keep up with technological changes.
Third-party solutions offer the advantage of continual updates and maintenance, alleviating some of the burdens from the internal IT team. However, choosing the right external partner requires careful consideration. Companies need to evaluate the reliability, scalability, and cost-effectiveness of third-party options, ensuring that they align with the organization’s long-term goals. By striking a balance between in-house development and outsourcing, businesses can manage their technological needs more effectively, reducing the risk of technical debt accumulation.
Recognizing Cost Constraints
However, it’s also important to recognize that transitioning to third-party solutions is not always feasible due to cost constraints. Companies must weigh the benefits and drawbacks of outsourcing versus maintaining in-house solutions, considering both immediate and long-term impacts on technical debt. Outsourcing can be a cost-effective solution for some projects, but it may not always be the best approach for every situation.
Organizations need to develop a clear strategy for when to outsource and when to keep projects in-house. This involves assessing the complexity and criticality of the project, as well as the organization’s capacity to manage and maintain the solution. By making informed decisions about outsourcing, companies can optimize their resources and minimize technical debt while ensuring they meet their technological objectives.
Hiring Talent for the Future
Focusing on Future Technological Needs
Hiring talent for the future rather than the past is crucial. Many companies focus on finding candidates who can maintain current systems, even if those systems are outdated. While maintaining existing systems is important, more emphasis should be placed on hiring for future technological needs. As technology evolves, finding skilled professionals in older software becomes increasingly difficult, and new tech talent may be reluctant to work with outdated systems.
Recruitment strategies should therefore focus on identifying candidates with the skills and expertise needed to drive future technological advancements. This forward-thinking approach ensures that the company can adapt to emerging trends and challenges, maintaining a competitive edge in the industry. By prioritizing future technological needs, organizations can build a workforce that is capable of leading innovation and staying ahead of the curve.
Embracing Innovative Skill Sets
Technical debt poses a significant challenge for businesses, often acting as a silent barrier to seizing opportunities. Mike Baker, Chief Information and Technology Officer at PGIM, emphasizes how outdated tech is frequently overshadowed by immediate business demands, such as launching new products or closing deals. Yet, the hidden costs of technical debt become evident when a big opportunity arises—like integrating new technologies such as generative AI. Substantial time and resources are needed to reorganize data, onboard new vendors, or update old systems. Technical debt can consume between 15% to 60% of each dollar spent on IT. Baker argues that any IT organization without a plan to address technical debt is set up for failure. Fortunately, companies can leverage talent across the entire organization, not just within IT, to tackle this issue. By adopting a strategic approach to talent management, emphasizing innovation, businesses can identify and mitigate technical debt, preventing it from escalating.