IDC has introduced a framework designed to help organizations effectively measure and manage technical debt, a growing issue that hampers innovation, increases operational risks, and burdens IT budgets.
The example of Southwest Airlines during the 2022 holiday travel season is a clear illustration of how tech debt can manifest itself in disastrous outcomes when left unchecked. Their legacy systems, which were not prioritized for maintenance or updates, were unable to respond to a major operational crisis, leading to significant financial losses and long-term repercussions.
Outage of Southwest Airlines’ scheduling system affected 2 million customers and resulted in the cancellation of 16,900 flights. Southwest experienced an immediate 16 percent drop in its stock price and logged a loss of more than $800 million that fiscal year due to this outage.
Tech debt is essentially the cost incurred when an organization chooses to use outdated systems, manual processes, or unmaintained technologies rather than modernizing or investing in necessary upgrades. This debt builds up over time, hampering agility, security, and innovation, and can eventually lead to critical failures like the one Southwest Airlines experienced. Often, organizations know they are carrying this debt but don’t fully comprehend its scope or the risk it poses to the enterprise. This lack of understanding can lead to decisions that unintentionally increase the risk of failure in crucial business operations.
Originally, technical debt referred primarily to shortcuts in coding — quick fixes that helped developers meet deadlines but often resulted in complicated, hard-to-maintain code bases. Over time, the concept has evolved beyond just software development to include the entire technology stack, from infrastructure and architecture to data management and third-party solutions, giving rise to the broader notion of enterprise tech debt.
IDC says tech debt represents not only hidden IT costs but also increased security vulnerabilities, operational risks, and a barrier to innovation. Tech debt isn’t always negative; companies sometimes take on technical debt strategically. Problems arise when it accumulates without regular “technological payments,” or updates and maintenance.
The new framework from IDC helps organizations assess and address their tech debt leverage, a metric IDC has introduced to quantify tech debt as a percentage of the total enterprise technology stack. By identifying and evaluating each technology based on its supportability, life expectancy, and operational burden, organizations can prioritize which systems need immediate attention to reduce risk and improve efficiency.
“By establishing a common language and measurement framework, CIOs can elevate the discussion of tech debt with their executive teams, transforming it into a strategic tool to drive business objectives,” said Daniel Saroff, Group Vice President of Consulting and Research at IDC.
Daniel Saroff said this framework provides a unified view of tech debt, enabling the executive team to manage tech debt proactively rather than reactively, reducing risks while ensuring the organization’s digital infrastructure remains agile and resilient.
The framework is designed not just for CIOs, but for the entire C-suite, offering a single, trackable ratio that can be used by boards and leadership teams to understand and manage tech debt over time.
Why Does Tech Debt Accumulate?
Tech debt accumulates for several reasons, not all of them due to bad decision-making. Common causes include:
A rapidly evolving technology stack: Enterprises may struggle to keep up with the pace of innovation, causing them to rely on older, more familiar systems that are deeply integrated into their operations.
Tight coupling of systems: The more interconnected and interdependent a company’s systems are, the harder it becomes to update individual components. This leads to postponing necessary maintenance, compounding the debt.
Focus on revenue over infrastructure: Maintenance and upgrades to internal systems are often seen as non-revenue-generating activities, leading to their deprioritization in favor of initiatives that drive immediate growth.
The Impact of Tech Debt
Hidden Costs: While tech debt often saves short-term costs by deferring upgrades, over time, the maintenance of outdated systems can become increasingly expensive.
Increased Risks: Legacy systems are more vulnerable to security breaches, and the likelihood of catastrophic system failures grows as they age.
Inhibited Innovation: Teams focused on maintaining outdated technology have less bandwidth to invest in innovation, slowing down the organization’s ability to compete in the marketplace.
Operational Inefficiencies: The accumulation of tech debt leads to inefficiencies in business processes, making it harder to adapt to market changes or new opportunities.
Measuring and Managing Tech Debt
To manage tech debt effectively, organizations must first define it clearly and then implement systems to track it. A comprehensive tech debt management strategy includes:
Defining Tech Debt: Start by clearly articulating what your organization considers tech debt. Without a shared understanding, it becomes difficult to manage effectively.
Measuring Tech Debt: This requires a multi-dimensional approach:
Assess the time and effort required to maintain legacy systems.
Measure security vulnerabilities associated with outdated technology.
Calculate costs related to redundant or siloed technologies across the organization.
Aggregating the Data: Bring together the various measurements to create a unified view of tech debt, allowing executives to understand the total impact of tech debt on the enterprise and the risks it represents.
Presenting Tech Debt to Leadership: With quantifiable data, organizations can present a clear picture of how tech debt is affecting the business and what systemic risks are being accepted by delaying upgrades and maintenance.
As digital transformation accelerates, this approach to tech debt management is expected to become a vital component of enterprise strategy, helping businesses stay competitive while minimizing operational disruptions.
