Reduce Technical Debt And Prevent it From Turning Into Financial Debt

The deal seems great—you get the house you want at a lower rate, leaving more budget for decoration. But along with the house, you’re also buying the smell, which will cost you time, money, or comfort in the future.

In this article, we explore common trade-offs engineering teams face when making architectural decisions and how technical debt can quickly translate into financial debt. We also review tips for balancing development and business expectations that let you reduce technical debt. 

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Table of contents

• Understanding the trade-offs of architecture design to prevent technical debt

• How to balance software development with business goals to reduce technical debt 

• How does technical debt affect your business finances

• How can NaNLABS help you reduce your technical debt

Understanding the trade-offs of architecture design to prevent technical debt

Designing software architecture is essentially about making technical and navigating resource constraints. As a data engineering team leader, you’re likely in the middle between balancing your resources at hand and a strong deadline or budget you can’t exceed. 

The truth is, you can’t always run away from technical debt. However, you can learn to evaluate your alternatives to reduce how much time you’re borrowing from your future team.

These are factors you should keep in mind when making architectural decisions and commitments:

• The product’s deadline

• The project’s budget

• Your team’s expertise, size, and availability

• The project’s scope

• Organizational processes and internal policies or restrictions

• Security and compliance regulations

Examples of good and bad trade-offs

It’s common to hear that technical debt happens when the roadmap is too ambitious. But, the challenge isn’t in planning ambitious software; it’s in leading effectively without compromising your team’s well-being, your business’s reputation, or financial stability. 

As a team leader, you should create a roadmap that is ambitious yet realistic, with clear priorities and a list of "nice-to-haves." "This allows for informed decisions about which features to cut if time starts running low," adds Gustavo.

Leverage your team’s technical strengths by using technologies they’re already familiar with. This doesn’t mean there’s no room for experimentation, your roadmap should also have some flexibility for quick experiments that can help you inform key decisions. 

An example of a good trade-off is to sacrifice the use of a new, cutting-edge technology that seems perfect for your needs on paper but your team doesn’t know how to use. If your team is unfamiliar with it and you’re short on time, using it could lead to poor code quality, system failures, and delivery delays. So, going for a technology that your team is highly experienced with, although not the perfect fit, could ensure better software quality and a more reliable product.

Another good trade-off might involve sacrificing a feature or pushing the deadline to incorporate a new technology that will resolve bottlenecks or support future scalability.

However, there are also examples of teams prioritizing the wrong thing. For instance, some teams go for speed by postponing data compliance and security regulations until the last minute or treating them as a “day one patch”.

This approach often leads to teams working extra hours before and after launch to patch and secure the platform. Also, failing to meet regulations could result in fines or security incidents that can negatively affect your company’s operations and reputation. This increases costs in repairing the damage and addressing the reputational impact.

Another poor trade-off is when leaders maximize their team’s working hours and implement a sustained crunch culture to meet deadlines. This way of working is very common in the gaming industry and can lead to burnout and high technical debt as overworked people tend to make more mistakes.

Most scenarios that involve trade-offs are usually caused by having a project’s scope that doesn’t align with the deadline and the team’s size or expertise.

How to balance software development with business goals to reduce technical debt

We’ve talked about the potential factors you need to balance when making decisions that could lead to technical debt. So, how can you learn to balance software development requirements with business goals? Let’s get into it.

There’s no one-size-fits-all approach for matching your business stakeholders’ expectations with software development needs. Instead, we’ve seen teams that shine at this due to having experienced leaders. As a team leader, you’re not expected to know exactly how everything will play out. However, good heads of departments know when to ask for help to avoid committing to unrealistic decisions. 

For instance, if you don’t have enough clarity about a particular aspect of the design, you can hire an IT consultant before making an unrealistic decision. Or, if you need to approach a complex topic, find a specialist to help out before agreeing to an unachievable deadline or using the wrong technology. 

What adds to your technical debt?

There are intentional and unintentional causes of technical debt, as well as legacy causes. 

If we set aside using old code or outdated systems, we can say that there are two major reasons that lead to technical debt: Lack of knowledge and high egos. 

Lack of knowledge usually leads to unintentional technical debt as some technologies will simply be out of your area of expertise. For instance, you may commit to using technology that’s new to you but seems easy to learn, or you may stick to the ones you know because you ignore if there are better solutions. 

That’s why it’s so important for you to encourage your team to learn and practice new skills as part of their personal and professional development. This includes learning about other systems, other technologies, and even other languages. “It doesn’t matter if you plan to use them or not. It’s about being aware, and maybe giving you other ideas on how to solve problems,” says Gustavo.

Encouraging continuous knowledge also allows them to take a more active part in the architecture design as they can act as your internal specialist. You can turn to them to clarify complex aspects of your design and make better decisions. 

Lack of knowledge can also lead to writing poor definitions, planning an overly ambitious roadmap causing teams to accelerate their deliveries, and using the wrong technology. 

The second major cause of technical debt is ego—this is likely to cause intentional debt. No one wants to admit that they can’t do something or that the technology they’re experts in isn’t necessary in this scenario. 

“Great engineers, and people in general, leave their ego at the door, and engage in constructive discussion with their peers to look for the best solution,” says Gustavo. This is important because people with low egos, find solutions that benefit the project, not the solution that suits them the best.

Leaders with high egos can lead to technical debt by making the wrong decisions, causing high employee rotation, sticking to old systems and technology, or making false promises to stakeholders. A high ego can also lead to team leaders committing to an aggressive deadline to satisfy the leadership team at the stake of their team’s work-life balance. 

Other intentional causes of technical debt come from everyone in the project knowing the importance of meeting a deadline or sticking to a budget. This can lead to everyone crunching for a few months or making quick fixes despite knowing they’ll need to address these mistakes in the future. 

How does technical debt affect your business finances

Technical debt can quickly turn into financial debt, that’s why it’s so important to properly assess those initial trade-offs. “You can end up running a business in which acquiring customers is more expensive than the lifetime value they provide. And, unless you have lots of money or are in a really aggressive expansion phase, you may end up burning your reserves faster than you can spell the word ‘technical debt’,” says Gustavo.

Technical debt can become a serious financial problem by causing you to:

• Pay increasingly large bills to cloud providers due to inefficient use of resources

• Experience high customer churn as a result of a buggy and unreliable tool

• Invest more money in acquiring new customers

• Hire additional staff or consultants to identify and address the root causes of your technical debt

• Neglect security and compliance, leading to potential damage to your brand reputation and fines

• Increase customer support needs to address the concerns of unsatisfied customers

• Cause your team to experience burnout, which can lead to high staff turnover

Best practices to avoid technical debt from turning into real financial debt

Although it may seem impossible to code and push solutions at a fast pace without generating technical debt, there are ways to prevent it from turning into a heavy financial problem. Here are the best practices we follow at NaNLABS and recommend to others:

1. Be transparent and practice open communication. This seems simple, but it works wonders to admit that you’re uncertain about how some things will play out and ensure the business understands the risks. This can allow you to get more experimentation time or increase the budget to hire an expert. Also, being transparent with your team about your goals and spending, allows them to make better decisions that match the overarching goals. 

2. Build your knowledge toolbox. You can’t be an expert in everything, but you can stay on top of trends and explore new technologies as you grow in your role. Encourage your team to do the same, this way, you can have a diverse and informed group that can help you make specialized decisions. 

3. Build the factory, not the toy. Build processes around you that help your team follow standard operating practices. Make sure to use processes to help you organize work without adding too many details or restrictions. This allows your team to write better documentation and follow best practices so anyone can pick up where they left it. Also, befriend automation to avoid repetitive tasks and testing. 

4. Test the important bits. Automate testing to test as much as you can. While the recommendation is to get 80% of test coverage, when time is tight, the best advice we can give you is to rigorously test the most critical parts of your system.

How can NaNLABS help you reduce your technical debt

As you’ve seen throughout this article, technical debt can easily become a big problem for companies of all sizes. Bad decisions can put the company’s finances, your team's mental health, and the viability of the project at risk. 

At NaNLABS, we're experts at helping businesses optimize their processes, redesign architectures, and reduce their technical debt. Take Fluint, for example—a B2B SaaS startup that was struggling with a stalled MVP due to poor communication and a low-quality codebase from a previous agency. When Fluint brought us on board, we quickly stabilized their code, enhanced key features, and delivered a scalable MVP in just 90 days.

Whether you're in the middle of a project that's going off the rails or looking to avoid technical debt from the start, we can help you out. At NaNLABS, we offer multiple services ranging from data engineering consulting to team augmentation and MVP development. 

Want to see what we can do for your business? Let us become your technical sidekicks and get rid of the root cause of your tech debt.

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