While spending years in software business, one concept which stands clear among all entrepreneurs is technology debt. Technology debt is eventually when you take up more and more time to pay it in present time and carry it forward to pay it later, usually with interest. For instance, when you choose that you have discovered some designer flaws in your software, but you work on the problem with a hack so that you could precisely meet the deadline of the project, you are undergoing a technology debt. You will definitely have to pay a cost for this decision, and you’re ready to bear the cost as the cost of not standing up by the deadline is a lot higher. And, you promise yourself, that once the product is ready, you will be fixing up the problem (thereby paying off the debt).
Difference between Technology Debt and Fiscal Debt
Technology debt isn’t same as fiscal debt. The most crucial part is its interest, when you incur a fiscal debt; there is a known process that you have to pay an amount higher than the basic sum. However, fiscal debt in business is practical and quite common. Till the time your company is making cash, you can clear off the debt and things go fine. However, problem incurs when you don’t generate cash and debt keeps on getting bigger and bigger.
During the time of technology debt, there is a similar process, but the challenge is a lot higher. Often the rate of interest is unknown and cannot be precisely predicted. So if you’re taking a short cut on a major software product to meet a deadline and it is saving you about 100 hours think again, how much do you have to pay ultimately in the coming years to meet this debt? Check out the chances you have to make your loan gets called off before you check it and there might come a time when you simply don’t have the sources to clear it off.
There is a common forgiveness aspect which comes in technology debt which don’t find in fiscal debt. The forgiveness aspect is when you undergo technology debt, no matter what the reason is, it doesn’t really cost anything to you, because the project may be abandoned for some cause or any issue, it doesn’t just make any sense. In such cases, you end up not really clearing off the debt at all. However, it is due to the forgiveness factor that technology debt has become so enticing and persistent. Often there is a mindset to take the shortcut and incur the debt as you really don’t have to pay it off. However, if technology flaw is goes beyond the limit, the expenses are really high.
Acknowledging technology debt is a little difficult. At the least, it is crucial to know when going for a tradeoff decision, that in real sense, you’re incurring debt. Being aware about it is the first stage. Try to check the rate of interest on the debt. Try to clear out the debt as soon as possible as you have to pay much more in the long run. Click here to find out how to calculate the interest rate on technology debt.