The CIO’s 4 most critical tech debt challenges – and how to solve them

Troels Astrup, Partner in Devoteam and Head of CIO Services, explains how to identify tech debt challenges and create a strategic plan to tackle them.

What is Tech Debt?

Tech debt is an invisible threat that challenges CIOs in many kinds of organisations. It drains resources, inhibits innovation and increases risk at a time when digital transformation and AI are essential. In fact, 93 per cent experience of all organisations to have technological debt in one form or another.

Introduction

As a CIO, CTO, or CDO, you may be in the middle of this battle. You know that debt isn’t just a technical issue. It is also a strategic risk that requires support at all levels of the organisation.

You may have inherited the debt from your predecessors or contributed to it consciously or unconsciously. In any case, technology debt affects the entire organisation. It is a strategic risk that can slow down future growth and innovation. At the same time, it creates significant financial burdens. Even more, it draws on resources that you could allocate to more strategic initiatives. For example, think of investments in digital transformation and product development​​.

Perhaps you have already replaced some critical systems along the way, but the whole still feels unchanged. Tech debt has become a permanent part of the organisation’s foundation – something you live with but can rarely address fundamentally.

The problem with tech debt is that it doesn’t go away on its own. On the contrary, it grows exponentially the longer you allow it to exist. Why? Because you will build your new systems on top of old ones. Complex integrations will create dependencies that make it harder and more expensive to settle the debt later. Fortunately, there are solutions for dealing with tech debt.

Here you can read more about Devoteam’s definition of and approach to technological debt . If you need help dealing with technological debt, you can write to me via this contact form

Challenge 1: Increasing costs for IT operations

Technological debt constantly pushes up your IT operating costs. When old systems require more maintenance and support, you will have a reduced budget for new technology and innovation. Why? The IT budget rarely keeps up with demand. It slows down the company’s progress.

In an IDC survey from 2023, almost 40% of CIOs responded that they expect to exceed the budget for digital infrastructure in the next 18 months. The survey also shows that 47% blame technology debt.

The result is a dilemma in which companies are expected to deliver “more for less”. In other words: they have to drive operational efficiency without compromising on innovation. But when a large part of the budget goes to keeping old systems running, there are fewer funds for new digital solutions. This lengthens the distance to innovation.

Your responsibility as CIO is to balance operations and innovation. An effective debt settlement plan is a key component of this balance.

Solution: Prioritise a strategic tech debt settlement plan

To free up funds for innovation, you should first of all map the company’s technological debt. Then you should develop a prioritised plan for settlement. Start with an analysis of the total cost of ownership (TCO) of the systems and identify the most costly areas. By quantifying the time and resources that tech debt consumes, you’ll gain a better understanding of total tech debt. You will also find it easier to prioritise efforts accordingly. You can use Gartner’s PAID model as a starting point, which precisely helps with the right prioritisation.

Linking technological debt to the company’s business capabilities will create a clear connection between technological challenges and their business impact. This makes it easier for you to prioritise efforts where they can create the most value. This is, for example, in critical processes or areas with high growth potential. 

Business capability mapping can act as a strategic tool that integrates IT with business strategy. In addition, it supports a more targeted and value-creating technical debt management. When you, as a CIO, choose to phase out or modernise the most costly legacy systems, you free up significant resources. You can then allocate these resources to future digital initiatives of higher strategic value.

Read also: Break out of the technological debt prison and regain strategic dynamism

Also, consider how moving to cloud solutions can reduce operational costs by eliminating the need for physical infrastructure and maintenance. At the same time, you achieve a scalable and flexible IT infrastructure. This approach not only creates economic air. It also makes your organisation better equipped to support innovation and rapid adaptation to new business needs.

Challenge 2: Technological debt hinders digital initiatives and AI

Technological debt is a direct barrier to new digital initiatives and the realisation of AI potential in your company. The integration of new technologies, such as Artificial Intelligence (AI), is hampered by legacy systems and poor data connections. This delays development and reduces competitiveness.

Many AI projects end up as proof of concepts that never materialise due to technological debt. It both inhibits innovation and increases costs. In addition, it weakens the company’s competitiveness and reduces the ability to utilise AI and other advanced solutions.

Solution: Create an AI-ready infrastructure through targeted debt settlement

As a CIO, you should first conduct a thorough impact analysis. This will allow you to map the specific barriers that technological debt creates for IT operations and business development. The analysis can also make visible the concrete consequences of technological debt. Think of delayed AI projects, lower efficiency, and increased security risks.

The biggest obstacles to using AI often lie in the integration and data layers. So feel free to start your analysis by examining the data layer. Then move up to the application layer, where legacy systems can often be in a form that makes AI difficult to incorporate.

The interest in AI is also the perfect starting point to make the business understand the seriousness of the problem. Technological debt can directly hinder the implementation of AI. Again, it is important to link it to business capabilities, so that the business can see the consequences. Thereby, the impact analysis shows why technological debt is a common challenge and not just an IT problem 

Read also: The business does not understand IT – let’s have a common language

Once the consequences are made clear, you as a CIO can begin to map the technical debt barriers that hinder AI development. Start by prioritising the modernisation of the systems most critical to making AI projects succeed. Investing in data enhancement and flexible integration platforms can ease the transition to AI. It will ensure that new technologies can be implemented quickly and smoothly.

Gartner’s TIME model can help evaluate and prioritise the company’s various applications and technologies. This is based on the four categories: Tolerate, Invest, Migrate and Eliminate. It gives you a structured overview of which systems can be kept as they are, modernised or expanded, moved to new platforms or phased out.

It is a practical tool for managing technological debt and ensuring that resources are used strategically. Via the model, you can set up a prioritised and weighted list. This can form the basis of a roadmap for settling technological debt.

A phased approach, where you settle small parts of technological debt on an ongoing basis, can also ensure progress in AI development. When you tackle technological debt in parallel with AI development, the organisation can achieve faster time-to-value and stay competitive. This also prevents you from having to put large projects on hold.

Challenge 3: Critical areas of compliance and security

Systems and infrastructure affected by technological debt often fail to meet modern security standards and compliance requirements. This can expose the company to increased risk of data breaches, hacker attacks and regulatory sanctions.

Ignoring this challenge can lead to serious security breaches. It will not only damage the company’s reputation but also cause significant financial losses and legal consequences. In addition, non-compliance can result in large fines and sanctions from regulatory authorities. This can also burden the company’s finances and reputation.

Solution: Proactively manage technology debt

You can proactively meet these challenges by prioritising a structured reduction of technological debt adapted to the company’s risk profile and compliance needs. Start by identifying the systems and infrastructure that can no longer be safely updated. Then make a plan to either phase out, upgrade or replace them. Also, establish a roadmap for ongoing compliance checks and risk assessments. With this, your company will always have control over the critical areas.

You gain more benefits when you modernise legacy systems and integrate them with advanced security platforms. First, you ensure higher safety standards. Secondly, you ensure a better ability to adapt the company to new regulatory requirements. This not only reduces the risk of cyber threats. It also reduces the large fines that come with breaches of compliance.

Challenge 4: Lack of understanding in the rest of the business

As a CIO, you may face a significant challenge when it comes to getting the necessary buy-in from the rest of the organisation to deal with technology debt. Especially from top management.

Technological debt is often invisible to those outside the IT department. Decision-makers often focus on short-term deliverables and quick wins. Without a deeper understanding of the long-term consequences of technological debt, these priorities risk reinforcing inefficiencies and increasing the company’s risk profile.

Top management may not see the direct business implications. And without their support, it can be difficult to secure the resources for a structured debt reduction. This can create a vicious cycle where the debt continues to grow. It will also hamper the organisation’s ability to scale and innovate. The result is that it increases the risk of system breakdown and a direct impact on the bottom line.

Solution: Make technological debt visible and strategically relevant

So how do you break the vicious cycle where technology debt is ignored or under-prioritised? As a CIO you must clarify the direct impact of debt on the organisation’s strategic goals and business capabilities.

Conduct impact assessments that show how technology debt is hindering growth, innovation and efficiency. If key areas such as product development, customer experiences or data analysis are constrained by technical debt, this can result in inefficiency and increased risk. It will directly affect the company’s ability to realise its strategy. Add to that that technological debt should be presented with tangible data. Use concrete scenarios and financial analyses to illustrate the costs of inaction.

Put clear numbers on how debt increases operating costs, delays innovation and creates greater risks of security breaches. Also highlight how modernisation and debt settlement can free up resources and reduce total cost of ownership (TCO). The benefit: funds can be reallocated to strategic initiatives. In this way, top management will understand that technological debt is a financial burden with significant consequences for the company’s future success.

Finally, you can make tech debt a strategic priority by changing the narrative. This assumes that it is not just an IT problem. It is a strategic risk that can hamper the entire organisation’s growth and competitiveness. By linking the debt to the company’s overall goals and concrete must-win battles, you can show that investments in liquidation are not only about operational efficiency. They are also about supporting innovation and future growth.

When you combine these three approaches – impact assessments, financial visibility and a strategic narrative change – you as a CIO can ensure that technology debt is not just viewed as a burden. Technological debt is also an opportunity to build a stronger and more future-proof foundation for the organisation.

Brief summary of the specific solutions

So what’s my recommendation? Here is a brief summary of the actionable solutions for dealing with tech debt:

• Debt settlement strategic plan: Map the costs and plan to phase out the most costly systems to free up resources for innovation.
• AI-ready infrastructure: Create an impact analysis and modernise systems that block AI development to ensure faster time-to-value on new initiatives.
• Compliance and security: Implement a structured approach to identify and upgrade systems that do not meet today’s security standards.
• Business understanding: Show senior management the financial and strategic risks of technology debt so they see the value of a long-term resolution strategy.

Finally, it is important that you as a CIO recognise that technology debt cannot be solved with a single modernisation or simplification program. It requires a systematic and continuous approach as well as a continuous focus and governance.

Would you like help to make an impact analysis of the company’s technological debt? An analysis which you can present to top management? Or is it more relevant for you to get a 360-degree review of technological debt in your organisation, including an action plan? Let us know.