The CFOs are largely responsible for IT functionality. At several companies, the IT department is now directly accountable to the CFO. Now the CFO has become strategic and their number one job is to avoid technical debt and improve the processes and services as the technology platform evolves.
Tech debt is not a new term; actually it refers to the lack of attention in building effective software development projects. Such imperfections are rarely produced if the future tense is not considered or if shortcuts do not work. However, financial officials see tech debt and the aspects that cause inefficient use of technology from a different perspective than the IT department. The risk associated with poorly running the IT department could be the biggest threat to the business, causing millions of dollars in loss and complete damage to the company’s reputation.
Aspects of technical debt
The basic aspect of tech debt is inefficient technology leadership. Typically, 30 percent of total debt depends on hiring an inefficient IT leader. Often the CFO fails to recognize the qualities of an IT leader. Previously, companies used to place employees with high computer skills in the IT team. But in today’s time this is not enough! The IT leader needs to know the right way to run and interact with important apps, deliver important data, and develop a great customer experience.
The second point is the poor supervision. In fact, about 25% of technical debt stems from the inefficiencies in reporting, discipline and strategic focus. Defective and obsolete systems are in third place with 20% of the role in total technical debt.
Irrational spending ranks 4th with 15% debt responsibility. It can be because of overspending, underspending, poor resource allocation and more. You can set spending benchmarks by looking at the spending of similarly sized companies in your segment.
Last but not least factor responsible for tech debt is chaos, which stands at 10%. Several companies have cross-functional procedures, incomplete data, separate systems that cause chaos and lead to technical debt.
Get out of technical debt
After evaluating your company’s technical debt, look for steps to improve it and encourage better inventions:
- Evaluate your IT functions. Go for a detailed study of your IT departments, its systems and structures, the budget details and project reports. Highlight your current state including IT expenses for both the ongoing projects and the new projects. Arrange where possible changes can be made for better impact.
- Introduction to common reporting processes. Standard IT reports monthly termination procedures should highlight the current status and rank the IT initiatives, source updates, risk management issues and monitoring data. You can hold people accountable for understanding the performance and status of the departments.
- Organizing project management. Review your project’s priority list to better align projects in line with business strategies.
- Assess and standardize IT spend. Technical debt is often reduced by evaluating your current IT expenses.
Finally, find out whether you are investing the right amount of technology or not. Look online to find out how you can efficiently channel your technology resources to reduce technical debt. Learning about credit card refinancing and going for it can be a smart move to have a stress-free life.
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