This is similar to the Structured Finance analogy except that it is introduced in an unplanned state. If the Structured Finance can be viewed as a business funding its startup by negotiating finance with the bank, this is closer to a startup funding itself entirely using a credit card.
When does this happen? Typically this is when systems are developed by inexperienced/incompetent developers without strong management/standards in place.
I’ve been involved in many systems that have areas that were
- “developed by x and we don’t dare change it because we’ve no idea how it works”
- have areas that were knocked up by the owner/his nephew who was doing A-Level computers and it would be too big a job to rewrite it now, or
- were written in [insert language here] because someone wanted to have a play with it / was good at it and no one here now knows that language.
The first step to dealing with this sort of technical debt is to get a handle on the level of it. Get someone to sit down with the “credit card statements” and understand the interest that is being paid on this debt. Until that is completed there is no way to understand if it needs dealing with and what the cost of dealing with it is.
Once the position is understood, it can be dealt with in a similar way to the structured finance technical debt.
Other posts in this series:
- Introduction: Why Technical Debt isn’t all bad
- Positive Technical Debt part 1: A Director’s Loan
- Positive Technical Debt part 2: Structured Finance
- Positive Technical Debt part 3: Investor demanding payout
- Check back soon for Negative Technical Debt part 2 (subscribe)