Creative and financial deficits among the downsides of tech debt

The damaging spiral of “tech debt” must be broken to stimulate not just the economy, but creative minds too, writes Technology One’s chief executive, Ed Chung.

Ed Chung, chief executive at Technology One.

Every debt, eventually, has to be repaid. Right now, the day of reckoning is fast approaching for one of the most crippling – but least discussed – debts burdening government across Australia – technical debt.

Technical debt is the cost of generations of incremental investments in legacy technologies to tease additional functionality or life from them.

Often, these investments are made because they seem like the fastest solution to getting a new function or service in place. Other times they are driven by the sheer weight of sunk investment.

This sunk investment is not just in actual systems. It is also the impact of the number of people, advisers, embedded technology partnerships and ongoing operating costs associated with the established ways of doing things.

As the debt grows larger and larger, it is becoming harder and harder to retire.

Systems held together by gaffer tape and chewing gum are delivering mission critical services across Australia. From securing borders to managing payment and revenue systems, these systems not only cannot be turned off, they require constant and growing maintenance.

Technology debt is creating not just a financial deficit, but encouraging a deficit of imagination that discourages decision makers from embracing the new. The risk of failure is so great, “sticking to what we know” seems to be the only safe option.

Too often, it proves a fool’s errand.

Years of budgetary pressures have driven departments and Government agencies to double down on investing more in systems they first bought a generation ago. This is compounded by the lucrative deals the consulting firms and system implementers have signed, which sees them to bill hourly to patch up systems with said gaffer tape and chewing gum. They are effectively incentivised to keep these old systems going for as long as they can.

The Government, understandably, is demanding departments and agencies prioritise spending on programs to reduce the burden on citizens during economically tough times, not on running themselves. But we are reaching breaking point.

More and more of scarce internal IT budgets are being consumed keeping old systems supporting critical services from falling over, making it seemingly impossible to pay for new systems to replace them.

If these were bridges or roads owned by governments, their decrepitude and the rising cost of maintenance would be obvious and demand action.

But even with “invisible” IT systems, the music eventually stops and the bill for the debt comes due.

Within a day of the Sydney suburban rail system coming to a halt earlier this month – in the middle of a state election – reports emerged the failed switching system had been obsolete for a decade.

Apart from the rising risk of failure, the financial burden of servicing government technical debt is reaching a point where policy makers may be left with little choice.

This debt is becoming increasingly costly to the budget at a time when fiscal discipline is demanded by the twin crises of inflation and cost of living.

This spiral has to be broken.

The first step is to reduce both the cost and the risk of transitioning to new systems. That sits in large part with the technology industry. Consultants advising governments on technology need to accept their share of the blame too. A looming Senate inquiry into conflicts of interest by the big four consulting firms is likely to raise some uncomfortable questions about their tangled business relationships in the advice and technology industries.

On the demand side, Ministers and agency heads need to step in and push the industry to show more imagination, while also questioning how they can reduce their own internal switching costs and simple resistance to change.

As the Productivity Commission found in its major review of national productivity this month, the cost of retraining staff to adopt new processes – even those that increase efficiency – are barriers to change.

Again, though, assessments of these costs may be inflated of they are based on history. Newer business applications are learning from online consumers services by becoming more intuitive and embedding training and self-help.

Here is one idea to open the shutters and let sunlight in.

Ministers could ask the industry and their departments and agencies for ideas to save $10-100 million in the cost of running government. Those ideas should be capable of delivering value in three years or less, and the risk of failure should sit with the vendor, not the government.

Now that would stimulate some imagination!

Ed Chung is chief executive of TechnologyOne.