New service boils down technical debt to $$; ties it to cost and value

Israel Gat

Under the direction of Dr. Israel Gat, Cutter Consortium has developed an assessment and valuation process that exposes both technical debt and its implications, and reduces a large number of complex technical considerations to a common denominator that is universally understood: dollars.

Dr. Gat, a Cutter Senior Consultant, has been studying the impact of technical debt on software project governance. According to Gat, innate optimism, resource shortages, and the never-ceasing pressure to deliver additional functionality to the market often leads to software development projects that are saddled with a high level of technical debt. Says Gat, "Though some 'borrowing' could be expected in the short-term, technical debt, if left unchecked, can become a significant burden with severe adverse effects in the long-term. Accrued technical debt is often 'invisible' since until now there's been no unifying metric for it that can be easily understood at all levels of the organization, by both technical and non-technical people.

"Executives in charge of software governance have long dealt with two kinds of dollar figures: One, the cost of producing and maintaining the software; and two, the value of the software, which is usually expressed in terms of the net present value associated with the expected value stream the product will generate. Now we can deal with technical debt in the same quantitative manner, regardless of the software methods a company uses."

When expressed in terms of dollars, technical debt ties neatly into value vis-à-vis cost considerations. For a "well behaved" software project, three factors -- value, cost, and technical debt -- have to satisfy the equation Value >> Cost > Technical Debt. Monitoring the balance between value, cost, and technical debt on an ongoing basis is an effective way for organizations to stay on top of their real progress, and for stakeholders and investors to ensure their investment is sound.

The Project Dashboard

Figure 1 -- The Project Dashboard (adapted from the Sonar Technical Debt plug-in)

Says Gat, "The service we have developed combines static code analytics with dynamic program analytics to give you 'x-rays' of the software being examined at any desired granularity -- from the whole project portfolio to a single instruction. It breaks down technical debt into the areas of coverage, complexity, duplication, violations and comments. Clients get an aggregate dollar figure for 'paying back' debt that they can then plug into their financial models to objectively analyze their critical software assets. Based on these metrics, they can make the best decisions about their ongoing strategy for the software development effort under scrutiny."

Technical debt assessments and valuation can specifically help CIOs ensure alignment of software development with IT Operations; give CTOs early warning signs of impending project trouble; assure those involved in due diligence for M&A activity that the code being acquired will adapt to meet future needs; enables CEOs to effectively govern the software development process; and, it provides critical information as to whether software under consideration constitutes an asset or a liability for venture capitalists who need to make informed investment decisions.

A half-day seminar on assessing technical debt will be delivered by Israel Gat and Jim Highsmith at the Cutter Summit, October 25-27.

To interview Dr. Gat, or for more information on Cutter's Technical Debt Assessment and Valuation services, contact Kim Leonard at or 1-781-648-8700.

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