Editorial
The Gist
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Financial strain mounts. Technical debt increases maintenance costs and drains budgets, which limits investments in innovation and customer experience improvements.
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Productivity takes a hit. Legacy systems slow down teams and waste valuable time, which causes operational inefficiencies and stalled transformation projects.
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Customers feel it. Outdated systems lead to slower response times and poor experiences, which risks customer loyalty and higher churn rates.
Technical debt is a bit like credit card debt. A few small essentials here and there, plus that big purchase you just couldn’t wait to save up for, and before you know it, you’ve gotten yourself into quite the hole. Only then do you realize just how easy technical debt is to acquire, yet increasing expensive to carry.
According to a recent study of 500 IT decision makers worldwide from Pega and Savanta, 88% of respondents expressed concern that their level of technical debt inhibits their ability to compete with more agile, innovative rivals. The effects of this debt are so pervasive that only 7% of respondents reported no problems related to technical debt with their legacy systems.
If you’re not as familiar with the term, think of technical debt as the costs that build up over time when outdated software, technology platforms and hardware are used and updated with quick fixes. These fixes often come with diminishing capabilities, a lack of scalability and a lack of compatibility with newer technologies.
While technical debt may be invisible in many day-to-day operations, it imposes significant costs in terms of productivity, customer experience and total cost of ownership of legacy systems.
Table of Contents
- The True Cost of Technical Debt
- Technical Debt Slows Teams Down
- The Effect of Technical Debt on Customers
- What Leaders Can Do About Technical Debt
- Paying Down Technical Debt Over Time
The True Cost of Technical Debt
As the term “debt” would imply, there are some tangible financial impacts of technical debt. More than one-third of survey respondents said that ongoing maintenance costs of legacy systems are one of their organization’s greatest financial drains.
Nearly half of the organizations surveyed (47%) said they continue to rely on legacy applications for 10 to 20 years, while nearly one in five use systems that are over two decades old. The challenges with these systems likely sound painfully familiar if your organization is in a similar position. These challenges include high costs of maintenance, limited interoperability and high ticket cost for any potential upgrades or additions.
This affects marketers and your customer-facing investments because the financial drains directly impact opportunities to invest in product or service innovation, customer-facing experience enhancements and the ability to connect data sources more easily to understand behaviors.
Related Article: Stop Building Tech Stacks. Start Building Growth Engines
Technical Debt Slows Teams Down
While the tangible financial burdens that technical debt puts on a company are considerable, the hidden costs are those in productivity. Sixty-eight percent of the respondents said that legacy systems prevent them and their teams from operating effectively. These systems eat up time, focus and effort that could be spent on priority initiatives.
There are many potential outcomes here. For example, operational inefficiencies often stem from the significant time spent on maintenance (44%) and the challenges that come from siloed, disconnected systems (37%). Failed transformations are also common. Thirty-seven percent of organizations surveyed lost up to half of their productive time last year because of failed legacy system transformation projects. Stalled innovation is another issue. Nearly three-quarters of businesses said outdated systems stop them from adopting new technologies like AI and automation, which could affect both internal teams and customers.
Leaders that think they are saving companies money by putting off a much needed system overhaul aren’t really saving anything. The dollars for those initiatives are instead being wasted paying for the hours spent on inefficient processes and systems that take way too many hours to accomplish what a modernized system might be able to automate.
The Effect of Technical Debt on Customers
We need to directly acknowledge the impact that technical debt has on customers, their experiences and their retention. In fact, over half (57%) of organizations acknowledge their reliance on legacy systems is likely to cause customers to defect due to suboptimal experiences.
For nearly a third of these organizations, this means anywhere from a 26% to 52% increase in the average resolution time for customer inquiries over the past year. This frustration-inducing time is directly attributable to outdated legacy systems requiring staff to juggle multiple cumbersome applications.
With limited budgets with which to make investment decisions, it’s not heartening to hear that nearly three-quarters of survey respondents admit prioritizing profitability investments over improving customer experiences through modernizing their systems. In reality, the customer may not always be able to be prioritized, but there needs to be a balance. After all, what good are profitable projects when customers are heading for the exits?
Related Article: Composable Architecture: How to Unite Old & New
What Leaders Can Do About Technical Debt
Despite the many potential causes of technical debt, as well as the myriad of ways it may manifest both internally and externally, there are a few things that leaders can start doing today to start paying down their debts. First, they should identify key problem areas. They must understand where technical debt is having the biggest efficiency and customer experience impacts by looking at key metrics and by talking with the teams who might be most affected.
Next, it’s important to prioritize debt management. Simply saving money by not spending on new infrastructure improvements does not take into account the long-term revenue and customer lifetime value gains to be made by strategically paying down technical debt.
Finally, align incentives for long-term gains. Balance a cost-cutting mandate with rewards for improving churn-reducing and revenue-generating ideas and initiatives.
Some leaders may not feel the direct impacts of technical debt, yet others may be all too aware. Aligning teams and incentives and making the reduction of technical debt a priority will have a long-term payoff. Potential benefits here include efficiency gains, maintenance cost savings and customer benefits like less churn, greater loyalty and potentially higher customer lifetime value.
Related Article: Mastering the Digital Experience Tech Stack for 2025
The Hidden Costs of Technical Debt
This table summarizes the key business impacts of technical debt across financial, operational and customer experience dimensions.
| Dimension | Impact | Why It Matters |
|---|---|---|
| Financial Drain | High maintenance costs for legacy systems | One-third of IT leaders cite this as a major budget strain, limiting investment in innovation and CX improvements |
| Operational Inefficiency | Legacy systems reduce team productivity | 68% of respondents say old systems prevent teams from working effectively; 37% report significant time lost to failed transformation projects |
| Innovation Stalled | Inability to adopt new technologies like AI | Outdated infrastructure blocks modernization efforts, hindering competitive advantage and internal efficiency |
| Customer Churn Risk | Slower response and resolution times | 57% of organizations admit legacy tech drives customer defection due to subpar experiences |
| Strategic Misalignment | Profitability prioritized over CX upgrades | Long-term growth and loyalty are jeopardized when customer-facing systems are neglected |
Paying Down Technical Debt Over Time
This is a complex, multi-dimensional issue, which is why so many organizations are deep in technical debt in the first place. Yet the benefits of paying down your organization’s technical debt can have financial, operational and customer-facing impacts that address some major brand challenges.
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The good news is that there is hope, and change doesn’t have to happen all at once. That said, if the scenarios described earlier are even a partial match for your organization, it’s time for a strategic intervention to proactively address technical debt. This will help you secure future competitiveness and customer loyalty.
That means starting today. Organizations that systematically pay down their technical debt can significantly enhance agility, support innovation and consistently deliver superior customer experiences.
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