The State of the Workplace in 2019 — Why Debt is Holding Back Digital Transformation — Part 1

Despite a push towards adopting digital technologies in the workplace, success rates continue to be less than impressive. A key factor contributing to the complexities around digital workplace adoption is technical debt. Technical debt is defined as the cost and effort involved in addressing the problems arising from poorly planned digital transformation initiatives and leaving problems for the future. When enterprises chase quick wins and apply short term patches to long term problems, it results in technical debt.

“Technical debt is really about systems that have grown organically over time, are still in existence today, and haven’t necessarily had the proper care that is required to run a modern-day application. There are significant costs of keeping them going, from hardware to support staff,” says Brent Conran, Intel IT’s chief information security officer. “But the real cost is our inability to be agile and the inability to invest in the modern systems that are necessary as Intel pivots into new markets.” In the context of workplace modernization, we are looking at four types of debt:

● Fresh capital expenditure — Capex spent on remediating bad code, fragmented applications, low performing infrastructure, etc.

● Ongoing operational expenses — Incremental opex incurred due to new process requirements, maintenance, and preventable user training

● Culpability costs — Additional spends on downtime resolution, security breaches, data and access issues, etc.

● Lost opportunities — Opportunity costs arising from productivity dip, employee attrition, and a decline in market reputation

Clearly, these four elements go beyond the traditional definition of technical debt or design debt or code debt. It is no longer limited to fixing legacy technology — companies failing to successfully adopt digital workplaces stand to lose out on a multitude of fronts.

The Severe Impact of Debt Accumulation

According to two-thirds of business leaders, digitalization must be accelerated if enterprises are to maintain their competitive edge. Not surprisingly, therefore, new technology is often overlaid on legacy systems in a bid to cut down transformation timelines. This leads to complexities such as lack of integration, frequent issues faced by employees/users, a rising number of IT tickets, and snowballing costs.

And it isn’t only small businesses or those unfamiliar with the intricacies of digital transformation who face debt. At the Digital Workplace Experience Conference 2019, Google’s director of engineering, Kate Matsudaira, spoke about the company’s own share of problems. “We have a lot of vendors with systems that don’t integrate and work well together. We have legacy technologies that are absolutely business-critical that we don’t want to invest in,” she said. “And did I mention the super high expectations of our employees, with respect to the technologies and the workplace that they’re in?”

Employee dissatisfaction is another way in which technical debt is crippling the modern workplace. Employees at “technology laggard” organizations are 6x times more likely to quit when faced with outdated technology, compared to their digital-first counterparts. On the other hand, the ability to easily access business applications has reduced workforce attrition, report 54% of CIOs.

That’s why, in addition to the traditional notion of technical debt — i.e. the cost of hardware and software fixes — enterprises must now consider a rising pile of soft costs. For instance, a recent report of UK employees found that workplace IT issues are creating a £4 billion productivity “black hole.”

All of this points towards the necessity of a strategic rethink when approaching workplace digitalization.

Three Pivots of a Minimal-Debt Strategic Rethink

Using outdated, unsupported, or deprecated technology for the sake of efficiency, or it just harder to change a work practice or sometimes just because you’re more familiar with it, also accrues debt. CIOs should explore the following ideas right at the start of their workplace transformation projects, in order to curb debt.

1. Go beyond the “set and forget” mindset — Monolithic applications were once perceived to be cost-effective, demanding a single payout for lifetime use. However, with massive strides and new upgrades launched by digital workplace providers like Citrix or Microsoft, almost every day, this only leads to more debt. Investing in SaaS platforms with flexible subscriptions can go a long way in debt prevention.
2. Implement parallel transformation tracks — Debt repayment does not mean that innovation must grind to a halt. Legacy components can often be reintegrated into the new architecture, while continually implementing the latest workplace tools can help stay ahead of debt. This would ensure that enterprises do not incur new debt, even as they repay old ones.
3. Use cognitive services to futureproof the workplace — Cognitive technology is an emerging area which aims to simplify workplace IT with a focus on UX quality, delivery speed, and cost savings. Importantly, this makes transformation more contextual, reducing debt caused by slow adoption — it is also automation-driven, which accelerates delivery.

Why Cognitive Could be the Magic Bullet Enterprises are Looking For

Cognitive services use machine learning to understand the user and application behavior across the enterprise. This helps to identify activity patterns, creating correlations between workplace platforms and their impacts. Enterprises can achieve faster adaptability to change without holding on to legacy, thereby preempting debt. It is even possible to recommend the next-best-action so that they are always on the most optimal transformation track.

At a time when 40% of the time invested in workplace application development is spent on dealing with debt, cognitive technology could prove to be a “magic bullet.” Not only will it speed up transformation, but it will also make sure that digital workplaces are in-sync with employee requirements.

To conclude, 95% of enterprises will offer digital workplaces in the near future, with the market reaching USD 35.7 billion by 2023. To make this massive growth truly sustainable, debt prevention through the use of strategy and next-gen technology is essential.

In the next chapter of this series, we delve deeper into the technical side of debt incurred during digital transformation and explore how application development strategies can be fine-tuned for debt prevention.