We often talk about technical debt. In fact it is technical risk.
Debt may be repaid or refinanced. Risk accumulates until it materializes as operating losses, security breaches, or failure to deliver new solutions. Treating it as risk makes it manageable because risk is already a familiar concept to Management and subject to processes, reporting and governance.
Technical risk rarely affects just one area. It arises from lack of vendor support, known vulnerabilities, systems that few employees understand, and platforms where workforce expertise is scarce. Age is not a problem in itself – but when it leads to loss of support, knowledge, or compatibility, the consequences are tangible.
Three structural factors contribute to the persistence of the problem. The business reaps the profit from legacy systems, whereas IT absorbs cost and risk. The CIO works with a time frame of three to five years, while the CFO’s efforts are measured over a twelve-month period. And finally, incentive structures are skewed: new systems are rewarded, while reduction of technical risk is rarely acknowledged. Cutting the IT budget does not solve the problem – it deepens it.
The solution is a twofold approach: governance and remediation. Governance is about making technical risk a visible part of the company’s overall risk management, reconciling profit and loss, accepting multi-year horizons, and measuring the CIO on risk mitigation as well as deliverables. Remediation is about managing consequences after the damage is done: prioritizing systems based on risk, preparing thoroughly for major transitions, continuously reducing remaining complexity, and assigning business ownership to legacy-dependent products.
Ongoing modernization may be adequate on peripheral systems, but rarely on core platforms such as mainframe, SAS, SAP, or core banking. They encapsulate decades of business logic that cannot be broken down into small modules. Therefore, decisions are postponed until major, expensive improvements are inevitable.
The solution is a twofold approach: governance and remediation. Governance is about making technical risk a visible part of the company’s overall risk management, reconciling profit and loss, accepting multi-year horizons, and measuring the CIO on risk mitigation as well as deliverables. Remediation is about managing consequences after the damage is done: prioritizing systems based on risk, preparing thoroughly for major transitions, continuously reducing remaining complexity, and assigning business ownership to legacy-dependent products.
Taking control
New tools have opened up new options. Code and rules can be mapped in business language, functions separated, standard processes relocated, and logic made transparent rather than buried in the code. The point is not hype, but rather that insight helps reduce complexity ahead of a transition – and with it, risk and cost.
Being in the driver’s seat therefore implies three things: Management treats technical debt as technical risk, the CIO and CFO speak the same language and reconcile P and L, and the company follows two tracks – governance to mitigate risk and remediation to make the necessary improvements.
Technical risk is not a residual IT item, but a strategic challenge that ties capital, increases risk exposure, and inhibits innovation. Governance reduces risk going forward. Remediation addresses the consequences when the legacy of the past impedes the present. New options allow us to identify system contents, extract valuable elements, and decommission the rest. That is how you take the wheel and assume the driver’s seat.
Let us help you
It requires experience, methodology, and the ability to bridge the gap between the CIO and CFO. This is exactly where Conformance and Atlab FS offer to help: We translate complex legacy challenges into manageable business decisions.
Reach out and let’s talk about your challenges and how we can assist you in your IT journey.
– Kim Schmidt, Atlab FS
– Jesper Nyvold, Atlab FS
– Rasmus Strømsted, Conformance