What is IT Debt and How Much is it Costing You?

What is IT Debt?

The term IT debt became a very popular talking point in the selling and marketing of cloud-based solutions after Gartner promoted it in 2010. IT debt refers to the investment a company would have to make to eliminate its IT backlog and bring their current application portfolio up to a fully supported state. Specifically, it has been used to conduct Application Rationalization exercises and to create business cases that support the migration of legacy, on-premise applications to the cloud.

Historically, IT debt has grown over time due to factors like changes in regulations, mergers and acquisitions, and the burden of supporting previous IT investments that are based on architectures that are historically complex and/or difficult to maintain. In addition, multiple surveys have shown that many organizations spend the majority (often averages that exceed 70%!) of their IT budget just maintaining legacy systems, thus hampering their ability to invest in new technology.

Attacking IT Debt with Salesforce

With its metadata-driven, multitenancy architecture, Salesforce allows its customers to roll out new functionality and reduce their backlog by leveraging configuration instead of code to introduce and modify application functionality. With the average cost of QA testing for custom development for companies rising to 35–40% of their development costs, this can also allow organizations to spend more time and money focusing on reducing their backlog.

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Now consider that on-premise based software companies have to test products across a multitude of operating systems, OS versions, database vendors, browsers, etc. Some software vendors have been known to spend over 70% of their R&D budget on testing along. But this is not the case with innovative SaaS companies like Salesforce that have a comparatively static infrastructure. This allows them to focus much of their R&D budget on new products and enhancements to existing products, which in turn has created the ability for Salesforce to release new features and functionality in their portfolio at an unprecedented rate.

The Value of a CRM Implementation Strategy

While this has brought a tremendous amount of value to their customers, some organizations lack the ability to implement these new features and functions at the same rate. Many companies start their CRM journey with Salesforce Automation (SFA) and then progress into Marketing Automation or Service & Support. End-user adoption is typically high at the initial launch of the program. However, many organizations fail to implement a CRM governance and implementation strategy that allows them continuous innovation, which can contribute to declining CRM adoption rates over time. When combined with the rate of innovation that competitors or new entrants to the marketplace are taking advantage of, this can actually increase an organization’s overall IT debt.

What Should You Do?

To stay competitive and meet growing customer demand, many companies cannot afford to fall behind the curve. The first choice is to do nothing, which wastes a considerable amount of your budget, which is not a good plan. So to keep up, businesses need to accelerate the migration of legacy applications to SaaS platforms. This is especially important in the case of applications that impact the customer experience by utilizing a governance and implementation model that allows them to keep up with the increased rate of innovation.

This is an issue that can seem daunting to many organizations. However, by investing a solid plan to close the gap in their backlog and implement new development practices like continuous integration deployment, companies can close this gap. Failure to do so may not only increase their IT debt but may put them at a competitive disadvantage.

Perficient helps businesses gain a competitive advantage with technology integrations that can save companies on average thousands — and in many cases, millions — over time.

Have you ever heard of IT debt? Let us know in the comments.

Are you scared you might suffer from IT debt? Good news, the doctor is in. Let us help.

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