• Platform

Taking the heat on tech debt

3 November 2021

JUMO’s CEO and founder Andrew Watkins-Ball gets into a conversation with our VPE, Fábio Matos, our CPO, Martin Vogdt and Chief Analytics Officer Paul Whelpton.

The man (Ward Cunningham) that coined the term ‘tech debt’ uses taking out a loan as a metaphor for the result of rushed software development. If you don’t pay it back in good time, interest accrues until the interest is eventually bigger than the loan itself. When that happens, you can’t modify the software anymore. 

So, the logical conclusion is to pay down your loans. If you don’t, you’ll default to the point where the magnitude of the arrears necessitates starting over. Tech debt costs on several fronts: your system becomes sluggish, your people get grumpy and making changes becomes slow and risky.

But debt is not necessarily bad. We take on debt in our personal and professional capacities because it makes all sorts of things in life go faster, it lets us dream bigger: buying a home, growing a business etc. How would we do that without debt? Does the same apply to tech debt? As long as you pay it back? It seems that, like many things in life, sensible risk taking can lead to great things. What’s important is to make sure you have a good understanding of the risk factors that will shape the outcome.

Recently, we have been spending a lot of time on this assessment and the trade-off between speed of output and debt accumulation. We have found one metaphor really helpful; thinking about a busy commercial kitchen with the mess representing the debt. Cooking is a messy business (especially when Andrew is cooking) and not all of us embrace cleaning like Mrs. Doubtfire. The best way to run a successful kitchen is clean as you go. You peel a potato, you throw the peels away. The longer you leave a mess, the nastier it becomes. Sure, on that day you might go faster without cleaning up, but in the medium term, the mess is slowing you down and in the long term everything grinds to a halt.

Recognising the need to be constantly cleaning in order to go faster is the key message.

Management’s challenge is to get everyone in their team to understand that cleaning is a secret ingredient to sustained speed. It’s got to become a ‘that is just how we do it’ part of the culture in order to feel the difference.

We’ve seen incredible sums of money being raised in fintech in the last year. Many start-ups are becoming scale ups and use their funds to hire bigger tech teams. In the context of growing capacity, you can split these businesses into two broad categories:

  1. Those whose strong technical foundations can scale from an already high level of output.
  2. Those that need resources to tackle an unsteady core and increasing tech debt.

Obviously category 1 is where you want to be, but few find themselves there! For the majority in category 2, no matter how much talent you add, you will be asking great chefs to clean up an earlier shift’s kitchen mess. Not knowing the kitchen, your chefs are spending their time trying to navigate where everything is rather than cooking up something wonderful. Ideally, the clean up should happen before you get to this point. More chefs don’t necessarily make your kitchen run faster. Brought in at the wrong moment, they’ll just make it slow and expensive.

JUMO, at only 6 years old, has built a scaleable banking technology platform. We’ve allocated significant resources to paying off tech debt, but while our core is strong, we need to work hard to ensure it’s set up in a way that continues to allow for fast and flexible delivery in the future. We are constantly surprised by how little we are engaged on the topic. It’s a vital part of understanding how ready a system is to capitalise on the next iteration of the core product or driving fit in a new product.

Our view is that this dimension is going to become a more prominent feature of investment conversations. It’s not going to be enough to claim that money will solve the problem. Passing more focused scrutiny on what’s going on in your kitchen will become an important part of qualifying for capital and deciding how you then put that money to work. It’s clear that, if you run a software business with a developer-heavy cost base, it’s damned expensive to have a mess in the kitchen.