Video: Executive Edge | The Hidden Cost of Technical Debt - How It Impacts Supply Chain, Construction, and Real Estate
Welcome to Executive Edge, a video series delivering expert insights on key technology trends shaping industries today. In this episode, we dive into the hidden cost of technical debt and its impact on supply chain, construction, and real estate companies. Joining us are Angela Czajkowski, a seasoned executive with deep expertise in operations and supply chain leadership, and Chris Stettler, an experienced CIO specializing in digital transformation and IT strategy. Together, we’ll explore how executives can navigate the complexities of technical debt, mitigate risks, and make informed technology investments to drive business success.
Lauren Langer 0:04
Hello everyone and welcome to today’s session of Executive Edge.
The hidden cost of technical debt.
How it’s impacting supply chain construction and real estate companies joining us today, we have Angela Czajkowski, a seasoned executive with deep expertise in operations and supply chain leadership.
As an executive, she has first-hand experience navigating the complexities.
Of business strategy, operational efficiency and risk management.
We’re also joined by Chris Settler, an experienced CIO and it leader who specializes in helping supply chain construction and real estate companies drive digital transformation and optimize technology strategies with a strong background in it, aligning it with business goals, Chris has provides key insights for us on how.
CIO’s can help executives make informed technology decisions.
Welcome today, both you, Angela and Chris.
Chris Stettler 1:05
Good morning.
Angela Czajkowski 1:06
Thanks, Lauren.
Lauren Langer 1:09
All right.
Well, I will get our conversation started here.
How well do you guys feel? Executives today understand technical debt and its impact on businesses and its true costs.
And what do you think?
The key conversations that a CIO should be having with executives teams to highlight the risk and implications of that on their business.
Angela Czajkowski 1:34
I’ll jump in first, Chris, and then I’ll pass it to you. So if I’m if I’m, if I am wearing my executive leader hat technical debt is almost a buzzword.
It’s an umbrella. It’s a.
It’s a term.
It’s a blanket that could cover a lot of things.
And for me, I’m not asking.
What is it? But rather, what does it mean?
What does it do when?
How does it impact my organization?
So coming to me, you know, as an executive, any, any it leader coming to me and saying we have a lot of tech debt that doesn’t tell me anything.
Hearing we have risk, we have exposure.
We have, you know, unexpected costs we have there.
There is something lurking, or we’re not prepared to do what it is that we need to do.
That’s how I need to hear that message around tech debt.
Not just we have mounting tech debt.
We have a backlog.
We have a lot of stuff we need to get done. That’s not. That’s not resonating with me as an executive.
Chris Stettler 2:42
Yeah, I think you know, technical debt at the end of the day is about the ability to scale.
It’s about the ability to grow the organization and are we keeping the systems up with the, with the pace of the business and are we moving forward. So you know if we’re if we’re constantly holding on to the old systems that we’ve had for 20 years.
You know, those systems aren’t going to scale with us as a business?
And so there’s going to be an impact. We’re going to be limited in some way going forward because our systems won’t support the growth the way that we did it in the past won’t get us where we want to go in the future. So you know, we can.
Continue to hang on to those old systems, but at some point you’re going to have to pay.
To up. Either rip and replace, uplift or, you know, make a large investment to either augment or just replace all together.
So you know it’s about the ability to scale as the company grows. And if you’re not investing, then you’re not going to be able to grow at some point.
Angela Czajkowski 3:51
And Laura, you talk about what are those key conversations?
Lauren Langer 3:52
Inherent.
Angela Czajkowski 3:54
I I have to say that everything you just said, Chris, this is a yes and it’s then tell me the plan to do this like it.
It can’t be all at once because number one, I don’t think anyone is sitting on.
Excess capacity, just a glut of resources that we’re not currently deploying somewhere.
So it’s all about priority. So, for me it’s when my CIO comes to me and says we have this, this mounting technical debt and here’s a plan for how we both keep the lights on.
Continue to advance our strategy and not chip away at this knock down or chip away the tech debt. That’s the kind of plan I need to hear.
So what kind of conversation does the CIA need to be having with me as an executive?
It’s what’s the plan to get us there that we have a manageable amount of cost with a manageable amount of investment of time and resources that we can make get our way to where we want to go.
Chris Stettler 4:42
So I think most not most. I would say many mid-sized organizations don’t really have a true IT strategy and so in my view that conversation Angela starts with an IT strategy and that has to be tied to the overall corporate strategy.
Where are we going as a company?
And so when we know that we’re, we’re then aligning that it strategy to both deal with our technical debt. So, our systems that need to be replaced along the way.
And then we’re also planning for future investments that will help us with the growth aspects of the organization. We have to get to the overall company objectives.
So that exercise, that building, that strategy helps us then develop a road map and that road map will lay out when we expect to retire those older systems or replace them or augment them.
Maybe we upgrade them, but we’ll have a road map of what we’re going to do and win.
And that will include a mix of dealing with the technical debt and then also investing in new technologies that help us all get to that strategic objective. And then from that, you know, I’m laying out the whole plan here all in one shot, but you build the budget.
That supports all those things.
So on an annual basis, we need to be looking at our strategy, refreshing it and then thinking about how our budget.
Supports those objectives.
And there’s a governance process on top of all of that that has to that has to evaluate those investments. And then you know, give us the approval and there they have, they have authority at that point to then prioritize what we want to spend our money on.
And also you know reject some of these investments so you know all of those things kind of wrapped up in one.
It’s not an easy thing to do and it’s not short and simple, but it is a process.
That we can follow to make sure that we’re addressing both the technical debt and our investments in the future.
Lauren Langer 6:49
It makes a lot of sense.
And you know, talking about those investments, it makes me really wonder like, what are those real-world priorities and fears that are keeping executives up at night, and how do my technical debt turn some of those into real challenges and real business risks?
Angela Czajkowski 7:09
I think all business leaders want, you know, the same things. And if we talk about supply chain as a focus, it’s can I deliver the right product and the right quantities to the right place at the right time at the right cost.
I mean I that’s what you know. Can I deliver the value to my customers?
Am I able to operate?
And anything that would inhibit our ability to effectively, efficiently and profitably operate to me is a huge threat. So as an executive.
Maybe the primary thing heating me up at night is what would be those hindrances to my ability to continue to run a successful organization?
And we can see very clear ties to some of that tech debt in terms of business continuity, disaster recovery and planning. And Chris, you know I you go into that. So for me as an executive, it’s have we identified potential threats to my ability to operate and to.
To deliver my services or my products to my customers.
And then I think right now, cybersecurity is on every executive leaders mind, not just because it’s receiving.
There’s so much press and there’s so much activity in this space, but also because it is agreed unknown.
Most business executives don’t understand the true threat landscape to their organizations.
So without a really clear understanding of what the level of risk is within the organization, and it may be a clear reflection on what is my risk tolerance like.
How much risk am I really willing to operate with?
I think that cybersecurity presents a lot of.
A lot of gives a lot of executive sleepless nights right now.
Because we just, there’s so much that we don’t know that we don’t know or we do know that we don’t know and we’re not really clear on what the mitigating forces are.
Chris Stettler 8:57
Yeah, well said, Angela.
I’ll start with cyber.
I think you know cyber is always on our minds and certainly on my mind every day.
So we make a lot of investments in cybersecurity to keep the organizations safe, and there’s frameworks out there that we can adapt that will help us make those decisions more wisely rather than just trying to wing it.
But and you know, I think about the other factors and its operational performance.
So are our systems operating?
Well, let’s start with the basics.
Do the systems go down often during the day or are they sluggish at periods throughout the day?
You know, do you have high volume at certain points in the day then? So the the systems crawl, do they fail and have to be rebooted or restarted or and so in the meantime you can.
You can’t take orders.
You can’t ship.
You can’t receive product.
You can’t do all the things.
That you would normally do in an organization.
And you know, and I think about the other aspect is you know this may be a little bit longer term, but are my competitors going to just you know consume me are they making advancements that I cannot make because I don’t have the right Sol?
In place and I know it’s gonna cost a lot of money and I don’t know that we can do it well.
And so I’m. I’m worried that in a competitive landscape, I’m falling behind. And so, you know, what am I gonna do about that?
And I think that’s what can keep, you know, my CEO’s and the other C levels, the leadership team, awake at night.
Lauren Langer 10:41
That’s a great point, Chris.
I can.
To your point, I can only imagine the desire to innovate and the needing to know like I have to innovate or I’m going to get left behind like my competitors will take over is completely consuming their fears at night.
Chris Stettler 10:52
Great.
Lauren Langer 10:57
And you can’t have a conversation about innovation in the world that we are in today without talking about AI.
So how do you feel like?
How does technical debt when you’re talking about AI? Like what?
Look like is. If you’re experiencing a ton of tech debt like is that is there a real risk that you can’t do anything here and you won’t be able to embrace AI within your organization and you’re not gonna be able to stay competitive like I would imagine that.
Would that’s something that would be very, very worrisome for an executive.
Chris Stettler 11:34
You know, I think.
Using AI has to rely on good data, so if you have good data, you’re gonna get good output from an AI engine, whatever engine that is. If you’ve got really rotten data, then you’re gonna you’re not gonna be happy with the results from any type of AI. So.
Your legacy systems you know if they don’t, they may not have proper controls in place to make sure your data is good.
I’ve seen this numerous times.
And so you get really.
Rotten data and it requires a huge lift to get that data squared away.
But once you do, you can leverage that for the long term using AI capabilities, and then you know how to invest in these. You know, I view AI as just another solution.
You know, we’re going to bring.
To the we’re going to bring to the table an AI solution that helps us do this thing. We’ve got this problem that we need to solve.
What’s the best way to do that?
Could be AI could be another could be.
A smaller investment could be whatever that investment is, but you know it’s on it to figure out what the what the best solution is and then bring that to the table in the governance process and say here’s what we think we’ve got this problem. We’ve got this problem.
We need to solve.
We think that in this case AI is the best approach.
So here’s what we think that’s going to cost.
Here’s the solution.
Here are the benefits.
Here’s what you can expect long term.
Angela Czajkowski 13:03
Chris, I love what you just said.
There, though, is it’s that.
What’s the problem?
We’re trying to solve AI is not a monolith where it is a.
It’s not a hammer that we bring to every problem, it’s it is there and it’s we’re getting a lot of press around AI right now and we’re seeing advancement and it’s there’s certainly application within the business setting.
But we don’t have to immediately leap to AI is the answer.
Rather, it’s what is the problem we’re trying to solve and then collaborating with it.
So the business brings the goals, the outcomes, the challenge.
So this is what I’m facing.
It collaborates with the business to say these are these are various paths that we could deploy. We could go down many paths to solve that problem.
There are various levels of investment to solve that problem.
There are various time horizons that it would take us to solve that problem.
So I think that what you just said there, Chris, is how, how is it collaborating with the business to right size a solution to the problem at hand.
That meets the business goals and objectives that looks at our forward-looking strategy and path.
Everything isn’t, you know, an AI application and we have to have an appetite for to spend and there’s a lot of foundational work that we can be doing along the way to say any a variety of solutions are going to require the same foundation setting rotten data as.
An example that’s never good.
Rotten data is bad.
No matter what, whether we want AI or if we simply want to be able to use data enabled decision making to run our business, rotten data equals bad.
How are we addressing that?
We can build on.
Chris Stettler 14:32
Yeah. You know, I look back on.
Angela Czajkowski 14:33
It.
Chris Stettler 14:36
In in the last decade, when cloud was emerging and it’s all it was, the buzzword, it was the buzzword of the of the decade and everyone was saying, hey, we need to get in the cloud. All right, well, what do we need to do?
What problems are we looking to solve that was, that was the question and AI is just like that.
I get people coming to me and saying we need to get into AI and like, OK well, what problem are we going to solve?
It’s no different.
There’s the hype cycle is real and I get that.
But we always have to make investments for a purpose, not just AI, for the sake of AI.
You know, it’s AI to solve problems.
Lauren Langer 15:14
I think that’s wonderful.
And you know, we’re talking about making investments and stuff like that.
And no, CIO’s and executives are constantly focusing on the need to focus on profitability and innovation in order to stay competitive.
But managing technical debt can be costly.
How do you strike that balance between those two?
Angela Czajkowski 15:36
We all know there are levers that you can pull when looking at profitability when looking at overall financial outcomes.
It’s what levers are we pulling and what impact did that have within the business?
So I mean we technology becomes the magic button that we try to press for efficiency.
You know, how do we become faster through technology? And there is a big yes there. One thing that I have found is often times operations leaders.
Are.
Challenged to take.
Advantage of or to leverage the efficiencies that we gain from technology, meaning it’s hard to say, oh, through this system we will be able to reduce resource inputs by X and then to actually enact that you know it becomes more of a phased approach.
So I think there’s a great deal of discipline that’s required to say this new system is going to cost us X number of dollars, but we believe we will be able to put.
Y number more transactions through.
Through the through the funnel, whether it’s production or transactions or whatever.
The widget is.
Having an emphasis in that business case development, as Chris talked about governance and our investment strategy is OK, we decided we’re going to invest in something and we have an expected return on that investment.
How do we plan to measure the return on that investment? What is it?
What’s the outcome?
So we’re going to pull this lever.
We expect this outcome, how we measure it.
We are all agreed and aligned to this is what we can expect to get. It’s not always.
And exact science, but at the very least, we’re having that dialogue around what are we measuring?
What are we tracking toward and how are we all holding ourselves accountable?
Because to be disciplined around investment allows us to really reap the benefits of those returns that we’re expecting.
Chris Stettler 17:20
Well, well said, Angela.
You know, one of the other aspects and most folks don’t really think about this is the longer you maintain that legacy system, the more expensive it is to maintain it. You’re layering in usually.
Other solutions that are new and you and when you’ve got let’s say it’s an ERP system for instance that you’ve had for 20 years, all right, that system is likely not as robust as it needs to be.
So you’ve got a new HR system, you’ve got a new supply chain system.
System and integrating these newer systems with that old system is difficult and it requires a lot of code that you have to write custom code that you have to write and then maintain so that maintenance paying for those developers paying for those business analyst paying for that team.
To maintain what you have, what you’ve built in order to keep that old system up and running in addition to the maintenance costs, all the other things that go with it.
That adds up and it starts to consume more and more of an IT budget.
Budget to the point where it starts to really get inverse on what you can do with new investments, so you can’t grow the business because you’re spending all of your budget trying to keep what you have.
So there’s that.
You know, it’s not something that I think a lot of business leaders think about, but the longer you hang on to it, the more expensive it is and the more of your IT budget it consumes.
Lauren Langer 18:46
Great point, Chris. And it actually makes me wonder, what do you think?
The turning point typically is for executives to understand the value of proactively managing that technical debt.
Vs you know, just letting that build up and as a CIO, how do you help them see that value and quite frankly help them see what happens if they don’t proactively manage it.
Chris Stettler 19:11
Well, again, I go back to my earlier statements about the strategy, right.
So it’s talking about what we think the strategy should be and in those conversations, we’re having discussions about it.
Well, here’s, you know, look at my budget.
Look how much I’m spending on just maintaining this old system.
And if we were to do something different, we were to go out and buy a new system.
Yeah, it’s a big it’s a big initial capital investment.
But you’re going to hold on to that system for 10-15 years, most likely. If I’m thinking about an ERP.
Those kinds of investments are long term investments and you’re going to you’re going to amortize that across many years.
And so I think if you can show those business cases to the leadership in the if nothing else in the context of your budget discussion, then you can you can open their eyes, but you’ve got to be deliberate about it.
It’s not something that you just slide into. You’ve got to think about.
We’re have all we have all of this technical debt, all these legacy systems and so.
What are we going to do?
What is our plan?
How are we going to retire these? And you know, do you agree that we need to?
I think there’s a question to that.
Lauren Langer 20:21
That’s great. Wonderful.
All right.
Well, that’s all we have for today, guys.
Thank you, Chris.
Thank you, Angela. So much for joining me today. And you know everyone just listening to the next executive edge for some more great insights from our team. Thank you.
