https://www.techtarget.com/searchcio/tip/The-CIOs-playbook-for-reducing-tech-debt
While debt was once referred to simply as "money owed," the increasing rate of technology adoption has created a new kind of debt that plagues companies and IT leaders. Technical debt -- also known as tech debt -- refers to the costs associated with relying on suboptimal shortcuts in technology and using outdated technology to maintain business operations. The longer this debt remains unaddressed, the more expensive it becomes to resolve, so it accumulates interest -- similar to other financial debts.
Companies often find themselves drowning in tech debt. Gartner found that, on average, 40% of infrastructure systems have technical debt concerns. It may appear easy to reduce tech debt and make it a priority. However, companies typically look for short-term savings, which eventually need to be addressed.
Chief information officers (CIOs) and other IT leaders must address tech debt at the board level to demonstrate its impact on the company's performance, scalability and customer satisfaction.
Joe Locandro, executive vice president and global chief information officer at Rimini Street, said technical debt occurs when IT is more than three versions behind.
"Technical debt can limit the functionality and innovation required for the business," he said.
There are various layers of tech debt -- including infrastructure, networks, hardware, operating systems, applications and databases. Locandro said the board typically asks for a percentage of technical debt, which is the percent of time spent on new technology versus time spent fixing old technology, with a lower percentage focusing on old technology being a good indicator of effective debt management.
Leaders can reduce technical debt by gaining buy-in from across the organization, conducting a thorough assessment, and establishing ongoing governance within the infrastructure to effectively manage the life cycles of technology.
Technical debt can cause significant problems for a business, resulting in financial losses and hindering growth. Without a proper plan to manage tech debt, business leaders will need to discuss additional issues with the board.
Shay Levi, co-founder and CEO of Unframe AI, said that tech debt is like a web of wires, and companies can become suffocated by it. "So if you have a few wires, you can still move. But when you have 1,000, you find yourself unable to move, you're completely suffocated," said Levi. He said that when companies are suffocated by tech debt, they become frozen and struggle to move forward and address this debt.
Locandro said companies are only as good as their oldest piece of technology.
"Once you start upgrading things, they don't work with the old stuff anymore," Locandro said. "You go through this big renewal process and then costs blow out."
Technical debt can lead to the following issues:
Holding on to hardware may seem like a cost-saving measure, but it can cost companies more money in the long run and increase tech debt. A recent study by Reviews.org found that Americans are keeping their phones longer than they would like, with the average user upgrading every 29 months, compared to the average user's intended upgrade interval of every 16 months.
The same can be said of organizations that hang on to outdated hardware and software, which contributes to their tech debt. Ivanti's 2025 Technology at Work Report states that 39% of survey respondents said that outdated hardware causes waste in budget spending. Older systems have hidden costs -- including the inability to run modern software, recurring failures, security risks and slower performance.
NTT Data, a global IT infrastructure and services company, found that 80% of organizations believe outdated technology is limiting their innovation efforts. In Deloitte's 2025 Global MarginPLUS study, company executives identified the two largest internal barriers to meeting growth expectations were the company's inability to enable digital infrastructure and the lack of flexibility in existing assets and infrastructure. Both responses increased significantly -- by 40% and 33%, respectively -- over the previous year.
The first step in reducing the technical debt is to diagnose the problem. This can be achieved through technical audits and maturity model reviews, which help determine when a system or infrastructure requires an update.
Then compare the estimated cost of fixing the debt with building a new system.
IT leaders can balance and reduce technical debt. Here are some steps IT leaders can take limit this debt.
Levi said AI has paved the way to help focus on addressing tech debt.
"Making the transition from non-AI native to AI-native has a lot of upsides. It's not just, 'Let's get rid of the debt,'" he said.
There is a greater focus on AI because it can help resolve issues and assist companies in quickly getting out of debt, making it highly valued. AI can transform the way people work, enabling companies to innovate more quickly.
Technical debt is inevitable as technology changes. Reducing tech debt is not a one-time initiative but a strategic capability. By adopting a playbook, leaders can reduce risk, future-proof the organization and continue innovation at a steady pace.
Leaders must adopt key performance indicators (KPIs) to determine the defect rates of programs and any system uptime. Other main KPIs include the following:
Read more about other KPIs to measure and reduce technical debt.
In addition to KPIs, John said managing technical debt also requires human insight. He has his team leaders tell him what needs to be addressed, so regular communication within an organization is crucial.
Levi said picking a starting point and not focusing on all areas of technical debt is valuable. Focusing on too many areas to address at once can freeze a company and prevent it from moving forward. He said there are many vendors out there that can help and fast-track efforts with AI.
John said having zero technical debt is nearly impossible due to the nature of the software and technology industry. He said when companies reach a certain level of maturity, they need to step back and assess what they have, then invest in areas that need improvement -- if it will bring a better long-term outlook in critical areas such as customer satisfaction and security.
"When I got to UCLA Anderson, we didn't have a cloud strategy. I decided to make things cloud first as an opportunity to innovate," Miller said. He went on to say that technical debt is an innovative strategy because it guides leaders on what to update and address.
Amanda Hetler is a senior editor and writer for Informa TechTarget, where she writes and edits technology explainers and IT strategy articles.
02 Dec 2025