Industry 4.0: Strategies for Managing Technical Debt
- vdmidzi
- Mar 12, 2022
- 5 min read
Updated: Apr 25, 2022
Technical debt is an often misunderstood or underestimated subject in Operational Excellence Transformations, but is key in reaching Industry 4.0 excellence.
In part 2 of our Executive Insights series with Antonio Queiroz, Chief Digital Officer at Euroclear, we discuss the importance of having the right Technical Debt strategy, building organizational alignment, and the role of the transformation leader in aligning Technical Debt objectives with Transformation objectives.
For the purposes of this discussion, we defined Technical Debt as the gap between your current IT capabilities and the capabilities needed to effectively leverage all of your current employee and process capabilities.
For example, where a warehouse operator might have operated a paper-based tracking system, chances are that same operator will operate a WiFi enabled tablet-type solution once you’ve launched a successful transformation. Later the warehouse might switch to fully automated restocking with a predictive supply chain connection.
Clearly, the level of IT-support required for this warehouse will differ significantly depending on the stage of transformation it is in.
Getting the Technical Debt-work (the work of resolving the gap between the current IT capabilities and the capabilities needed) to match the critical transformation needs is one of the most underestimated challenges in Industry 4.0 transformations.
As he has been both the CIO and the transformation leader in several transformations, I asked Antonio how he managed Technical Debt.
We structured our discussion around three key topics:
1 | 2 | 3 |
Defining the right technical-debt strategy | Building alignment around critical technical-debt work | The importance of a transformation leader to align technical debt projects with transformation objectives |
1. Defining the right technical-debt strategy
Antonio started by emphasizing the importance of choosing the right strategy: “There is a fundamental difference between complex, hard-to-align organizations and smaller, more easily-aligned ones.
In small organizations, you can develop a strategy and build alignment around the strategy, allowing you to use a targeted Technical Debt strategy. Focusing your resources on the Technical Debt areas that are critical for your transformation.
In more complex organizations a targeted strategy is unlikely to work. Here, you need to be ready to adjust your strategy so it brings along the key stakeholders. In this context, you might need to spend a major share of your budget on areas prioritized by other leaders with a smaller share available for the transformation critical work, leading to a gradual focus-building strategy. “
“In these larger organizations you will start by building traction with a critical mass in the constituency by showing that the investments to reduce Technical Debt are generating an immediate benefit for them. In parallel, you can then decide your approach to the Technical Debt issues that are particularly threatening to your broader transformation.”
2. Building alignment around critical technical-debt work
Antonio then shared three techniques he has used to build support for this ‘mission-critical’ Technical Debt work:
Create metrics that inform your approach
“You might have gotten lucky and the stakeholders are willing to invest in the areas you need to work on. They just might not agree with the approach you want to take. For example, you both agree that you need to develop a stronger analytics capability. However, they want to build this capability in the existing mainframe whereas you want to develop this in the Cloud. In this case, you can start with their approach while putting specific metrics in place that illustrate the benefits of an alternative option. This way, you can say: ‘With this traditional approach, we can only go this fast. If we want to go faster, we have to switch to the Cloud.’
Use a maturity assessment model
A maturity assessment model can allow you to report back where your key gaps are and make a stronger case for why you need to invest in these areas. You can complete these assessments with external partners to provide an additional reference point.
Use Speed-boats (pilots)
You might launch a couple of speed-boats (i.e., pilots). A speed-boat can be a separate company that you launch on the side with separate IT. Or it can be a new department inside the company with a separate platform. The key to leveraging speed-boats is that they are separate from the main platform, require relatively little investment and provide the metrics to demonstrate the impact of your proposed effort.” Speed-boats can deliver early wins to help build support.
Antonio illustrated the advantages of this strategy: “At one point, I was building a mobile banking platform. It was the first time this bank had built a mobile banking platform and many did not believe it would be a viable channel in our market. So we launched a speed-boat on a separate platform, not impacting the core-banking system. We started measuring mobile banking visits versus branch visits and showed that, while the number of mobile banking visits was only a fraction of the branch visits, they were doubling every four months. Everyone could see: ‘This is still small, but, at that rate, in three to four years, the majority of our visits will be on the mobile platform’. From that moment on, we had the full backing to invest in the mobile platform.”
3. The importance of a transformation leader to align technical debt projects with transformation objectives
As Antonio pointed out, large companies require a combination of technical and diplomatic skills to ensure the right work areas are managed strategically.
As someone who often combined the role of transformation leader and CIO/IT leader, Antonio was well aware of two things:
What exactly the Technical Debt was
Which Technical Debt areas would hurt the transformation first and/or most
In many transformations, the leadership for the transformation and the leadership for IT and technology sit with different people and aren’t at all aligned. We’ll delve in later articles more into the role of transformation leaders. Something to remember already is the importance of having a leader who understands both what the technical debt is and how it impacts the transformation whilst also having the diplomatic skills to ultimately ensure your organization works on the right topics.
In the meantime, if addressing technical debt is an area you’d like to explore further, please do reach out.
Key takeaways:
From early in the transformation, technical debt should be acknowledged, prioritized and well-managed but it should not delay your transformation.
Choose between a targeted Technical Debt strategy (in easily aligned organizations) or a gradual focus-building approach (with complex, less-aligned organizations).
Leverage one of three techniques to build focus on those technical-debt areas that threaten the transformation’s success:
Implement metrics to demonstrate the benefit of your proposed approach.
Leverage maturity assessments to drive focus on key challenges.
Create speed-boats (i.e., pilots) to demonstrate the impact of new work. Ensure speed-boats operate as freely as a start-up, with no risk to the rest of the company.
Ensure a transformation leader is in place to align technical-debt and transformation priorities.
Next up:
The role of talent engagement in reaching Industry 4.0 excellence.
We will outline how winners in Industry 4.0 are evolving their people strategy and share some reflections on where we might be going next.
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