How to Sustainably Improve Profit Margin at Your Software Development Agency
Improving your margin is an exercise in balancing costs against the tactics you are using to generate revenue while continually working to make your team more efficient.
Technical debt is a lot like financial debt, in that you can only ignore it for so long before it starts to ruin your life.
Everyone accumulates tech debt at some point. It's a natural byproduct of software development today. We're asked to ship effective code as quickly as possible, and in doing so, we often have to cut a corner or we inadvertently introduce something to the codebase that has to be corrected later.
It happens, but it's important to recognize technical debt when it's added, and if it's not possible to avoid at the moment, it's critical to reserve time to correct it later. If not addressed, tech debt can eventually cascade into other areas of the business, eroding platforms, processes, stability and operations until it eventually begins costing the business real money.
Below we'll break down seven classic technical debt examples, share how they typically come about and what you can do to resolve them.
Technical debt refers to the implied cost of an additional rework caused by choosing a quicker, often suboptimal, solution over a more sustainable one.
Technical debt doesn't necessarily need to be just badly implemented code or some shortcut that is suboptimal to the long-term goals of the company. It can also be any code related to a non-essential part of a project.
For example, let's say something already exists as an established service in your application, but you decided to implement a separate version yourself. These can be services like payment processors, email and SMS senders, or even backends and databases. Reinventing the wheel to add redundant code is technical debt.
And just like financial debt gathers interest, so does technical debt. If it's not addressed, it can lead to increased maintenance time, system fragility and reduced development speed.
It is important to distinguish technical debt vs. bugs. Bugs are not technical debt. You can have no bugs and a lot of technical debt. However, having a massive pile of bugs can be a symptom of technical debt.
The most prominent manifestation of technical debt is development speed. While it usually also produces more bugs, you can be bug-free if you're careful enough. But what you'll notice is that it takes longer and longer to develop additional product features.
So every potential short-term gain in speed you achieved in a 1-2 week time window is quickly lost in a 6-12 month window. And it doesn't stop there - it compounds further and further. All you did was dig yourself a hole in which you'll fall 6 months down the line.
There are two main types of technical debt: intentional and unintentional technical debt.
Unintentional technical debt is usually a smaller part of the problem any project faces. And even then, it is hard to blame yourself for the things you couldn't know. You did your best, and that's all that matters.
Deliberate technical debt is usually the biggest problem. Intentional technical debt plagues codebases throughout the world. And it is the result of the assumption something can be gained by doing things badly.
The main catalyst for such behavior is a lie that project managers and business owners like to tell themselves: "it's just temporary".
Usually, when they feel the pressure (real or imagined) regarding deadlines, good business practices break down. The future seems so distant and irrelevant, and the present so important. The result is cutting corners and other bad practices, which are explained in this article.
Programming tech debt (also sometimes called "code debt") refers to technical debt incurred in your codebase.
Code debt acquired during the early stages of the project can make life difficult down the line. Because everything else builds on top of it, every mistake you make propagates and amplifies the problem throughout the project.
Every shortcut you take inside the code will cost you much more than you expect. That is why planning everything in detail in the beginning, accounting for your long range plan, is essential. Even if you're in the mindset of "move fast and break things," the business should know where it wants to be in two years or even five.
Your mind will object because it seems like you're doing nothing when you take your time to devise a plan. But don't be fooled. This is the biggest opportunity for acceleration you'll get for the rest of this project. So use it wisely.
Architecture debt (also called "infrastructure debt") can arise when organizations get locked into storage or compute solutions that don't easily scale, or if they build into rigid data structures that don't support feature additions.
Infrastructure technical debt is the most dangerous form of technical debt, and it is costly to resolve. Just like how code debt in the early stages of a product can impede your progress later on, architecture debt can act like a governor on the engine of your business.
The best way to address infrastructure debt is to prevent it from happening. Thoroughly map out your infrastructure needs based on your long range plan, always consider scalability, contingencies, and be comfortable with your limitations before getting started. Don't paint yourself into an expensive corner by rushing into an infrastructure solution because it was cheap at the time.
Besides bad code and infrastructure, another form of technical debt is choosing an inappropriate programming language. Even if your code is perfect, just by choosing C++ to create a website instead of Node, Python, or PHP - you instantly added a ton of technical debt. And that is because you're using a suboptimal solution for a given problem.
The same situation happens when choosing frameworks. Any time you don't select an appropriate tool for your specific situation, you're slowing down your project and automatically adding technical debt to it.
You create technical debt whenever you implement non-essential functionality instead of using established solutions and services.
For example, there is no need to implement your own email sender when other solutions already exist. The same applies to payment processors and many other functionalities your software project often needs.
The key is to focus only on developing functionality specific to your product. And that's it.
Documentation technical debt emerges when the documentation of a software product lags behind its actual state. While often overlooked, this type of debt can be as debilitating as code technical debt.
It's important for software development teams to diligently maintain their documentation. Inconsistent documentation can mislead developers and stakeholders, which can turn into inadvertent bugs and issues in your code.
Worst of all, documentation debt can lead to "tribal knowledge" situations. In these cases, only a few seasoned members of the development team know the actual ins-and-outs of a product.
Then, when a new team member is onboarded, they need to spend significant time with senior members to understand the codebase. This slows down production until the new member is up to speed. And when senior members leave, it can have a devastating effect on the team, because everyone has to re-discover how the application works.
The key to successfully managing technical debt in your documentation is to:
Design debt, sometimes known as "UX debt," rises when quick fixes or piecemeal design changes are rolled out due to constraints with time, resources or knowledge. While these compromises might work in the short term, they can lead to a degraded user experience and increased refactoring costs in the long run.
Over time, colors, fonts, buttons or other elements in the application do not uniformly match, which degrades the user's trust. Even worse, bypassing user-centric design principles can result in a less intuitive user journey, making it harder for users to navigate or accomplish tasks efficiently.
While some design debt can be unavoidable, the best way to manage technical debt in your UX is to proactively manage your UX. Establish and adhere to a robust design system, and conduct periodic design reviews to identify inconsistencies or areas of improvement.
Software development is a rapidly evolving field. Becoming comfortable with an existing framework or technology is great, but you shouldn't feel married to it, and it's important to experiment with emerging (but tested!) technologies.
In the end, some of your competitors will use those same tools, giving them an advantage over you. So it is wise to use these tools before they totally become mainstream.
For example, the talk about low- and no-code platforms is increasing. They have already existed for years and are well tested by now, so it's pretty safe to use them. The fact that not everybody is using them already is the exact reason why you should. Because it will give you a market advantage.
8base database is one such low-code platform that gives you incredible options when building your backend. Specifically, 8base allows you to create database tables through a visual dashboard in just a few clicks. On top of that, the API endpoints are automatically created, and you can connect to the backend immediately.
It is production ready out of the box, and it's up and running right away. Oh, and by the way, it is automatically scalable from one to a million users (or more) with no extra setup required.