6 ways to reduce tech debt and fund growth

While using an array of business technologies allows organizations to do more faster, keeping all the systems running efficiently and updated is often a burden on the organization. Moreover, when technology adoption starts to take a life of its own and spreads willy-nilly across the organization, the resulting sprawl and friction can become a not-so-small millstone around management’s neck.

This is the problem of technical debt or “tech debt” – the common results from mergers and acquisitions due to multiple inherited technology platforms and the failure to achieve expected synergies, impeding value creation and growth.

Tackling tech debt is an expensive and frustrating corporate undertaking. But sorting out the tangled web of outdated or incompatible technologies can eventually save them millions of dollars, including from potential system failures and cybersecurity incidents,¹ which then can be plowed back into new investments. Better integrating or eliminating excess systems and data sources also reduces the manpower required to reconcile multiple inputs. Tech debt reduction can help make a company’s operation more efficient and profitable, especially when the result is more reliable data that enables better decision-making.

A highly effective method for mitigating tech debt is to address the issue through a performance improvement perspective. This approach trains a critical eye at technology suppliers, platforms, and the surrounding ecosystem to help prioritize what to mitigate or eliminate based on cost and impact. Typically, a company will engage an external partner to bring an unbiased outside-in perspective to identify its tech debt issues, as well as to leverage market insights and sector expertise which it may lack internally. Utilizing data analytics and benchmarking tools, the advisor can help organizations quickly assess the problem and identify disconnected or redundant systems to simplify or eliminate.

As leaders plan for the future, it's essential to recognize the critical role performance improvement plays in preserving margins and increasing value. By managing costs and boosting efficiency across all business areas, savings can be reinvested into higher return activities.

At KPMG, we combine data, insights, and execution capabilities to help you prioritize and deliver value. We use proprietary data and deep insights to identify areas for improvement, and leverage our extensive sector experience to execute on these opportunities.

Our performance improvement offerings are designed to sustainably enhance your business’s financial trajectory, balancing growth and cost control. From strategy to execution, we can help you confidently achieve measurable improvements in revenue, operating margins, cost structures, and working capital positions.