Every IT department has the same recurring conversation. A development team comes to their manager and says: “We need to stop working on new features and clean up the code. We have a huge technical debt that is slowing us down.” The manager, understanding the problem, goes with this message to the director or CEO. There he hears in response: “We don’t have time to ‘clean up’ now. Customers are waiting for new features, and the competition is not sleeping. We need to deliver business value, not deal with technical fads.” The team goes back to work frustrated, and the debt grows, making more features even slower to develop. And so it goes on and on.
This cycle of frustration stems from a fundamental problem in communication. Technical teams talk about the problem in technical language (“bad architecture,” “ugly code,” “no testing”), while the business understands only one language: the language of money, risk and return on investment (ROI). Until IT leaders learn to translate the technical debt problem into that language, they will always lose in the battle of priorities.
This guide is a complete manual on how to build an ironclad, data-driven business case for paying off technical debt. It’s more than a collection of arguments – it’s a roadmap that will show you how to transform the refactoring conversation from a technical complaint into a strategic investment proposal that the business can’t ignore. Step by step, we’ll walk you through the process of quantifying the cost of debt and building a conceptual “ROI calculator” that will become your most powerful tool in conversations with management.
Why is technical debt like a loan whose interest cripples the entire company?
The metaphor of debt, popularized by legendary programmer Ward Cunningham, is extremely apt, and is worth understanding in depth in order to be able to effectively explain the concept to business stakeholders.
Imagine that instead of building new functionality in a solid, thoughtful way (which takes time), you decide to take shortcuts to meet an important deadline. In this way, you “take out a loan” in the form of technical debt. You deliver the function (capital) quickly, but from then on you start paying interest.
This “interest” is the extra effort the team has to put in every day, working with this suboptimal piece of code. It’s the time spent understanding complex code, fixing bugs that arise in it, and working around its limitations to build more features. At first, the interest is small. But over time, as more layers are built on top of the debt, the interest grows exponentially. Eventually, it gets to the point where the team’s entire “income” (i.e., its time and energy) is eaten up by interest payments alone, and there is nothing left for growth (capital repayment and new investments). This is when the company experiences innovation paralysis.
Where does technical debt come from and why is it not always the result of “bad programming”?
It is important to understand that technical debt is not always bad. As in finance, there is “good” and “bad” debt.
Debt incurred consciously and strategically can be a good tool. It’s a situation where the team, in full alignment with the business, decides on a temporary, simplified solution to quickly validate a market hypothesis or get ahead of the competition. It’s like taking a loan to grow your business – it’s a calculated risk with a plan to pay it back as soon as the company starts generating revenue.
Debt incurred unknowingly or through negligence is always bad. It arises for a variety of reasons: lack of knowledge and experience on the team, time pressures that don’t allow writing clean code, lack of standards and good practices, or simply because of the natural “erosion” of the architecture as it grows. It’s like living on credit card credit at high interest rates – short-term convenience leads to long-term disaster.
What are the real and measurable business costs of ignoring technical debt?
When you talk to a business, you need to accurately name the costs the company incurs every day living with unpaid technical debt.
The first and most obvious cost is the decrease in speed (velocity) of the development team. Each new feature built on a foundation of technical debt costs more and takes longer. Instead of building on a rock-solid foundation, the team wades through the mud, and estimates become less and less predictable.
The second cost is an increase in errors and a decrease in quality. Complicated, “tangled” code is extremely difficult to test and prone to errors. Any attempt to modify it in one place can cause unpredictable failures in a completely different place. This leads to customer frustration and burdens the team with constant “firefighting” mode.
The third, often underestimated cost, is a drop in morale and increased turnover in the team. Talented and ambitious engineers hate working in a mess. They feel that instead of creating value, they are wasting their time and potential fighting the system. They end up leaving for companies that offer them a better work environment, and the cost of recruiting and implementing a new employee is huge.
How do you change a conversation with a business from complaining to a constructive investment proposal?
The key to getting approval to pay off technical debt is to reframe the narrative. You need to stop talking like an engineer and start talking like a product manager or financier.
Instead of saying: “We need to refactor module X because its architecture is bad,” say: “Investing in refactoring module X will allow us to reduce the time to deliver new features in this area by 30% in the next quarter.”
Instead of saying: “The code is ugly and difficult to maintain,” say: “Currently 25% of our team’s time is spent fixing bugs in module X. By investing in improving it, we can reduce this time to 5% and get back X hours of work per month for new product development.”
Instead of saying: “We need new and better libraries,” say: “Migrating to a new version of library Y will allow us to run this service on a 40% smaller (and cheaper) cloud infrastructure, which will translate into X thousand zlotys of savings per year.”
This is a language that business understands.
How to build a step-by-step ROI calculator for technical debt?
The purpose of the “ROI calculator” is not to get a number to three decimal places. Its purpose is to create a simplified but logical model that shows the order of magnitude of the problem and potential benefits. The formula is simple: ROI = (Return on Investment – Cost of Investment) / Cost of Investment. The whole difficulty lies in estimating the individual components.
Part 1 of the calculator: how to estimate the cost of investment in refactoring?
This is the easier part. The investment cost is simply the time your team has to spend on refactoring work, converted into money.
First, together with your technical team, define the scope of work precisely. Then, estimate the labor intensity of these tasks in man-hours or Story Points, just as you do for normal business functions. Finally, multiply this figure by your team’s average labor cost per hour. This will give you a concrete, monetary value for “Cost of Investment.” It’s important to keep this estimate realistic – it’s always a good idea to add a buffer for unforeseen problems.
Part 2 of the calculator: how to measure and present the financial gains from debt repayment?
This is the most difficult, but also the most important part. The return on investment is the sum of several components. You need to estimate them together with your team, relying on data where possible.
The first component is the recovered productivity of the team. Measure how much time your team is currently wasting on “interest” on debt. You can do this by asking developers to estimate for two weeks what percentage of their time is spent fighting the complexity of a particular module. If it turns out to be 20% of the time of a team of 5 people, it’s easy to count how much money the company is losing each month. Then, estimate to what level (e.g., 5%) this cost will drop after refactoring.
The second component is to accelerate the delivery of future projects. If you know that a major project is planned for the next quarter that will be based on a debt-ridden module, you can estimate two scenarios. Scenario A: deliver the project on the current code. Scenario B: first refactoring and then implementing the project. It often turns out that Scenario B, despite the initial investment, is ultimately faster and cheaper.
The third component is direct cost savings, such as reduced cloud infrastructure costs through performance optimization, or savings from reduced critical errors in production.
What are the different strategies for managing and repaying technical debt?
Once you’ve been approved for debt repayment, you need to choose the right strategy. Rarely is it the best idea to stop all work for three months and deal only with refactoring.
Incremental strategies are much more effective. One of the most popular is
Another strategy is to allocate a fixed time budget in each sprint. For example, the team can decide that 20% of the capacity of each sprint is reserved by default for work on technical debt reduction. This ensures steady, regular progress and prevents problem accumulation.
For very large, strategic debt, dedicated refactoring sprints can be scheduled, for example, once a quarter.
Strategic summary: what does a checklist for preparing a business case for refactoring look like?
Use this table as a step-by-step guide for building your argument.
| Step | The question you need to answer? | Key activities |
| 1. define the problem | What specific debt-ridden area of the system is causing the most problems? | Conduct an analysis with the team, collect data on the number of bugs, turnaround time and developer frustration. |
| 2. describe the impact on business | How does this technical problem translate into measurable business losses (time, money, risk)? | Identify slowed projects, rising maintenance costs, customer complaints related to errors in this area. |
| 3. propose a solution | What is the specific plan of action (refactoring) that you propose? | Define precisely the scope of work, objectives and expected results (e.g., “simplify the architecture of module X in order to…”). |
| 4. estimate the cost | How much time and money will it cost to implement this plan? | Prepare a realistic estimate of labor intensity together with the technical team. |
| 5. estimate the profit (ROI) | What specific, measurable benefits will this investment bring? | Use the “ROI calculator” to estimate recovered productivity, acceleration of future projects and other savings. |
| 6. present the plan and ask for a decision | What is your recommendation and what decision are you asking for? | Prepare a concise presentation or document that lays out the entire analysis in the language of business and clearly articulates the budget request. |
What business and analytical competencies do your technical teams need?
The ability to build a business case for paying off technical debt requires technical leaders and architects to step outside their comfort zone. They must learn to think like business analysts. This requires
How can EITT help your leaders and teams communicate effectively with the business?
At EITT, we understand that the biggest barrier to growth for many technology companies is not a lack of technical knowledge, but the communication gap between IT and business. That’s why our development programs for IT leaders place great emphasis on building these “soft” but crucial competencies.
In our IT leadership and business communications workshops, we teach managers and architects how to think strategically, how to analyze problems from an organization-wide perspective, and how to build compelling, data-driven arguments. We conduct simulated management conversations where participants learn to present technical initiatives in a language that resonates with business stakeholders. We help transform technical leaders into real business leaders.
Summary
Technical debt is not a problem that will go away on its own. Ignored, it grows stronger until it eventually stifles innovation and pushes a company over the edge. The key to tame it is to change the way we talk about it. Let’s stop treating it as an internal IT problem and start presenting it as a strategic investment decision for the entire company. By building a solid, data-driven business case and ROI calculation, you give the business what it needs to make the right decision. It’s not an easy task, but getting it right is one of the most important signs of a technology leader’s maturity and effectiveness.
If you’re ready to stop losing the battle for resources and want to learn how to successfully convince business to invest in quality and technical stability, contact us. Let’s talk about how we can help you and your leaders master this crucial art.
