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Archive for November 1st, 2010

Jim Highsmith on the Financial Implications of Technical Debt

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Jim Highsmith launched his new blog/website last week. I have no doubt whatsoever it will be a thought leadership blog. Moreover, knowing Jim I would expect the blog will address and integrate concepts and ideas from numerous disciplines, not “just” from software methods.

Jim’s first publicly available post  – The Financial Implications of Technical Debt – explores the impact of technical debt on capitalization. To quote Jim:

So the bottom line for technical debt. It’s expensive to fix, but much more expensive to ignore. Technical debt reduces future earnings, but even more critically, it destroys predictability which in turn impacts market capitalization in the near term, not in the future.

Figure 1: Loss of Predictability

Jim’s post nicely closes the {financial –> technical –> financial} loop. Ward Cunningham’s original debt metaphor borrowed the financial term to apply it to software development. Jim is now bridging from the technical arena back to the financial world.

If you are into any form of agility – technical, managerial or business – you owe it to yourself to follow Jim’s blog.


Written by israelgat

November 1, 2010 at 6:44 am