What Is Innovation Debt?

Innovation debt and technical debt result from not evaluating and improving system and platform capabilities. In recent years, government has gotten better at solving for technical debt. All levels of government are making investments to remove the technical risk; however, often these investments are done with the dreaded vision of “like for like.” When governments simply upgrade in a “like for like” manner they miss the opportunity to provide new service improvements for customers: elected officials, citizens, residents, constituents, employees. “Like for like” creates a void in innovation and even negates the ability to have the conversation to pursue system upgrades and achieve innovation at the same time.

There are a few reasons we need to solve for innovation debt:

The Changing Value Proposition of IT: In some organizations, IT has been historically seen as a required service or a necessary evil. But the COVID-19 pandemic has changed this perspective and demonstrated the strength, flexibility and resiliency of IT to their respective organizations. IT has become a nimble provider and enabler of services in a new and dynamic time. CIOs cannot step backward from this new position. We need to capitalize on it. We are now seen as the innovators, and we need to keep pressing forward.

Unleashing the Value of Subscription Model Services (including As-a-Service): The market for many IT products has changed to subscription-based services (this also fits nicely with the government trend to leverage the as-a-service model whenever possible). The impetus for this change stems back to the recession of 2008 when suppliers lost revenue as organizations reduced maintenance payments to remain solvent. The subscription-based model was developed to allow vendors to have a consistent and annual revenue stream. The service-based model does create a risk for governments because they lose the ability to reduce costs when needed without also reducing or removing services. However, there is a silver lining: Subscription services are evergreen platforms where the cost of maintenance and technical debt are removed. Subscription services also foster innovation since upgrades come with new product features that can bring new value to business operations.

The Rapid Pace of Change of Technology: For platforms that are not consumed as a service or a subscription, IT faces another dilemma: the fast pace of change in technology. Over the last few years, tech vendors have been bringing innovation to the market faster than ever. Failing to look at and evaluate these new offerings weakens the value proposition of IT and the innovation it can bring. Innovation debt will mount faster than ever before because of the new market forces. If action isn’t taken, the cost of future upgrades will not only increase, but the amount of change will be enormous. Large-scale, major implementations are always more difficult than bite-size chunks.

HOW DO YOU MEASURE INNOVATION DEBT?

There are two ways to measure innovation debt. The first requires you to understand the risk portfolio of your technology stack. In Oakland County, Mich., we leverage Tech Debt Check, our technical debt measurement application. This tool asks the question of application age. If an application is over seven years old, it is identified as a high innovation debt application, technology or service. Master plan efforts can then be sized to address this concern.

The second method is related to your organizational approach to adopting as-a-service or subscription service models. If you implement an as-a-service model but do not have an innovation or continuous improvement effort, you are creating waste. At Oakland County, we have continuous improvement projects for our Office 365, GIS and Okta platforms (to name a few) and will be following the same plan for Workday. It is the future of the IT business model.

THE OPPORTUNITY COST OF INNOVATION DEBT

Innovation debt can have a substantial impact on IT's reputation. Failing to address innovation debt will bring real blocks to organizational progress. Additionally, CIOs will not be able to meet the needs of citizens in the way they have come to expect from the private sector. Governments are beginning to be held to the same standards as businesses when it comes to citizen engagement (and remember, our business partners will have the same expectation).

Consider these opportunity cost factors:

Business process transformation and automation: Business process transformation is essential to driving cost efficiency. Leveraging technology to automate non-value-added tasks is critical for saving money and improving citizen experience. Carrying innovation debt makes business process transformation difficult if not impossible.

Artificial intelligence and machine learning: These emerging technologies are coming baked in to solutions every day. The problem is that governments are not using them because applications and services are not being maintained. These technologies are becoming easier to use and may not require the unique skill sets previously needed to get them off the ground.

Security improvements and response: Security threats are becoming more complex every day. The ability to react and respond is essential. We have learned from recent incidents that newer technology is easier to protect and remediate than legacy systems. Innovation debt is a force multiplier in the inability to respond effectively to a security event.

Information-driven architecture: Information, which is nothing more than meaningful data, is the reason any system exists. The design of modern systems focuses on an information-based design. This design principle facilitates the use of artificial intelligence, machine learning, improved security, public data transparency and the use of enterprise conversational technologies. Failing to remove innovation debt will increase costs when it comes to an information-driven architecture.

EJ Widun is chief technology officer of Oakland County, Mich.