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A Simple Guide To Understand the Types of Technical Debt

Technical debt is used to define the obligations of a software company when it has opted for an expedient construction approach or a design that has increased complexity and has proven to be more expensive in the long run. The term ‘technical debt’ is said to be quite useful when it comes to communicating with technical teams. It is helpful in providing a robust metaphor for effectively describing this concept, especially for non-technical stakeholders.

“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?” – Adam Smith

In simple terms, debt means taking out loans today with the intention and promise to make repayments in the future. Debt makes sense if current borrowing culminates in a better future, for example, borrowing to buy a house or for university education. Debt is usually bad if you take on a debt today, but it leads to a relatively worse future, e.g. if you would treat yourself to an expensive dinner with your credit card, knowing full well that you cannot repay the expenses immediately.

As for companies, you must understand that debt can be good, provided it is taken out to finance investments that would yield a higher return compared to the total cost of your debt. It would be sensible if you plan to sell the business long before your debts are due. The downside of debt is that it is a real expense that could reduce profits and cash, limit flexibility, and even lead to bankruptcy.

Financial debt is supposed to be a different kind of debt, and technical debt appears to have several similar characteristics and needs to be managed and measured. If financial debt or technical debt helps your business stay ahead of the curve, then the effort could be worthwhile.

But you need to understand the fact that technical debt has drawbacks that can lead to inefficiency and inertia, such as when a particular department may not be interested in using another department’s software, or when you keep delaying progress to meet short-term financial goals.

What Actually Is Technical Debt?

Technical debt is supposed to be a term which is limited to the technical community and has been in use since 1992 when the computer programmer Ward Cunningham first coined the term. Technical debt, also known as code debt or design debt, is supposed to be a software development concept that is known to reflect the implicit costs and expenses of additional rework that result from choosing a simple solution now, rather than using a better approach that would take a longer period of time.

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Technical debt could even be compared to monetary debt. In this context, you must understand that if the technical debt is not repaid on time, it could continue to accumulate interest, making it more difficult to make changes later. You should be aware of the fact that if technical debts are not tackled or repaid, this leads to an increase in software entropy. However, technical debts are not always a bad thing. There are situations where technical debts can prove to be a blessing to move projects forward. Learn more about perfect financial debt solutions by visiting

Simply put, technical debt involves incremental costs and setbacks for your business due to shortcuts taken earlier in the decision-making process or in the implementation and maintenance processes. These compromises might have been considered reasonable at the time because they saved time and money, and they can still work if it’s a calculated risk, but otherwise, they can cost you in the long run. Typical examples of this are overly complex code that could have been simplified with some time and effort or systems that were implemented imperfectly. Technical debt can be caused by a variety of reasons, including factors such as time to market, inefficiency, or the use of outdated software versions, etc.

Types of Technical Debt

Types of Technical Debt

We know that smart financial debt could help to achieve important goals in life much faster. You must also realize that this type of technical debt is not bad, and if you manage it efficiently, it can bring immense benefits to your organization. This is especially true for most fast-growing organizations, which have a critical need to ship products early to determine market or product fit, meet customer needs, and seize new opportunities. They must be exceptionally smart when it comes to incurring technical debt. Over a period of time, accumulated debt could slow your shipping speed, affect developers’ morale, or cause your business to go under completely.

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1. Deliberate Technical Debt

Engineers are aware of the fact that there is a right way to do something and that there is always a faster way to do the same thing. However, in some cases the faster way might be the right way; the team would deliberately do something ‘wrong’ just because they need to get the product to market quickly. Therefore, technical debts are often made to shorten the time to market.

2. Accidental Technical Debt

When designing and developing software systems, it is crucial to find the right balance between forward planning and future-proofing all designs with fast delivery and simplicity. This can prove to be a rather difficult balance to strike, and it is quite difficult to always get it right. As requirements change and systems evolve, you may understand that your design has some flaws, or that the new functionality is quite demanding and exceptionally slow to implement. You must remember that a really good, flawless, and original design could easily be refactored step by step. However, it can prove difficult, and you may need to engage in a more serious and significant refactoring effort.

3. Bit Rot Technical Debt

This type of technical debt occurs over time. A system or component gradually leads to undesirable complications over several incremental changes, which can be exacerbated if people are involved who do not fully understand or appreciate the original design. The associated symptoms are cargo-cult programming and copy-paste, etc.


Categorizing technical debt helps strengthen your team and leads to truly productive discussions. Technical debt must be present in systems. It is critical that you understand and assess exactly how technical debt slows down your team’s progress and focus on balancing your efforts to deliver functionality with an increase in overall productivity, essentially in the medium-to-long term.

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