CFOs can lead their organizations out of Technical Debt
Neynep Tukekci with the New York Times offered an insightful opinion article on the debacle that hit Southwest Airlines over the holiday season. Southwest experienced a staggering cancellation of nearly its entire flight operation, with 15,000 canceled flights since December 22nd. While the initial blame was on the weather, 2,300 flights were canceled a full week after the storm blamed for the original cancellations had passed. As this became front-page news, the underlying issues eventually surfaced, and it was not the weather. The weather was just the trigger. The real cause was what Tufekci refers to in the article as Southwest’s technical debt:
This problem — relying on older or deficient software that needs updating — is known as incurring “technical debt,” meaning there is a gap between what the software needs to be and what it is.
Southwest has been operating with antiquated scheduling software. There it is. The inability of Southwest to modernize critical operational software led to this embarrassing moment in their company history.
Their CEO, Bob Jordan, had to apologize directly to the public, telling ABC News, “I am extremely sorry” and “there is just no way to almost apologize enough.”
Southwest has also offered a full reimbursement to anyone who experienced cancellations. This cannot be a cheap remedy.
Marquee brands like Southwest spend decades building their brand, customer loyalty, and employee and stakeholder trust. That brand can come crashing down and take a beating overnight when things like this occur.
CFOs can play a role in their company’s initiatives to remove risks associated with technical debt. Far too many executives deprioritize investments in technology and business software. They believe they can always scrape by with their current technology stack and processes for another few quarters, or another year or two. The can keeps getting kicked down the road. Then a storm hits, and the risk of technical debt materializes.
Corporate software is a tricky investment. It can be expensive, and it often requires extensive implementation time and effort. It’s also not a tangible product. It’s not a flashy new building or factory that a CFO or CEO can walk through, feel, and touch. A software project provides no photo ops for the executive team. Enterprise software can also impact your P&L for that quarter or year, which in turn can impact executive performance bonuses.
Even before a risk like the one experienced by Southwest materializes, there’s an ongoing cost of managing operations with dated technology. This cost is always borne by the staff on the operational front lines. C-level executives usually don’t feel the day-to-day pain of legacy software. Executives in these situations often believe that since they make significant investments in human capital, those professionals they hired should just figure things out and make up for any technology gaps. The opposite is true. If you’re making material investments in people, you also have to provide them with the best available tools for them to perform their duties.
CFOs can start by identifying technical debts within their own departments before moving on to addressing enterprise-wide modernization opportunities.
If your team is still highly dependent on disconnected spreadsheets, that’s the most obvious place to start. There are so many modern software platforms available today to fit different budgets and needs. Finance and accounting teams relying on legacy systems or spreadsheets have been documented to waste up to 75% of their working hours on manual and redundant activities.