Technical Debt Interest: Calculating the True Cost of Delay

Technical Debt Interest: Calculating the True Cost of Delay

Technical debt is often described as a metaphor. It becomes more powerful when treated as what it really is: a liability that accrues interest over time. Leaving brittle code, tightly coupled systems, and undocumented processes in place is not a neutral choice. It is an active decision to accept higher operating cost, slower change, and increased risk in the future.

For executives, the critical question is not whether technical debt exists: it always does. The real question is how much interest the organization is paying today, and whether those payments are quietly constraining growth, resilience, and strategic options.

The scale of the issue is material. Research shows that the average global enterprise wastes more than $370 million annually due to technical debt and legacy systems (Pega / Savanta, 2025). For mid-market organizations, the absolute numbers may be smaller, but the proportional impact on budgets and capacity is often greater.

What “interest” looks like in practice

Interest on technical debt rarely appears as a single line item. Instead, it shows up as recurring operational friction with clear business consequences.

Slower delivery and missed opportunities

Legacy systems increase lead time for change. New features, integrations, or regulatory updates take longer than planned, delaying revenue, partnerships, and competitive moves.

Nearly 70% of organizations report that technical debt has a high impact on their ability to innovate (Protiviti, 2025). That impact is the opportunity cost of interest being paid every day.

Rising maintenance and support costs

As systems age, a growing share of IT spend is consumed by keeping the lights on. Organizations already spend an average of 30% of their IT budgets managing technical debt, with some industries reaching up to 39% (Protiviti, 2025).

This reduces discretionary budget for growth initiatives and forces tradeoffs between innovation and stability.

Increased operational risk

Brittle integrations and opaque batch processes increase the likelihood of incidents during routine maintenance or peak demand. Recovery often depends on tribal knowledge, lengthening downtime and increasing financial and reputational cost.

Talent strain and morale impact

Engineers prefer working on modern, well-structured platforms. When teams spend most of their time firefighting legacy issues, burnout and attrition risk rise, further increasing operating cost and people dependency.

At a time when over 90% of global businesses are expected to be impacted by IT skill gaps (IDC, 2025), technical debt magnifies exposure by concentrating knowledge in fewer hands.

Why delay feels rational (and why it is costly)  

Deferring modernization often appears prudent. Near-term revenue pressures, fear of disruption, and the visible cost of change all bias decisions toward inaction.

But inaction is not neutral. Technical debt compounds. Analysis shows that a legacy system costing $2.4M in its first year can rise to $2.7M in year two, with costs continuing to accelerate as complexity increases (William Flaiz, 2025).

As time passes, low-risk, incremental options disappear. What could have been addressed through targeted refactoring or decoupling eventually requires broader, more expensive intervention.

How to estimate the true cost of delay

Executives do not need complex financial models to understand where interest is highest. A few pragmatic lenses provide clarity.

Opportunity cost

Which features, integrations, or market moves are delayed because systems are hard to change? Value forgone is a direct expression of interest being paid.

Risk exposure

Which systems pose regulatory, security, or service continuity risk if they fail? The potential impact of an incident defines the upper bound of current interest.

People dependency

Where is critical knowledge concentrated in one or two individuals? Systems with high people dependency carry concentrated risk and often trigger emergency spending when expertise exits.

Change friction

How long does it take to implement a small change? High effort for routine work indicates high recurring interest. Reducing that friction delivers immediate productivity gains.

Reducing interest without disruption

Modernization is often framed as a disruptive rewrite. A more effective approach treats it like debt refinancing: reduce interest while keeping the business running.

Incremental, architecture-led patterns consistently outperform large programs:

• API encapsulation to reduce coupling

• Incremental refactoring and replatforming

• Improved observability and automated testing

• Strangler patterns that replace functionality gradually

These approaches align with broader evidence. Cloud-based modernization initiatives can deliver up to 4× the ROI of on-premises solutions (Nucleus Research, via Protiviti), and organizations modernizing on Azure PaaS achieved a 228% ROI over three years, with a 50% increase in development speed (Forrester / Microsoft, 2022).

Each step should be evaluated by the interest it removes: not the volume of technical activity it produces.

A simple prioritization rule leaders can use

To decide where to act first, assess each system across three dimensions:

• Business impact if the system fails or cannot evolve

• People dependency and concentration of knowledge

• Change friction for small, routine enhancements

Systems that score high across all three are high-interest liabilities and strong candidates for early, targeted modernization. This approach aligns investment with measurable risk reduction and visible business value.

Practical next steps

Leaders can begin reducing technical debt interest with a focused set of actions:

• Run a short assessment to map people dependency and quantify change friction

• Estimate opportunity cost for delayed capabilities and prioritize work that unlocks revenue or efficiency

• Adopt incremental modernization patterns that protect production while reducing coupling

• Make observability and automated testing non-negotiable so each change lowers future interest rather than adding to it

How Tricension approaches interest reduction

Tricension treats modernization as active portfolio management for technology liabilities. We help leaders identify where interest is highest, design phased interventions that lower recurring cost, and deliver architecture-first improvements that internal teams can operate confidently.

Our emphasis is on outcomes that matter to the business: shorter lead times for change, fewer incident-driven costs, and reduced reliance on a shrinking pool of experts.

Closing thought  

Technical debt accrues interest whether action is taken or not. The strategic advantage lies in understanding where interest is highest and refinancing in a way that reduces ongoing payments while preserving continuity.