Technical debt in the digital transformation era: Management and prevention as key allies of progress

In an era of rapid change, challenges are inevitable for any business or organisation—especially when it comes to digital transformation. One of these challenges is what’s known as technical debt: the long-term cost and complexity that arise when organisations opt for quick, short-term technology solutions instead of more resilient, well-architected approaches.

Sooner or later, every business accumulates technical debt as a result of the modernisation efforts demanded by today's fast-evolving landscape. This is also supported by findings in the “2024 Readiness Report” by Kyndryl, where respondents ranked technical debt among the top five modernisation challenges facing organisations.

As financial institutions accelerate digital transformation and cloud adoption, technical debt emerges as one of the major roadblocks to progress.

As with any transformative technology, cloud migration can be both powerful and complex. Migrating to the cloud often means redesigning and upgrading the programs and applications used so far—an endeavour that can bring complexity if not properly planned.

A common trap is the lack of adequate training or a clear strategic roadmap for what to migrate first and what comes next. Without this planning, technical debt accumulates quickly.

A Silent Risk

A poor transition into the digital era brings multiple risks that can severely impact any organisation. It also creates ongoing costs, draining budgets that could otherwise be allocated to innovation and new initiatives.

Let’s take data governance as an example. When outdated systems and newer cloud-based tools aren’t properly integrated, it can lead to reporting errors and increased scrutiny.

Equally significant is the financial risk. Any misstep can prove very costly. There’s also the risk to brand reputation. System failures or slow access to services—especially when customers are used to seamless experiences—can result in lasting damage to a company’s name.

Prevention Strategies

Minimising future technical debt is just as important as addressing existing debt. This is where corporate governance and leadership play a critical role.

Organisations must treat cloud migration as a comprehensive program—not a set of isolated actions. A coordinated task force should be established, bringing together representatives from IT, compliance, risk, legal, and business units. The team’s mission is to design a clear, strategic roadmap for smooth migration.

Without this centralised coordination, each department tends to act independently—often leading to disjointed outcomes, increased technical debt, and elevated business and compliance risks.

In today’s fast-evolving tech environment, technical debt is a multidimensional threat. The sooner organisations assess it, document it, and create a clear response strategy, the more effectively they will shield themselves—allowing innovation to thrive, without compromise.

• By Marios Kapiris, Director, Kyndryl Cyprus