- “Technical debt” represents the hidden costs of relying on older, siloed systems—and contributes to costly inefficiencies, delays, and missed opportunities
- Get four strategies to alleviate technical debt and drive process optimization through digital transformation
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Are you measuring the total cost of maintaining legacy systems or delaying planned digitalization initiatives? For many companies, the answer is yes. The term “technical debt” covers the often-overlooked expenses of maintaining old, siloed systems—such as added maintenance costs and decreased productivity. And these tech debt challenges can hinder an organization’s ability to remain innovative and competitive in rapidly evolving industries.
In fact, 86% of companies report being impacted by tech debt, according to a 2023 survey by Foundry. Executives surveyed listed the reliance on siloed, legacy systems and processes as the top IT roadblocks. Additionally, 43% of those surveyed say that tech debt impedes their ability to innovate.
To address this challenge, we’ve examined the hidden costs of delaying digital transformation (DX), highlighting the impact of technical debt and the benefits of successful DX strategies to improve business process optimization.
The Hidden Costs of Delaying Digital Transformation
Consulting firm McKinsey notes that technical debt results from organizations choosing quick and temporary fixes to their IT issues, which can result in costly long-term consequences.
Accumulating technical debt can create hidden monetary and intangible costs that impact the bottom line, including:
- Integration costs. Integrating new solutions into an outdated tech stack can be challenging and expensive, primarily when systems are patched over time.
- Project overruns. Hidden architectural challenges can cause organizational projects to exceed budgets and miss deadlines.
- Missed business opportunities. When teams prioritize managing tech debt, they miss opportunities to capitalize on new technologies and enter lucrative markets.
- Decreased employee productivity. Tech debt can make tasks like creating new features and fixing bugs more time-consuming for engineers. Additionally, teams that depend on cumbersome, legacy technologies may face a decrease in morale. Both scenarios can hinder an organization’s overall innovation process.
- Ineffective data collection and utilization. Fragmented and siloed data systems can impede the effective utilization of advanced analytics for decision-making. In addition, some manufacturing teams rely on outdated datasets for product design updates and procurement decisions.
- Budget diversion. According to McKinsey, more than 20% of technical budgets for new products are allocated to address existing technology issues required to integrate old and new systems. This involves higher maintenance, support, and security costs to patch legacy system problems while ensuring they are compatible with new software.
Delaying DX can cause businesses to fall behind competitors who embrace advanced technology to streamline innovation. This can prevent them from scaling operations to meet rising demand or expand into new markets.
The Benefits of Digital Transformation Implementations for Process Optimization
According to the KPMG 2022 CEO Outlook report, 72% of top-level executives prioritize digital investments. This is because DX provides advanced capabilities to help manufacturers streamline their operations and adapt quickly to dynamic market conditions and demands.
By implementing sophisticated digitalization solutions like aPriori, manufacturing product teams can reap significant benefits.
Four Strategies to Address Technical Debt and Accelerate Digital Transformation
Let’s examine the four strategies for successful process optimization below:
1. Align DX Initiatives with Business Goals
Approach: Ensure your DX journey aligns with your organization’s vision and goals. It is crucial to understand where the business is with its digital maturity and determine the next steps toward becoming more digitally transformative. This helps companies modernize their operations based on corporate priorities.
The aPriori Impact: aPriori integrates DX programs with corporate goals by delivering real-time insights and analytics, enabling informed decision-making for more effective and goal-oriented strategies across key performance indicators (KPIs), including cost, environmental sustainability, risk, and manufacturability.
2. Establish a Plan to Drive Process Improvement and Innovation
Approach: Successful organizational managers and team leaders establish a phased plan to reduce tech debt and advance their DX journey. A well-rounded plan includes the necessary engineering resources to resolve legacy system issues and improve productivity through digital investments. The goal is to create a straightforward course of action to strike the perfect balance between innovation and technical debt reduction.
The aPriori Impact: This is an approach Woodward, a global manufacturer of aerospace energy conversion and control solutions, is taking to reduce costs and improve supplier collaboration. The plan calls for internal stakeholder collaboration to achieve these goals, which includes implementing aPriori’s digital manufacturing platform. Woodward’s clear plan, extensive onboarding program to train employees to use aPriori, and aPriori’s software solution enable the manufacturer to determine the best options for cost, materials, suppliers, production, and more.
3. Leverage Automation to Improve Team Member Productivity
Approach: Businesses that invest in digital technology can overcome resource limitations, enhance productivity, and streamline existing processes. Moreover, automation enables engineers to eliminate repetitive tasks, improve product designs and manufacturing processes, reduce tech debt, and optimize efficiency. As a result, product manufacturers can spend less time addressing technical challenges and more on innovation.
The aPriori Impact: aPriori’s automation-driven capabilities can help forward-thinking manufacturers eliminate cumbersome and complex product development processes. aPriori enables the simulation of design and production processes using 3D CAD models stored in product lifecycle management (PLM) systems. And aPriori’s digital factories provide virtual representations of manufacturers’ production capabilities and suppliers down to the machine level. Companies can compare digital factories to determine the most effective product production site.
This integration empowers teams to unlock real-time manufacturing insights based on real-world variables such as labor rates, supplier capabilities, and more. These insights help organizations make informed decisions and take necessary actions to design cost-effective, sustainable innovations quickly and confidently.
4. Make Real-Time Collaboration Central to Optimization Efforts
Approach: Transparent communication enhances the teamwork required to tackle tech debt and make strategic investments for long-term business success. Additionally, project management leaders gain more visibility and better understand their teams’ progress, productivity, and efficiency in completing tasks. This is the collaboration and process optimization level that today’s digital technologies can provide.
The aPriori Impact: aPriori’s real-time manufacturing collaboration application, aP Workspace, streamlines task management for internal stakeholders and provides traceability into a project’s evolution. Further, aP Workspace centralizes teams and critical product data, accelerating data-driven decision-making for manufacturers to achieve profitability and sustainability goals.
Additionally, aPriori’s business intelligence (BI) reporting solution, aP Analytics, provides reports, dashboards, ad-hoc analysis, and more. aP Analytics delivers insights at scale to identify outliers for KPIs such as cost and sustainability. And it provides actionable insights that leaders need to make informed decisions.
Learn more about how aPriori Manufacturing Insights streamlines the product development process.
Set the Course of Continuous Improvement and Agility
Organizations can gain an edge in today’s volatile business environment by embracing digital solutions to achieve operational excellence. The insights presented in this post can help you start the process.
With DX, manufacturers gain new capabilities to replace the bottlenecks and redundancies associated with traditional complex processes and establish new business operations based on real-time collaboration and insights to accelerate workflows and make decisions quickly and confidently.
Cutting-edge digital solutions like aPriori enable manufacturers to unlock new capabilities and increase competitiveness. aPriori can help drive process automation by integrating with critical systems (e.g., PLM tools) to provide real-time decision-making across the product development life cycle.
Additionally, the aPriori cloud platform empowers manufacturers to simultaneously optimize product designs and production for cost, sustainability, and manufacturability. And with aPriori digital twins, manufacturers gain the agility to support the continued innovation required to reach their business goals.