How much is technical debt costing you?
Tags: devops, startup, performance, tooling
Published: 2022-04-08 15:59:05

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<p class="has-text-align-justify">Software developers are becoming one of the most important resources in the world. The lack of developers is a real issue, but it’s not the main problem in today's market.&nbsp;</p>
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<p class="has-text-align-justify">Better leveraging your organization's current talent is vital, and developers should spend their time building better products. However, the average organization <a href="https://stripe.com/gb/reports/developer-coefficient-2018" target="_blank" rel="noreferrer noopener">wastes up to 42% of its development time</a> due to technical debt.</p>
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<p class="has-text-align-justify">If not addressed, code quality issues resulting from a high technical debt will impact customer satisfaction, with users experiencing bugs. It will also restrict your organization's ability to innovate and quickly react to changes and the latest trends.</p>
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<p class="has-text-align-justify">Keep on reading to know how much technical debt and code quality issues are costing you and how Codacy can help you reduce that cost.</p>
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<h1 id="h-calculate-the-real-cost-of-technical-debt"><strong>Calculate the real cost of technical debt</strong></h1>
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<p class="has-text-align-justify">We’re in the process of developing a Codacy ROI calculator that will be available very soon! It will allow you to see exactly how much technical debt is costing you and how much you’ll be saving with Codacy. In the meanwhile, let’s dive into a practical example.&nbsp;</p>
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<h2 id="h-team-size"><strong>Team size</strong></h2>
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<p class="has-text-align-justify">For our example, let’s consider a team with <strong>50 developers</strong>, but you'll need to know how many developers you have in your organization.</p>
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<h2><strong>Average cost per developer</strong></h2>
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<p class="has-text-align-justify">Different countries (or even cities) have distinct realities in terms of salaries. Therefore, you’ll need to know how much your organization is paying developers. For our example, let’s consider a Software Engineer position in the USA, with an <a href="https://www.glassdoor.com/Salaries/software-engineer-i-salary-SRCH_KO0,19.htm" target="_blank" rel="noreferrer noopener">average salary of <strong>$ 116 000 / year</strong></a>.</p>
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<p class="has-text-align-justify"><em>Note: We know that employee salary and employee cost might not correspond to the same amount, depending on your countries’ tax policies.</em></p>
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<h2><strong>Time spent on maintenance</strong></h2>
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<p class="has-text-align-justify">According to a <a href="https://stripe.com/gb/reports/developer-coefficient-2018" target="_blank" rel="noreferrer noopener">Stripe’s report</a>, developers spend over 17 hours every week <em>- yes, every week -</em> dealing with technical debt and bad code. Considering a 40-hours work week, developers spend about <strong>42% of their time on code maintenance</strong>.</p>
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<figure class="wp-block-image aligncenter size-full is-resized"><img src="https://blog.codacy.com/wp-content/uploads/2022/04/Time-spend-by-developers-on-code-maintenance.png" alt="Time spend by developers on code maintenance" class="wp-image-5454" width="490" height="417"/><figcaption><a href="https://stripe.com/gb/reports/developer-coefficient-2018" target="_blank" rel="noreferrer noopener">The Developer Coefficient</a>, by Stripe</figcaption></figure>
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<h2><strong>Cost of technical debt</strong></h2>
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<p>Knowing the cost per developer and the time spent on maintenance, how much is technical debt costing you? This is how the formula looks like:</p>
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<p class="has-text-align-center"><code>cost of tech debt = average cost per developer x percentage of time spent on maintenance</code></p>
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<p>From our example, we have the following cost of technical debt, per year and per developer:</p>
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<p class="has-text-align-center"><code>cost of tech debt = $ 116 000 x 42% = $ 48 720</code></p>
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<p>Keep in mind this is only considering code maintenance, but there is also the opportunity cost of not being able to develop new features or having a high time-to-market. So, in reality, the cost might be much higher, depending on your situation.</p>
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<h1><strong>How Codacy can help you reduce the cost of technical debt</strong></h1>
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<p class="has-text-align-justify">We need to convert all those hours wasted on dealing with technical debt and bad code into productive hours. Of course, we can never eliminate unplanned work, but we can reduce it. That’s where products like Codacy come in.</p>
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<h2><strong>Codacy cost</strong></h2>
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<p class="has-text-align-justify"><a href="https://www.codacy.com/?utm_source=blog&amp;utm_medium=post&amp;utm_campaign=roi" target="_blank" rel="noreferrer noopener">Codacy</a> is a static code analysis tool that helps you automate code reviews on your commits and PR:</p>
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<ul><li>Define and enforce your coding standards on every PR;</li><li>Displays the current state and trend for the most important code quality metrics (security, style, duplication, complexity, and coverage);</li><li>Get visibility into your technical debt and the most problematic areas of your code;</li><li>Prevent security issues with security and performance checks;</li><li>Keep track of your overall code quality evolution.</li></ul>
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<p class="has-text-align-justify">How much does Codacy cost you? This is how the formula looks like:</p>
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<p class="has-text-align-center"><code>Codacy cost = number of users x $ 15 / month</code></p>
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<p class="has-text-align-justify">From our example, we have the following cost of Codacy per year:</p>
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<p class="has-text-align-center"><code>Codacy cost = 50 x $ 15 / month x 12 months = $ 9 000</code></p>
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<h2><strong>Time saved with Codacy</strong></h2>
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<p class="has-text-align-justify">Codacy helps you <strong>recover up to </strong><a href="https://codescene.com/hubfs/calculate-business-costs-of-technical-debt.pdf" target="_blank" rel="noreferrer noopener"><strong>25% of your lost engineering time</strong></a> by managing your code quality and technical debt. That's the equivalent of having 25% more developers without having the staffing cost.</p>
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<h2><strong>Codacy ROI</strong></h2>
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<p class="has-text-align-justify">We now have all the data needed to calculate the return on investment on a product like Codacy.</p>
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<p class="has-text-align-center"><code>Codacy ROI = team size x average cost per developer x percentage of time spent on maintenance x percentage of time saved with Codacy</code></p>
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<p class="has-text-align-justify">From our example, we have the following Codacy ROI per year:</p>
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<p class="has-text-align-center"><code>Codacy ROI = 50 x $ 116 000 x 42% x 25% = $ 609 000</code></p>
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<p class="has-text-align-justify">Here, we’re only considering that Codacy optimizes work related to technical debt and code maintenance. But Codacy helps developers regardless of their current development goals.</p>
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<div class="wp-block-button is-style-round"><a class="wp-block-button__link" href="https://www.codacy.com/?utm_source=blog&amp;utm_medium=post&amp;utm_campaign=roi" target="_blank" rel="noreferrer noopener">Start saving with Codacy</a></div>

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<h1><strong>Conclusion</strong></h1>
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<p class="has-text-align-justify">Developers are a valuable asset for any software development organization. However, developers spend 42% of their week working on code maintenance. Although you can’t eliminate unplanned work, you can reduce the effects of technical debt and bad code quality.&nbsp;</p>
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<p class="has-text-align-justify">Codacy recovers up to 25% of your lost engineering time, and your developers can focus on what they do best: building better products.</p>
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