By Arjun Mehta
Your team has technical debt. You've quantified it. You know it's costing $1M per year. Now what?
You can't refactor everything. You don't have a year of free capacity. You need a strategic approach to debt reduction.
Here's the playbook.
Step 1: Identify the Highest-Cost Debt
Not all debt is created equal. Some debt costs you 5% of capacity. Some costs 30%.
Focus on high-cost debt first.
Approach:
- List all known debt areas
- Estimate the cost of each (% of team time impacted)
- Rank by cost
- Attack the top 3
Example ranking:
- Monolithic architecture: 25% of time
- No automated testing: 15% of time
- Knowledge silos (one person owns payments): 10% of time
- Outdated dependencies: 5% of time
- Code quality issues: 5% of time
Start with the monolith. Ignore outdated dependencies for now.
Step 2: Quantify the Payoff
Before you invest in refactoring, know the payoff.
"Refactoring the monolith to a modular architecture will take 12 weeks (3 engineers). Payoff: reduces architectural debt from 25% to 10%, freeing 5 FTE. That's $750K per year in freed capacity."
Compare to cost: 3 engineers * 12 weeks * $2,880/week = $103K.
Payback: 5 weeks.
That's worth doing.
Contrast with: "Updating all our dependencies will take 4 weeks. Payoff: marginal. It's not in your top 3 costly debt areas."
Don't do it yet.
Step 3: Get Executive Buy-In
Before you start, make sure leadership understands the tradeoff.
"We can ship 40 features in the next quarter, or we can reduce technical debt and ship 35 features. But that 1 quarter investment frees up 5 FTE long-term. Next year we ship 50 features instead of 40. It's a short-term slowdown for long-term gain."
Make it explicit. Don't try to sneak refactoring into your sprint without telling anyone. That breeds distrust.
Step 4: Protect Refactoring Time
If refactoring "sneaks into" your sprint when there's pressure, it never happens.
Block the time. "Q3 is 30% feature work, 70% debt reduction." Make it real. Tell your product team. Tell your sales team. Commit to it.
Alternatively: dedicate a team. "Team A ships features. Team B reduces debt." This works if you have the capacity.
Step 5: Make It Incremental
Don't try to refactor everything at once. That's a risky rewrite and it'll take forever.
Instead:
- Start with one subsystem
- Refactor it
- Ship it
- Move to the next subsystem
Example: monolith refactoring
- Week 1-2: Extract payment module
- Week 3-4: Extract notification module
- Week 5-6: Extract auth module
- Week 7-8: Extract data layer
At the end of week 2, you have one extracted module. That's progress. You can ship it. The system still works. You're not in a multi-month rewrite.
Step 6: Maintain Quality While Refactoring
Refactoring can introduce bugs. Don't trade debt for brittleness.
- Write tests before you refactor (test the old code)
- Refactor
- Run tests (should still pass)
- Deploy to production
This takes longer but it's safe.
If you don't have test coverage, add it first. "Week 1-2: Add testing to the system we're refactoring. Week 3-8: Safe refactoring."
Step 7: Measure the Improvement
After refactoring, measure:
- Cycle time: did it decrease?
- Velocity: did it increase?
- Bug rate: did it decrease?
If you don't see improvement, you refactored the wrong thing or you refactored badly.
If you see improvement, celebrate it. And double-down on refactoring more debt.
The Common Mistakes
Mistake 1: Refactoring without quantifying payoff. You decide to refactor "because the code is ugly." But ugly code isn't costing you much. You spend 8 weeks refactoring and free up 1% of capacity. Not worth it.
Always measure the cost of debt and the payoff of refactoring first.
Mistake 2: Big rewrites. You decide to rewrite the entire payment system from scratch. It's a 6-month project. By month 3, requirements have changed. By month 6, it's a disaster.
Small, incremental refactoring is safer and more likely to succeed.
Mistake 3: Refactoring without protecting the time. You allocate "refactoring time" but when pressure hits, it gets cut. You never actually refactor. You just have good intentions.
Protect the time. Commit to it. Make it part of your roadmap.
Mistake 4: Refactoring without tests. You refactor and introduce bugs. Now you have less debt but more instability. Not an improvement.
Make sure you have test coverage before you refactor critical systems.
The Timeline
Debt reduction isn't a one-time project. It's ongoing.
- Quarter 1: Reduce highest-cost debt (monolith, architecture)
- Quarter 2: Reduce next-cost debt (testing, knowledge silos)
- Quarter 3: Maintain; add feature work back in
- Quarter 4: Ongoing refactoring as part of normal work
By year 2, debt is dramatically reduced. Your team's velocity increases. You ship more features with less effort.
With Glue
With Glue, you can identify high-cost debt: which systems are complex? Which are architectural constraints? Which are knowledge silos? Prioritize refactoring based on actual impact.
Frequently Asked Questions
How long does debt reduction typically take? Depends on your debt. Light debt: 2-4 quarters to reduce meaningfully. Heavy debt: 6-12 months. But you see ROI in the first quarter if you prioritize correctly.
Should we hire more engineers instead of refactoring? No. Hiring more engineers to work around debt is expensive and doesn't fix the problem. You're throwing bodies at a structural issue. Fix the structure first, then you'll be able to hire effectively.
Can we refactor while shipping features? Yes, but you'll be slower at both. Better: focus for a quarter. Reduce debt. Then ship features faster for the next 3 quarters.