Tech debt is an often overlooked but business-critical concept that affects real estate brokerages around the country. In this post, we explain what tech debt is, how it affects real estate brokers’ bottom lines, and tips for not just overcoming tech debt, but turning it into an asset. Read on to learn more.
The term technology debt or tech debt was originally coined in the 1990s to refer to cutting corners during the software development process.
Today, tech debt has evolved to also refer to investments (or lack thereof) in technology maintenance and upgrades. In simple terms, tech debt means not investing in technological upgrades to save money. Over time, this starts accumulating into a debt that includes the higher cost of upgrading your technology if and when it breaks down as well as associated opportunity cost, any losses associated with down time if your systems stop working, and the long-term cost of customer dissatisfaction, reputational damage, staff turnover, and more.
Real estate in general is an industry that skews older. Real estate agents and brokers, on average, are all over 50 years old. Older generations generally (though not always) tend to be less familiar with technology. Generation X is the last generation that reached adulthood without widespread computers at home or the internet. The result is increased comfort with the “old” way of doing things, and thus less emphasis and less focus on technology, which is exactly how tech debt starts to grow.
Picture this: it’s 2010. You’ve finally revamped and rebranded your brokerage’s first website, which you’ve hosted on your own server since the late 90s. The new look and functionality are a big hit, and you’re proud of your new look. It displays your listings and has a contact form that goes directly to your email.
The problem: it isn’t 2010 anymore. Search engine optimization has taken off and changed dramatically. Cloud computing is the way to go to reduce infrastructure costs and operational challenges. APIs and integrations are much more common. What few organic leads you get through your website these days you have to add to an Excel sheet by hand and follow up with manually. Your business is doing OK, but your competitors are doing better.
See what we mean? You’ve accumulated website tech debt, and overcoming the obstacles to tackling it can be hard.
Like any debt, brokerages like yours can leverage tech debt strategically. Maybe you postponed getting rid of your on-site server for a year because your office needs new carpet, or delayed purchasing a company-wide CRM because you had to relocate to a new space.
All business owners have to make tough decisions. But all debts have to be paid—one way or another. Tech debt can be particularly painful, too, so it’s important not to put it off for too long.
Most brokerages have some level of tech debt. This is normal, especially since tech debt can be a way to leverage your other assets in strategic ways when it suits your business. But it’s safe to say that if you’ve gone more than 5 years without making ongoing investments in your tech, your business is potentially at risk. Since every brokerage is different, it’s impossible to put out an exact dollar figure, but ask yourself the following questions:
If my systems went down today and were inaccessible for 3 business days:
Perhaps even more importantly, your tech debt also has an opportunity cost: the amount of money you could be making if you had invested in technology that helps you work better, more efficiently, and seize more opportunities. This cost is potentially even higher, but also more difficult to quantify.
Technological advancements are only going to keep accelerating as time goes on. Every moment you delay will make it harder to catch up.
Tech debt feels free. When your systems are working well, upgrading or improving them isn’t top of mind because busy brokers have a lot of other important things to think about. But a word to the wise: it’s much, much better to start paying off your tech debt now, rather than waiting for the proverbial debt collector. But how?
The first step is to perform a tech stack audit. A tech stack audit will help you identify crucial aspects about your tech:
Whether you have a little tech debt or a lot, there are effective ways for your brokerage to minimize it:
Perhaps the best way to minimize tech debt is to work with a partner who cares about your success just as much as its own.
At Constellation1, we are firmly committed to and heavily invested in our customers’ success. You don’t have to take our word for it, either, because our customers aren't shy about giving praise. If you want to tackle tech debt at your brokerage and set yourself up for long-term success, request a FREE tech stack audit today.