17. Tech Debt in SMEs - The Cost of Holding on to Old Systems

A series about business efficiency, finding profit and how to get there

Introduction
Every SME has a system or two that’s outstayed its welcome. A spreadsheet you have to triple-check. An old desktop program that only runs on one person’s computer. A legacy CRM that was “customised” five years ago and now no one dares touch it.

Sound familiar?

This is technical debt and it’s more than just outdated software. It’s a tax on your team’s time, clarity and effectiveness. It slows everything down, increases errors and locks in inefficiencies that you’ve long since outgrown.

In larger companies, tech debt can be buried in legacy infrastructure. But in SMEs, it lives in plain sight in your inboxes, file structures, accounting tools and workflows. And while replacing these systems might feel risky or expensive, the cost of doing nothing is often far greater.

Actions to Be Taken
Here’s how to spot, calculate and start clearing tech debt - without overwhelming your team or budget.

Identify Your Tech Debt Zones
Start by asking -

• What systems frustrate your team regularly?

• Where do workarounds, double entry, or repeated fixes happen?

• What tools do only one or two people know how to use?

• Where are you stuck using desktop or on-premise software that doesn’t integrate?

 These are all signs of systems that no longer serve your business efficiently.

Quantify the Hidden Costs
For each legacy system, estimate -

• Hours per week wasted in inefficiencies

• Cost of errors or rework

• Risk of lost knowledge if key staff leave

• Missed opportunities due to lack of integration, speed, or mobile access

 Multiply by hourly rates and frequency. The numbers will likely surprise you.

Prioritise What to Retire, Replace or Relearn
Not every outdated tool needs to be tossed - but each needs a decision - 

• Retire Obsolete or no longer fit-for-purpose

• Replace High pain, high frequency - get rid of it

• Relearn Still viable, but underused due to lack of training

Focus first on systems that are -

• Blocking efficiency

• Blocking visibility

• Blocking growth

Plan a Phased Transition
Don’t rip and replace everything. Choose one key system, find a lean replacement and migrate carefully. Involve users in the selection, testing and implementation.

Document workflows, train early adopters and let the team build confidence before scaling change.

Psychological Perspective
Tech debt isn’t just operational - it’s emotional. SME owners often hang on to old tools because -

• “We paid good money for it.”

• “It still kind of works.”

• “I don’t have time to deal with the change.”

• “I’m not techy - it’s too overwhelming.”

 But every day spent with a clunky system is a day your business is working harder than it needs to. And it sends a subtle message to your team

“This is good enough. Don’t expect better.”

Replacing outdated tech is less about the tool and more about a mindset shift toward continuous improvement. It’s a vote for agility, trust and professionalism.

HR Best Practice
HR can support this shift by focusing on change management and digital capability.

Here’s how -

• Run listening sessions to understand where tech is causing friction

• Support training and upskilling - new systems are only as good as people’s confidence in using them

• Recognise digital champions who embrace and promote change

• De-risk transitions - give staff safe space to learn, fail and adjust

Also, track tech-related stress. Poor systems often cause burnout, miscommunication and unnecessary pressure.

Red Flags to Watch For and Mitigate Against
Tech debt may be slowing you down if you notice -

• Reliance on one staff member to manage or “fix” a tool

• Multiple logins or re-entry of the same data

• Slow system response, crashing, or lost data

• Staff using personal workarounds (paper notes, side spreadsheets, manual lists)

• Tools that don’t integrate with newer platforms

These issues don’t just waste time - they chip away at trust, motivation and performance.

Narrative Story

Meet Pete from Gisborne
Pete owns a civil engineering consultancy in Gisborne. His team was using an old desktop timesheet system that hadn’t been updated in years. Only two people knew how to run reports. It was prone to crashing. Payroll was always delayed.

He finally decided to upgrade - not to something fancy, but a cloud-based system that integrated timesheets, leave and payroll.

It took a weekend to set up. Two weeks to train. In one month -

• Payroll admin time dropped by 50%

• Timesheet accuracy improved

• Staff gained mobile access and control

Pete’s reflection - “I thought upgrading would cost me time and money. Turns out, not upgrading had been costing me both for years.”

Golden Nugget
“Old systems don’t just slow down your business - they signal to your team that efficiency doesn’t matter.”

If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.

 📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact

If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview

🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.