It’s clear to see what Amazon, Uber, AIRBNB, Apple Pay and other new world disruptors and leaders have achieved with their respective business models. These companies embody the notion of a digital business and are made for, and even have defined, the modern or digital era of business.
The Challenge of Transforming into the Digital Era
Most business and IT leaders in established, traditional or legacy companies recognize the WHY change mandate and are convinced that they too need to be a digital business for the modern era. In many cases, the leaders in these legacy companies have active investments to build the new and innovative solutions and become digital competitors. As IT leaders in more established legacy companies, our problem is not only about mastering the new, but also dragging decades of legacy systems into the future with us. Unlike the Amazons and Ubers, who were founded and grew up as digital businesses to begin with, IT leaders in traditional companies have to perform a transformation to become a digital business. There’s a big difference in doing a digital TRANSFORMATION vs. starting a digital business from scratch. The distinction lies in the necessity to transform legacy systems, processes and cultures formed over decades, while also innovating and creating the new systems, processes and cultures.
As IT leaders in large, complex and established companies taking on this challenge, we must first educate and convince our business counterparts and Board of Directors of two things. First, how this happened, and second, the best course of action to get out.
How did this happen?
Communicating the first part, how this happened, is easy, but very seldom is it done in a structured, “archeological” way. We talk about the legacy base as being expensive, complex, slow and risky. However, what’s usually missing from this part of the story is how these systems are valuable business assets that run millions of transactions a day and, as complex and fragile as they are, they contain critical processes and data. Telling the story of how and when each system came to be is usually an eye-opening moment for an executive team to hear and discuss. In most enterprises, the legacy base came about as a product of one good idea, one project, one annual plan at a time – each happening in isolation without respect to the bigger picture. Each system was designed and implemented based on the hardware and software of the era. Over the years, we had to continuously modify and enhance our systems and the interfaces between systems for business changes, customer demands and regulations. Much of it came to us through acquisitions (remember when we acquired X, then Y, then Z). Then, as customers and supply chains changed, we “hardwired” one business unit’s systems to another, just to get by.
You may think everyone on the executive team knows this, but clearly articulating it will help you create a new, shared understanding or mental model. It will not only help the entire team understand the depth and complexity of your current state, but it will also energize and gain support for the second part.
How do we solve this?
Is there a way to unwind the technology landscape that was created over a period of several years or even decades? Getting to that question as an entire business and IT leadership team, galvanized by a shared understanding and commitment to change, is the first big step in setting up a realistic plan for any digital transformation.
Every enterprise, however, has had a choice on when, if and how to deal with this modern era of technology-driven business disruption, change and competition. Many have chosen to invest in building new capabilities and ignore the base. Some have chosen to outsource or offshore, which tends to temporarily reduce cost. That strategy is “your mess for less” and accommodates the cost side of the liability. However, it doesn’t reduce the complexity or risk of that base and it certainly doesn’t improve speed to market since all new capabilities must eventually be connected to this complex legacy base. Unfortunately, as IT leaders in the larger, more established legacy companies, we must face this as a critical element of our digital TRANSFORMATION. We must transform and modernize our aging and rigid systems base – along with, and in support of, our efforts to innovate and take advantage of new technology and business models.
The time is now because the risks are high, the competitive stakes are high, and the people with the knowledge of our legacy systems are continuing to age and eventually retire. For a while, I’ve said “every enterprise has a choice” about when and if to transform. Today, I say you no longer have a choice. It’s “Game On.”
Author: Charlie Feld, Founder, The Feld Group Institute
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