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Accelerating growth with Business Modernization: 7 step guide for CXOs

Business modernization is essential for any organization to grow as well as remain competitive. The earlier articles in this series on business modernization have focused on the modernization drivers, its benefits, gauging readiness, and common pitfalls and how to avoid them. This final article will act as a guide for CXOs to accelerate their modernization journey.

Arjun Vishwanathan
Chief Knowledge Officer
StrategINK

Santanu Ganguly
Chief Executive Officer
StrategINK

To get the best results, organizations should know what is needed to reach the goals as well as understand how to go about it. Here are some essential guidelines that can help organizations modernize their businesses.

Objectively assess the legacy system

As per a 2013 Gartner Survey, only 18% of the modernization projects are completed within the originally planned timeline due to a poor understanding of the legacy applications. A thorough assessment and analysis of the existing legacy applications are needed. This will help determine the readiness of the organization for application modernization. Also, it will greatly reduce the cost and scope of the modernization project. Organizations can assess their legacy systems by:

  • Understanding the six key drivers of business modernization
  • Gauging the impact of the legacy system from a business perspective i.e. business fit, business value and agility
  • Measuring legacy system modernization from an IT perspective focusing on cost, complexity and risk
  • Creating a case for legacy system modernization based on a combination of these drivers

Understand the business value

Delivering value should be the most important goal of business modernization. This value can be in the form of improved efficiency, a better experience for the customers, cost reduction, higher product quality, etc. According to a report, 55% organizations say legacy modernisation has helped the business accelerate their digital transformation efforts, crucial in today’s business landscape, whilst 54% say it has allowed them to be more reactive to market changes. To understand the business value, organizations should:

  • Create a cross-functional team comprising experts from R&D, IT, operations, sales, customer support, finance., etc.
  • Undertake a comprehensive cost and return on investment analysis for every variable involved
  • Understand the value for tangible as well as intangible impact, i.e. profitability as well as customer experience, employee engagement, etc.
  • Measure the cost of not modernizing

Select appropriate approach

An organization has the option of choosing one of the many available trajectories or approaches to business modernization. The various approaches come with their advantages, disadvantages, and risks. To understand which is the best approach for an organization, CXOs need to compare the attributes of the legacy system to the modernization objectives and then make a decision. Choosing the wrong approach can lead to a loss in productivity, and revenue and may even lead to scrapping the modernization project altogether. To make an informed choice:

  • Choose between the various options ranked by Gartner by the ease of implementation including encapsulate, rehost, replatform, refactor, re-architect, rebuild, and replace.
  • Focus on easier implementation, lesser risk and high business impact
  • Consider the challenges posed by the current legacy systems and choose an approach that can directly address those challenges.

Continual improvement

A successful business modernization should not be seen as a one-off event but as a continuous process. Organizations should strive to keep up with the ever-changing needs of the business. Continuous modernization can help tackle technical debt before it becomes a huge problem for the business. It can also help organizations avoid large-scale disruptions to the workflow due to one-time modernization projects. Once the initial modernization framework is in place, organizations must:

  • Continuously measure the impact against predetermined metrics
  • Understand what is working according to plan and where the approach needs to be reinvented
  • Focus on introducing incremental changes at a regular frequency

Be agile

To remain relevant in today’s competitive market, organizations need to adapt and respond quickly to the rapidly changing business needs. The legacy technologies might not be able to cope with the market changes. These technologies were designed to carry out one or two things very well but lack the flexibility to handle newer functions for the business. Research shows that 92% of C-level executives believe organizational agility is critical to business success. Invariably, organizations need future-ready systems that can support continuous innovation in processes, products, and services. Artificial intelligence and machine learning should be used to achieve the flexibility and speed needed for business agility. To facilitate agility organizations can:

  • Use well-established agile frameworks for design and development
  • Divide the modernization roadmap into delivery increments that can help realize the benefits faster
  • Constantly release usable functions of the modernization project to the stakeholders and get frequent user feedback
  • Leverage the feedback to act as a guide in directing the modernization project and help organizations remain user-centric

Ensure business continuity

Legacy modernization can help improve the performance of an organization but one of the challenges associated with it is maintaining continuous business operations while implementing the modernization project. A business continuity plan should be in place to ensure reduced downtime and seamless data migration from the legacy applications to the new system. The transition should be secure and avoid data redundancy as well as data loss. However, 51% of companies don’t have a business continuity plan. To ensure business continuity, organizations should focus on:

  • Building an effective continuity strategy by conducting a risk assessment to identify potential threats to business continuity
  • Carrying out a complete business impact analysis to see what all is crucial to keep the business up and running, and anticipate loss in revenue due to downtime
  • Designing and implementing policies to deal with the identified threats
  • Creating a contingency plan to get the business running after downtime which can include a backup and recovery plan
  • Testing and updating these policies, standards, and processes regularly

Invest in the right resources

A successful modernization project needs the right resources. Organizations should focus on investing in both people as well as technology. In case the businesses are incapable of forming a team capable of driving the modernization journey, they should look at bringing in experienced modernization partners. Creating the right ecosystem involves:

  • Identifying the needed skills and addressing the skills gap in the team by either upskilling or fresh hiring
  • Engaging modernization experts to collaborate with in-house teams to help organizations solve business problems, lower costs and improve efficiencies
  • Set up a system of governance that adheres to industry standards and delivers consistent results right from the start
  • Identifying and shortlisting technology partners who shall be responsible for replacing/ upgrading the legacy system
  • Focusing on comprehensive due diligence for technology partners based on their capabilities, trustworthiness, and long-term viability

Key takeaways for CXOs

To conclude, it is evident that following these seven steps can enable CXOs across industries in accelerating growth with business modernization. Here is a quick recap:

  • Assess the legacy systems to understand challenges and specific modernization need
  • Create a business value for modernization by weighing the costs against return on investment
  • Select the right approach best suited to the organizational modernization maturity, budgets, etc.
  • Focus on continuous improvement of processes, interventions and practices
  • Adopt an agile approach to quickly adapt the modernization strategy and practices to changing realities
  • Create a clear business continuity plan with focus on risk assessment, contingency planning, etc.
  • Invest in hiring and upskilling the talent along with right resources and technology partners to fuel modernization

These practices can help gain an edge towards business modernization and enable industries to achieve and realize far reaching impact.

Disclaimer: The views expressed in this feature article are of the author. This is not meant to be an advisory to purchase or invest in products, services or solutions of a particular type or, those promoted and sold by a particular company, their legal subsidiary in India or their channel partners. No warranty or any other liability is either expressed or implied.
Reproduction or Copying in part or whole is not permitted unless approved by author.

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