In our series on business modernization we have already covered themes such as the need for modernization, key drivers, the impact and strategic approach to modernization. Now comes the next step, that is gauging how ready a business is for modernization.
Business modernization is a must to remain relevant in a highly competitive market. A delay in doing so can result in loss of business, productivity and revenue. Enterprises might be tempted to immediately replace the existing infrastructure with a new more advanced one. But before taking such a drastic step, they need to assess the readiness for such a transition. The more prepared an organization is for modernization, the better will be the business outcomes. Business modernization initiatives can be capital intensive and risky at times, which makes gauging the business readiness extremely important. This can seem like a complicated, daunting, and tedious task. To make this activity simpler and less time-consuming, we have prepared a checklist.
By using this checklist, enterprises will be able to assess the current business environment and decide on the best way to move forward with the modernization initiatives.
Defining Business Objectives
The first tick box in the modernization checklist is an answer to why the organization needs to modernize. The modernization initiatives should be aligned with the business goals and objectives of the organization. Modernization cannot be achieved through a one size fits all approach. The need for modernization and its key drivers have to be identified. The current challenges, both process and technical, which are preventing the organization from meeting the business objectives need to be listed down.
Once the challenges are defined the next step is to prepare a vision of what the organization wishes to achieve out of a modernization project. Without a defined goal, the enterprise will be unable to plan and execute any transformations within the organization making the modernization journey futile.
Business modernization is not just limited to technological improvements but transformation in people and process as well. Thus, the next step is to gauge how ready the workforce is for modernization. Business modernization will lead to a cultural change in the company. The different teams such as marketing, sales, finance, business development, technology, etc. need to be aligned to the coming changes. The various teams in the organization should be open to embrace the change that will come in business operations. This can be done by scheduling readiness assessment meetings, conducting one-on-one or team discussions to understand their concerns and apprehensions.
Apart from the culture change, it is also important to assess if the current employees have the right skill set to successfully adapt to the changing work environment. It is vital to carry out an employee impact analysis and prepare a plan for carrying out the necessary IT and business reskilling and training so that the employees can smoothly transition into their new roles. In case the existing workforce is unable to upskill, acquiring new talent will become imperative.
Setting up a Cross Functional Team
A modernization project needs a dedicated team to oversee its operations from end-to-end. Without a team specifically designated to take care of the day-to-day activities, the modernization efforts will not yield the desired results. By having a dedicated team, organizations can assign accountability and measure progress and output of the project.
Enterprises need to have a Cross Functional Team (CFT) with employees from different departments who will be impacted by the changes and those who are crucial for its implementation. Thus, a key readiness item of the checklist is the presence of a CFT. This team consisting of members with varying expertise will be able to address the needs of various stakeholders, minimize disruptions and handle different challenges that will come up during implementation of the modernization project.
Organizations need to take stock of the technology portfolio. The objective is to gauge whether or not the organization has the right technological infrastructure to modernize. This can be done by reviewing the existing infrastructure and applications, both on-premise as well as on the cloud. Document the role and business purpose of each application and system. Identify the ones that need to be upgraded or replaced, and why. This involves determining how the existing applications are currently integrated, what tools are used for these integrations, how they are maintained, etc.
It is equally important to map out the future needs in terms of applications and systems. Identify what all new applications and systems will be needed in the company’s modernization initiatives. How will these new applications be integrated into the existing system? How will the new integrations be maintained?
Business modernization like any other aspect of business will be prone to risks. These operational risks associated with the implementation of a new system need to be recognized, understood, and documented. An accurate assessment and effective mitigation plan for anticipated risks should be in place. There has to be a policy in place to support good governance and regularly monitor whether the identified risks are within the acceptable limits. In the checklist, enterprises must compare the anticipated risks with the merits of the project to make a conscious decision.
Securing a budget
Though modernization projects become profitable in the long run by reducing technology debt, operational expenses and increasing productivity, their initial investment cost can be quite high. Thus, the next readiness step is to gauge whether or not there is enough budget for the modernization journey. There are costs involved in upgrading the existing applications and infrastructure, purchasing new products, reskilling and training existing teams, etc. Enterprises need to allocate a budget for the modernization projects. They can prioritize funding those projects which have a higher impact on the bottom line of the company.
Modernization readiness review can help create a roadmap for the business modernization project. It will also help to capture the benefits and the risks associated with modernization. Gaps can also be identified and resolved so that the modernization can start without much delay.
Business modernization checklist: Essential guidance for CXOs
As we conclude, here is a quick snapshot of the checklist for CXOs to gauge whether or not their organization is ripe for business modernization and learn what are the key areas for interventions:
- There is a clear business objective for modernization
- The culture is conducive for modernization
- The workforce has the requisite skills to leverage the benefits of modernization
- Budgets have been sanctioned for the modernization journey
- The technology infrastructure is ready for modernization
- A cross functional team has been set up to facilitate modernization
- Risk assessment has been undertaken
If an organization tick marks on each box of this checklist, it is ready to start its modernization journey.