The unleashing of the Pandemic of 2020, accompanied by the uncertainty and ambiguity across industries has made it clear that change and transformation is the only constant. Enterprises which have been able to modernize and stay abreast with the changing circumstances have been able to survive and even thrive. Invariably, business modernization has been one of the top emerging priorities for enterprises over the last two years. However, to believe that enterprises which already have a digital existence don’t need modernization is a myth that needs reflection.
If you look closely, modernization is not about adoption of technology to power operations. Rather it involves upgrading the old or conventional technological setup to stay relevant and augment optimization of resources across all enterprise verticals. Therefore, while digital transformation is the first step, modernization makes it an ongoing process to facilitate business sustainability and scalability. Business modernization is integral for ensuring resilience and agility in operations by ensuring the adoption of latest technological interventions to adjust to unforeseen circumstances. Through the course of the next few articles, we will discuss the diverse facets of business modernization from a CXO lens. We will decode the key drivers, impact, readiness, best practices and other key aspects of business modernization to drive enterprise success.
Decoding business modernization
Let’s start by understanding what business modernization essentially stands for or means. On a macro level, business modernization involves replacing the old legacy systems for an enterprise with contemporary, agile and relevant technology interventions to enable the enterprise to be future-ready. Business modernization can be seen as an umbrella term which includes modernization of all aspects of a business, including data modernization, IT modernization, etc. The rationale for modernization comes from the need to adapt to unforeseen circumstances and to ensure business continuity in the face of uncertainty with a major chunk of CXOs guiding their enterprises towards process redesigning and modernization of systems with emerging technologies.
Many enterprises often limit the idea of business modernization to IT or technology modernization. However, it is important to ensure that modernization becomes an enterprise wide effort, as in the face of a crisis, every business vertical takes a hit, and modern systems and solutions can help ensure continuity. Therefore, business modernization requires breaking enterprise silos and acceleration towards a collaborative effort to incorporate contemporary interventions across all business verticals.
Top 5 drivers for business modernization
On the face of it, it would seem that most leadership or CXO decisions for business modernization come from the need to replace outdated technology, because that’s the basic foundation. However, while that might be a reason, there are 5 major drivers which CXOs claim are behind this need to facilitate business modernization to replace legacy systems.
Fear of missing out
The first major driver is the constant fear of missing out. While this is a phenomenon most individuals are facing today, businesses are undergoing a similar experience. Most businesses fear that if their competitors undergo business modernization, and they don’t, they will lose their customers because of the legacy systems. Therefore, one of the biggest drivers of motivation is the fear that your competitor is already ahead in the race and if you don’t catch up soon, you will end up with costs and losses, much higher than the investments required to undertake business modernization.
Threat of extinction
The next major driver for business modernization comes from the threat of extinction. If you look at any technology, business or even species that became extinct, the major reason was it couldn’t adapt and modernize, keeping in sync with the changing circumstances. The same is true for your enterprise. If you don’t modernize, you will lose your supporting infrastructure and vendors, who no longer advocate legacy systems. Since your business cannot act in silos, unless you modernize to keep pace with the ongoing modernization, you will be vulnerable to extinction, leading to a loss of customer faith, and ultimately, business downturn.
Process and cost optimization
There are several processes in your enterprise that can be optimized by introducing the right modernization approach. Implementation of automation, artificial intelligence, etc. can go a long way into optimizing different aspects of your enterprise, and as a result, lead to cost optimization as well. You can leverage business modernization to eliminate repetitive, time consuming and inefficient processes, while focusing on those that facilitate efficacy and overall optimization. Furthermore, modernization can enable you to detect and eliminate bottlenecks in different processes, leading to better resource utilization and increased effectiveness and efficiency.
Vertical and horizontal interdepencies
Business verticals and departments no longer work in silos. If you look closely, there are several interdependencies between the various verticals and teams in your organization. Furthermore, there are a lot of interdependencies across different hierarchical levels in the organization as well. Thus, limiting modernization only to the IT or technology teams will no longer suffice. The interdependent nature of working, with a focus on a connected future is promoting overall business modernization. Additionally, leveraging business modernization processes, can further facilitate collaboration with the latest tools and platforms.
Improving time to market/ agility
One of the final drivers of business modernization today is to facilitate agility. Enterprises that are quick to respond to changing market conditions with reduced time to market have the first mover advantage to capture customer share. If you are still stuck on legacy systems, you will find it extremely difficult to attract customers with dynamic expectations. Furthermore, it will be challenging to remain relevant when you lack the agility and responsiveness. Therefore, business modernization is the best bet for you to augment your agility to adapt.
It is clear with these 5 drivers that business modernization is a secret recipe for CXOs who wish to facilitate business success for their enterprise, ensure market relevance as well as attract and retain customers to ultimately thrive.
Essential guidance for CXOs
As we come to an end of the first part of our discussion of business modernization, here are a few key takeaways that CXOs must consider during their next brainstorming or implementation sessions for business modernization:
- Business modernization and digital transformation are distinct, but interrelated concepts and enterprises must focus on both to thrive in a hyperconnected world.
- There are several aspects of business modernization and simply focusing on IT modernization will no longer suffice, because of interdependencies across verticals.
- Business modernization is the key for CXOs and enterprises to reduce the vulnerability to fear of missing out and the threat of extinction.
- Process optimization, innovation, agility and responsives are key drivers for business modernization that can help enterprises scale in the new normal.
In conclusion, it is clear that business modernization in the new normal is imperative for enterprises that seek to gain a competitive advantage and wish to facilitate business sustainability and scalability. Stay tuned to this space for more resources on diverse aspects of business modernization.