Business modernization is extremely critical to organizational success in the new normal. In one of our previous articles, we talked about the business modernization landscape and the key drivers that are pushing organizations to modernize. The objective of this article is to take a step further and explore the impact of business modernization, especially, on the bottom line. We will navigate through different ways in which focusing on modernization makes a business case. Therefore, it is important for organizations to focus on business modernization, not only as a good to have, but as imperative for growth and success.
Focus on business continuity
Business modernization can enable enterprises to navigate through the uncertainties and ambiguities accompanying the changing global market conditions. Put simply, business modernization empowers businesses to be more agile and responsive, both of which are integral to unparalleled continuity in the face of crisis. Modernization which comes along with greater interconnectedness, collaboration and optimization facilitates faster decision making and quick adaptability to the new needs. This is what forms the foundation of continuity.
If you look closely, business continuity has a direct impact on the bottom line for an organization. According to figures from Datto, just one hour of downtime can cost $10,000 for small businesses. For larger companies, those hourly costs can balloon to more than $5 million. Thus, focusing on business modernization from a continuity lens enables enterprises to save costs due to downtime, as well as create value by ensuring operations.
Better security landscape
Security is one of the top priorities for any enterprise today which makes business modernization essential. Security threats and breaches are no longer limited to the IT department, but have permeated to all business verticals. Since almost every business domain today is privy to confidential data, each one is vulnerable to security threats. Adopting a conventional on premise security approach will no longer suffice. Enterprises need to modernize their security approach to ensure sustainability and scalability. Put simply, conventional systems are highly vulnerable to and offer little or no defense against the sophisticated attacks of the modern world.
Furthermore, focus on security from a modernization lens is not only integral to prevent the threats and breaches to avoid loss of data, but also minimize the associated economic costs. According to a report by Accenture, a cyber-attack in the form of malware can cost an organization $2.6 million. Therefore, modernization can help enterprises reduce the impact of security threats as well as adopt a preventive approach to minimize the incidence in the first place.
Improved employee experience
In today’s world, the workforce is an organization’s biggest asset. Enterprises that acknowledge and capitalize on this trend see higher growth trajectories than others. However, to augment employee experience, enterprises need to facilitate modernization and provide their employees with something beyond the legacy systems. Expecting employees to work with age old systems, software and other aspects of the business might create a less than pleasant experience. Furthermore, modernizing to the latest tools and resources adds greater productivity and improves performance for teams across verticals.
Thus, connecting the dots with the bottom line, there are several forces at play here. On the one hand, modernization leads to a better experience, greater engagement and motivation which facilitates retention and minimizes the huge costs of voluntary turnover. On the other hand, it directly augments productivity, output and performance which lead to a healthier bottom line.
Alignment with market expectations
Customer expectations and market compliances keep changing and are dynamic in nature. While legacy systems take into consideration the expectations and compliance requirements when they are built, they seldom have the capability to upgrade themselves as new requirements come to the forefront. Furthermore, the inability to keep pace with the same can lead to serious economic and brand implications for the enterprises.
First, if an enterprise is unable to align its offerings and services with customer expectations due to modernization limitations, it is bound to lose market share and will be unable to attract new customers or retain new ones, who may want to leverage the benefits of modernization being offered by others. Second, business modernization can help organizations avoid the cost of compliances which might accompany the reliance on legacy systems. Often, legacy systems have limited capabilities when it comes to data privacy, etc. and do not meet the contemporary compliance norms, which has the potential to attract serious non-compliance charges. Therefore, business modernization can directly impact the bottom line by helping avoid such costs.
Facilitate resource efficiency
Finally, business modernization across all verticals can help facilitate resource efficiency. Again, there are several aspects at play here. First, business modernization brings along leveraging key tech drivers to promote better outcomes. For instance, leveraging automation for powering many repetitive and administrative tasks can help enterprises put their human resources to more value-add work.
Research shows that 57% of leaders say that automation technology saves departments between 10 and 50% on costs previously associated with manual processing. On the one hand, the administrative tasks will be handled at a much lower cost, with greater accuracy and transparency. On the other hand, the workforce will be able to generate greater value for the enterprise. In both the scenarios, modernization can impact the bottom line in a positive manner.
Furthermore, leveraging business modernization can enable enterprises to facilitate innovative models of working and resource utilization. Cloud modernization is greatly enabling remote and hybrid work which is adding great value for organizations. This clearly illustrates that business modernization augments resource efficiency to make it more value driven for the bottom line.
Become future ready with business modernization: Key takeaways
As we draw this article to a close, it is important for CXOs to acknowledge the impact that business modernization has the potential to create large scale value for the bottom line. Here are a few important takeaways:
- To impact the bottom line, it is imperative to make modernization a business priority and not just an IT priority.
- Business modernization can help ease into disruptions caused by uncertainty, rather than being caught off guard.
- The impact of business modernization on the bottom line can be manifested through new value generation with respect to greater productivity, performance, value-add focus and market alignment.
- Simultaneously, the impact on the bottom line is visible through cost savings from business continuity, security threats, non-compliance costs, etc.
Thus, business modernization can impact the bottom line for an enterprise in several ways and CXOs on the forefront of connecting these dots will be able to capitalize on the value faster than others. Stay tuned to this space for more insights on business modernization, templates for readiness, best practices and much more.