The business landscape today is quite different from what it was a decade or even five years ago. Business needs are constantly changing making it mandatory for organizations to pivot to meet these evolving demands. In our previous articles in this series focused on business modernization, we have highlighted the need and benefits of modernization, outlined a strategic approach to modernization, and also prepared a checklist that can help an organization assess how ready its business is to start its modernization journey.
The constantly evolving technology environment pushes businesses to be agile and modernize if they wish to remain relevant. Organizations not only have to remain up-to-date with the latest technologies but at the same time have to adhere to the compliance standards of their industry.
Mitigating the top challenges to business modernization
In the process of business modernization, organizations will be faced with numerous challenges. These can act as a roadblock and hamper modernization efforts. Before kick-starting the business modernization journey an organization should look out for the key challenges that they might encounter and ways to overcome them.
Challenge # 1: Maintaining a momentum
Modernizing the entire business operations can be a huge project, spanning over a few months or even a year. The large size of the project and the long duration may result in losing momentum while on the way to modernization. This can be one of the biggest threats to a modernization project. With time, the project might be seen as a money-pit or the teams working on it might get overwhelmed as the project might look too much to handle. This may lead to abandoning the transformation project mid-way.
How to keep the momentum going for modernization?
To avoid losing momentum, one needs to start with a clear vision for the business. There is a need to take a stock of the existing technologies and identify where changes and upgrades are needed to reach the business goal. Once these are in place, the planning of the modernization initiatives can begin. After this, the incremental steps can be mapped and the project can be split up into smaller tasks. Completing small tasks can help gain some traction and momentum in the project. A sense of achievement will help boost the morale and confidence of the team as well.
Challenge # 2: Dealing with internal resistance
Business transformation requires the involvement of internal stakeholders i.e. directors, key management personnel, managers, team members, etc. When modernizing legacy technology, there is bound to be some level of resistance. There will be a major shift in the culture and day-to-day activities of the company once the transformation is complete. This cultural and operational shift will be felt by employees across the organization. And if the employees are forced into the transition without understanding the how and the why they will resist the change.
How to drive employee and leadership buy-in to mitigate internal resistance?
Dealing with this requires engaging with all the different teams to understand their concerns and take their feedback on the proposed modernization plan. Establishing a task force having representation from departments other than IT such as HR, marketing, sales, finance, legal, etc is important. This will ensure that all perspectives are taken into consideration before and during the modernization leading to minimal resistance to its implementation.
The internal resistance will not just go away by stakeholder engagement. Along with collecting their feedback, the implementation team also has to assess the readiness of the different departments in terms of skills required to work with the new technologies. Training needs have to be identified to make sure that the employees are equipped to work in the new environment.
Challenge # 3: Justifying the costs involved
Modernization requires large amounts of funds and getting the budget for it approved can be an uphill task. The short-term costs can be quite high for such projects. A large portion of the IT budget goes into supporting and maintaining the existing system. The higher the technical debt of an organization, the higher the percentage of funds needed to run the legacy applications. This leaves little funding for modernization projects. Many high-level executives might feel that if the current system is working then why change it? There has to be a balance between maintenance and modernization.
How to create a business case for modernization?
The need for change should be justified by metrics such as quantifying the direct cost savings, the business value, the return on investment (ROI), new business opportunities, better and faster decision making, competitive advantage, etc.
Challenge # 4: Maintaining business continuity
Legacy applications generally support the daily workings of an organization. This can make ensuring continuity amid business transformation difficult. The applications supporting the core business operations would have large amounts of data related to the business. Loss or exposure of data can be detrimental to the business. This legacy data needs to be protected during the transition. Data migration from legacy systems to the new system can be a challenge if there is a difference between the encoding of the two systems. When designing a migration strategy, organizations should anticipate the risks and come up with solutions to avoid data mismatch or loss. The data security plan should conform to the industry norms.
How to ensure business continuity?
Instead of completely discarding the legacy system, in some cases, the new systems will be functioning along with the legacy system. In such scenarios integrating the legacy systems into the modern infrastructure can be difficult. The modernization journey should be planned in detail to ensure that business operations are not hampered. Modernization Subject Matter Experts (SMEs) with specific domain knowledge of the industry undergoing modernization can be brought in to direct the change management process.
It is quite clear that there are many challenges that are likely to come along the way in a business modernization journey. Here are the top pitfalls to look out for and address proactively to ensure high impact results:
- Inability to maintain a steady momentum: Have a clear goal, action plan and stakeholders identified, measure and celebrate success in real time.
- Internal resistance: Create a business imperative for modernization and illustrate how it can practically empower everyone in the organization.
- Justifying costs involved: Look at the biggest picture and create a return on investment plan taking into tangible and intangible returns.
- Maintaining business continuity: Have a steady working plan taking into account all aspects that could potentially be impacted and a clear path for each.
Addressing these challenges proactively can enable enterprises to tread on a successful path to modernization to reap the multiple benefits and far reaching impact.