Information technology is constantly evolving. In order to keep up, you must transform your legacy IT system into a platform fit for the future, write Leon Cooper and Milan Vyas for Strategy+Business.
You updated your company’s IT system a few years ago, but it’s already out of date. You’re frustrated – of course you are – but you must adapt or risk falling behind.
It’s not enough to simply update your legacy system. You must revolutionise the way you do IT.
Leon Cooper, a director of PwC Australia’s Technology Advisory practice, and Milan Vyas, a director of PwC Canada’s counterpart, have investigated how numerous companies have modernised their IT systems, and discovered that those who were successful followed some common principles.
BUILD A PLATFORM FOR THE FUTURE
In order to transition from your legacy IT system to a system fit for the future, Cooper and Vyas advise following the following ten principles:
1) Put the customer first. Every investment in new technology should improve the end product or service for your customers. Start the process of modernising your company’s IT system by building a solid business case for it.
Outline how each component of the new system will contribute to improvements in key metrics, e.g. customer retention, sales or user experience.
Set up cross-departmental teams to plan the modernisation, enabling IT staff familiar with the latest technology to connect with employees responsible for the day-to-day running of the business.
- Why do we need to enhance or transform our technology right now?
- What problems do we expect to solve?
- How will this change deliver value to our customers?
2) Simplify your architecture. In the past decade, your IT system has probably evolved in a “haphazard and as-needed fashion” resulting in a “complex network of technologies”. It functions, but it isn’t easy to make changes.
Things have moved on. Today different systems, e.g. payments or customer relationship management (CRM), work on one easily configurable modular platform, and the software-as-a-service (SaaS) model enables companies to integrate new functions on demand – just like downloading an app on your smartphone.
You can now combine high functionality with ease of use. “Standardisation of software code and integration standards have enabled systems to interact more fully without requiring bespoke design,” write Cooper and Vyas.
- How can we best simplify our technology systems environment?
- Where is the modularity in our current systems environment?
- Is it flexible enough for our needs?
- What data and functionality will be accessible – from customers, business partners and operations – when we better integrate our system?
3) Design for flexibility and speed. Constant innovation is key to the success of a modern business. Your company must learn to adapt at speed or risk failure. Your IT system must be able to adapt with it.
In the old days, IT systems competed on functionality – performing one or two tasks to a high standard. Today’s modular platforms allow much greater flexibility. Choose a platform that supports a range of plug-and-play functions so your staff can reconfigure it as the market changes.
Test your new platform or upgrade using the minimum viable product (MVP) approach. Install only the features necessary to demonstrate the system’s value and test the MVP on a sample group of customers and/or staff.
Artificial intelligence (AI) and machine learning (ML) will allow your new IT system to learn customer and staff habits.
- What aspects of our existing system is constraining our speed with respect to change?
- Are these aspects necessary?
- Are there better ways to change direction while managing risks?
- What kinds of unexpected changes have we needed to deal with in the past?
- What do they suggest about future designs?
4) Engage with your workforce and culture. You can’t just change your IT system and hope to succeed. Your employees must be on board with the new direction your company is headed in. Align the new technology with your company’s culture.
Encourage staff to get involved in the transformation. There will be a handful of “authentic informal leaders” who are fully onboard with the modernisation. Seek these individuals out and work with them to identify potential stumbling blocks and formulate a plan to overcome them.
- What do people need from the new IT system to be productive?
- How do we know?
- How technologically capable is our existing workforce?
- What skills do they already have and what do they need to develop?
- What kind of cultural changes need to occur for new systems to be adopted?
How do we create them?
5) Adopt a services mindset. Modern platforms are more open than they used to be. You will no longer host and manage your systems in house. Services will be outsourced. When a service is no longer effective, you can replace it.
- What are the essential technology services we provide to our organisation?
- Are we organised and funded according to the outcomes we provide, rather than the assets we manage?
What other services could we offer in a cost-effective way if we were better organised to do so?
6) Plot the journey before starting. Iconic companies such as Apple Inc, Honda, IKEA, and Starbucks are successful because they all started out with a clear vision and developed their business models to deliver it.
Having decided on your direction of travel, based on customer value, create a “systems modernisation road map” – a series of milestones to be reached along the road to success.
Senior managers from across your company must support the changes you plan to make, forming a “guiding coalition” of “change champions”.
Your journey is planned, but it is not set in stone. It must be “self-correcting”, with each step providing a learning opportunity.
- What are the critical steps in our migration to a new system?
- Who will we bring together to implement each step?
- How will we adapt our plan to “course correct” when things don’t go as expected?
Who needs to be part of our powerful guiding coalition?
7) Organise by capabilities. You will not be ableto overhaul your IT system all in one go. The best way to organise the transformation is by highlighting your companies distinctive capabilities – those that differentiate you from your competitors and provide greatest value to your customers – and working to enhance those capabilities.
- What are the most critical capabilities that differentiate our company and provide value?
- How will our IT modernisation enable and enhance these capabilities?
What technological solutions and vendors fit best with these critical capabilities?
8) Be agile and user centric. Do not wait to release your new IT system all in one go. Instead, release functions as you go along.
Cooper and Vyas advise using “established agile frameworks, such as Scrum, Disciplined Agile Delivery (DAD), the Scaled Agile Framework (SAFe), DevOps and Lean IT”, for design and development.
Test new features on employees and customers, build your own system to interpret user feedback and incorporate it into the design of your new IT system.
- Who will benefit most from the changes, and how are they engaged?
- How do our analytics improve our knowledge of their experiences?
How do we pivot and change our approach when we need to?
9) Invest in resources that make the change stick. Before you embark on transforming your IT system, conduct a careful analysis of the resources needed to make it a success.
Carefully select the team that will oversee the modernisation, ensuring each team member has a “strong bias for change”, and highlight your highest modernisation priorities and align funding with these priorities.
You will have to keep your legacy IT system running during the modernisation and train your employees to use the new IT system. Make sure you budget for this.
- Which IT investments are linked to the greatest return?
- How do we realign resources to support the transformation while running the business?
What skills will be needed with the new systems, and how do we build them?
10) Partner based on shared values and trust. Choose your long-term partners carefully. You are not simply making a transaction.
“Your goal is to find companies that can deliver mutual benefits and with which you can develop a working relationship that involves mutual commitment and creative collaboration as well as a fair deal,” write Cooper and Vyas.
- What are we looking for in a partner?
- What values are important to us?
- What criteria will we use to ensure that our partner has similar values?
- In committing fully to a partner, how can we build mutual trust?
MORE THAN JUST TECHNOLOGY
It’s important to remember you are not just changing your IT system. You are changing the way your company operates.
“In modernising your company’s technology, your goal is an effective and sustainable vehicle for strategic success,” conclude the authors.