April 11, 2022
It has been observed that businesses advanced their digitization plans by two to three years to adapt to the situation created by the pandemic. Enterprises were not only switching to a remote working model overnight but also seeking to make big changes to keep up with new customer behaviors, large-scale supply chain dislocations, and uncertainty like they had never seen before. This was classic digital transformation stuff -- leveraging various technologies, from AI to blockchain, to reimagine the way they met customer needs, went to market, or conducted their operations.
Halting this march was legacy, the infrastructure, applications, and processes that enterprises had piled on for decades into a complex mess. Each time they needed to extend a product, create an innovation, or run advanced analytics, they had layered those capabilities on top of the core system, because adding those features to the core itself was almost impossible. While this tactic bought the organizations some time, it gradually raised both architectural complexity and technical debt to unsustainable levels. Another problem was that adding legacy infrastructure capacity -- read data centers -- took months or even years. When the pandemic forced enterprises to change at speed and scale, they had to modernize their IT before they could transform their business.
This is living proof that modernization has come a long way since its early role of cost and efficiency enablement. Today, IT modernization is a prerequisite for digital transformation; it creates the infrastructure and business processes foundation on which enterprises build new models and markets as part of digital transformation. Accordingly, the reasons for modernization have also expanded to include cloud-led business agility, lower code complexity, and enterprise-wide automation and integration.
In addition, modernization delivers several secondary benefits as follows:
IT as a service model: Modernizing core systems using cloud also allows organizations to consume IT as a service off it. Hybrid cloud, and its poly-cloud/multi-cloud variants, offer unlimited capacity on-demand, extreme flexibility of (self-service) provisioning, and a variable cost structure so enterprises can access and pay for resources based on seasonality and demand.
Deeper insights: Another advantage of cloud is rich insight. Cloud offers unlimited data, as well as analytics, machine learning and AI solutions as services that enterprises can leverage to generate insights for market expansion, business improvement and other goals. Being highly flexible, cloud is ideally suited to enterprises pursuing “fail fast, learn faster” innovation.
Better security posture: Modernization lowers enterprises’ technical debt as well as their technology risk. When network modernization is included in the overall agenda, it allows security to be embedded in network design and thereby improve the IT experience of the business. Another critical driver of modernization is the need to upgrade processes and solutions to make them compliant with evolving security regulations.
Investment value: By modernizing their applications at the right time, organizations can continue to draw value from the money spent on them. This also reduces the likelihood of needing a bigger program to refactor applications or rewrite them altogether.
Fortunately, modernization is no longer the formidable challenge it used to be some years ago. Organizations can hand over IT hosting and provisioning to third-party cloud services providers, who specialize in this. Also, they need not worry about being locked-in with a single vendor forever, thanks to the emergence of multi-cloud and poly-cloud models. Even modernizing a major software system is easier than before. Take the example of core banking solutions. These are now componentized to enable banks to upgrade their legacy systems progressively. Also, their composable architecture allows various capabilities to be composed easily into innovative products and services. Finally, all modern core banking platforms are cloud native.
These advances also mean that every enterprise can choose its own path to modernization, upgrading in phases or doing it in one go. The sooner, the better.
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