December 20, 2021
It looks like 2022 will be the year that technology modernization becomes the norm, rather than a pivot driven by pandemic-related changes. Cloud-native adoption rose from 2020 to 2021, and in 2022, half of enterprise organizations take this path, including re-platforming or refactoring “to be based on cloud-native, rather than layering cloud-native onto their existing plans.” For CIOs in organizations not already on this path, it’s time to weigh the costs of modernization against the rising drawbacks of not modernizing -- and begin setting the stage for your digital transformation.
There are multiple facets to modernizing technology, starting with decision makers’ needs to balance the need to provide quality services -- established on the existing systems -- with the demands of innovation to meet customer expectations and maintain their competitive footing in the marketplace. For example, many organizations use legacy systems to deliver services that work for their customers, and they may hesitate to modernize because of the potential disruption to business operations.
However, these organizations have stacked up tech debt by sticking with those systems. Legacy systems can be difficult and expensive to upgrade. They often lack software maintenance support from the publisher. Unsupported systems present security risks, because there are no publisher-produced updates or patches to repair known vulnerabilities that hackers can exploit to steal customer data and proprietary information and to disrupt operations via ransomware and other attacks. That can create compliance, legal, and reputational risks for organizations.
As newer technology raises users’ expectations for performance and experience, it’s becoming more difficult to sustain good-enough applications with the right features to support business goals on legacy software. Unifying data that’s siloed in legacy systems can be difficult. Tech-debt problems can prevent business growth by making it hard to compete with companies that are using newer systems with better features and data-unification capabilities. For example, an organization with siloed data and apps running on unsupported software can’t match the quick development capabilities of a company that can build, test, and launch a new feature in two or three two-week development sprints using modern applications and data they can access in the cloud.
Technology Modernization and Employee Experience
New technology that improves the customer experience can also help employees work more creatively and efficiently. Forrester predicts that in the year ahead, “human-centered technology initiatives that form a tight link between customer experience and employee experience” will enhance competitiveness and yield 3% to 5% net productivity gains. Helping employees work more efficiently and have more positive interactions with customers, colleagues and vendors can also improve employee retention.
However, there is always a learning curve with modernization. Any organization planning a technology modernization program needs to factor in the need for training and enablement, so employees can get the most value from the new tech as quickly as possible. CIOs need to factor in time to prepare their workforce to support the incoming systems. That may require finding resources to upgrade current employees’ skills, hiring new talent with experience in the new systems, or a combination of upskilling and new hires.
The role technology plays in employee experience affects the organization’s ability to recruit top talent. Especially when companies recruit on college campuses, they often find that many candidates want to work on the latest systems and with the newest technology. When you can demonstrate to candidates that your organization’s technology aligns with their career goals and preferred development practices, you’re more likely to win in the intensely competitive battle for tech talent to support your modernization and CX goals.
Planning Your Organization’s Modernization Project
Successful modernization projects need an executive champion -- a chief digital officer, chief growth officer, or chief innovation officer who sets goals, ensures that the modernization initiative is a priority, and supports it across the organization. Depending on the company’s industry, business model, and customer relationships, this leader may also want to work with their best customers to understand what modernization approaches will deliver the most customer benefit.
With goals in mind, assessment of existing systems is the next step. Where are the organization’s current vulnerabilities, dependencies, and technical debts -- the software gaps, update needs and repair requirements that are hindering performance? This evaluation shows where and how the existing technology needs to change. It can also strengthen the business case for the growth journey by showing how and when it can pay for itself.
That leads to the next step, which is comparing costs to determine which approaches will be most cost effective and deliver the fastest time to break even. For example, is the business case stronger for having the organization run its own data centers or working with a cloud provider?
With an understanding of the company’s modernization needs and best options, it’s time to map the digital transformation journey. This requires planning to migrate, re-platform, retrain, and manage change in the most logical, least disruptive way. For example, the company might time certain elements of their transformation to align with retirement of aging hardware or the end of software licensing periods. These milestones can serve as trigger points for implementing new technology.
Finally, understand that technology modernization is a process that can take three to five years to complete, especially for a large enterprise with a lot of technical debt and many legacy systems. With the right champion, clear goals for customer experience and employee experience, and timing based on company needs and resource contract renewals, organizations can manage modernization in a way that enhances their customer relationships and employee engagement along with efficiency, innovative capacity, and security.
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