The journey to enterprise modernization starts with value

Podcast Transcript

Tania Salarvand:

The challenges of the pandemic have prompted enterprises to modernize their technology but modernization projects have been met with some challenges and companies are finding that seeing the process through requires more than just dollars. Welcome to Pragmatism In Practice, a podcast from Thoughtworks, where we share stories of practical approaches to becoming a modern digital business. I'm your host, Tania Salarvand. Joining me today is Sarah Taraporewalla. Sarah's had almost a decade and a half experience working as a technologist for Thoughtworks. She spent most of that time working in either remediating systems or modernizing processes, people and systems in our current client organizations. That experience has allowed her to build her experience in enterprise modernization and she now leads our enterprise modernization platforms and cloud practice in Australia. Welcome Sarah.

Sarah Taraporewalla:

Thank you for having me. Hi, Tania.

Tania:

Thank you for joining us and let's jump right in. As I mentioned before, you've been in this space for quite some time, talking about modernization, enterprise modernization, cloud modernization and everything in between. How has the current climate really highlighted that need for modernization?

Sarah:

As the world rapidly faced lockdowns and companies were forced to implement remote working conditions for the first time last year, one thing was clear, you can't operate if you don't have a digital presence. That reigned from the customer interactions that businesses had with their people and the story that I find amazing gyms, finding a new need for a digital front door and new ways to connect to their customers because everybody was stuck at home. Also extend itself to just the core internal systems, systems that had been traditionally locked away in cupboards within a company where their access was determined by the physical presence of their employees in their actual building. They were forced to scramble to put in place VPNs that could handle the load of everybody working from home and also the firewalls and extra security measures that were required as teams quickly and in very short of place of time rushed to be are working from home.

Fast forward a year and we are seeing the results of this mandatory experiment in digital. Now, as something that I've recently read from Gartner shows that 69% of companies have accelerated their digital initiatives in response to the COVID driven disruption. With enhancing operational excellence and optimizing the costs being those two main driving forces. So I think something very interesting happened last year. Now, previously modernization projects were on companies' radars, they were on the roadmap, but they just couldn't get them and a lot of the technology leaders, they just couldn't get that business buy-in because their systems were adequate and they were running fine. But what we have seen through this climate is that acceleration to digital and that acceleration of these modernization programs and you know what the thing was holding organizations back previously, money, funding. But now the flood gates have opened.

It makes complete business sense. Flood gates opened and so are the wallets. Now, apparently companies splashed out $15 billion extra a week during that pandemic to support remote working. So it was a little bit of a no brainer right now to accelerate those plans to become digital because if you don't, I bet you that your competitor will.

Tania:

That's a great point, part of it is meeting our customer's needs, the other part is you will get disrupted very quickly if you also are not embarking on some of these initiatives. You mentioned this a little bit, but I'd love to dig into the different types of modernization projects. You said that, obviously there are a few that are elevated and visibility has shifted at the few that might be based on urgency, can you tell us a little bit about what these different types are and can they all be tackled at once? Do they need to be incremental? How would you advise?

Sarah:

Usually we see about three different flavors for the modernization. So on one end, we've got more of a directional step change, so as companies are looking at the backlog and doing features, they're evolving the system that's existing and in place, and that can work well if your system is quite adapted to change already and it's only a little bit of a step change in directional change that you need. On the other end of the scale is the big bang approach, which is what a lot of people are used to, tools down, work on our remediation project, and don't come up for air until we've got the full system replicated in new technologies. But there's this happy middle ground that is complicated to achieve, but the best way to realize the value and early value and that is this gradual replacement of subsystems.

So pulling at the seams, starting with looking at what the shortest path to value would be and what thin-slice you could pull off your bigger system and modernizing that and focusing on that to bring that one over the line. You end up with this old new hybrid of a system, but it's the shortest path to that value. Determining which way is best for you and for your situation, will actually be determined by your motivations and what drove you to your modernization plan. Sometimes you just have to rebuild your system from the ground up but if you do that, you're probably giving your competitors a couple of years free advantage by them just being able to capitalize on your lack of improvement to your system.

Tania:

You bring up a really interesting point around taking that first step and what that means and figuring out what that means for you and your organization. What is the advice that you've been giving leaders, especially in the last year on how to get started? How do they prioritize and how do they know where they actually begin the journey?

Sarah:

So the first thing that I tell them, let's have a look at the business strategy because the technology strategy that we have for this modernization needs to support what the business does. So we start by having a look at what the business is today and where it needs to get to tomorrow and then start looking at where we are currently, what our systems can do but I look at it through four different lenses. The systems themselves are definitely one of them, the product itself and what it achieves for the customer and what we need to do for customers of tomorrow is another lens. The third lens is the processes that we use to build and run these teams so that we can put the focus back onto the solving business problems.

So take it away from technical challenges that we have and put it back into the business hands and the fourth lens, which is often forgotten in these modernization programs is the people and that's the change management of the people themselves and what journey you will need to support to help your people themselves modernize their skills or modernize their practices to support your technology strategy. With all those changes, what we do find is that there is a cultural change, which will happen through the course of this modernization project to the organization. So that is something to be prepared for.

Tania:

Which really brings up a good point. It's usually not the technology, that's the hardest part believe it or not, it's the people, it's the change, it's the culture and thinking about that as you just mentioned, companies have the hardest time adapting or responding to change. Whether that's changing their internal processes, change in the environment around us, what advice would you give to them at this point about their enterprise modernization and what to take into account?

Sarah:

So the first thing to remember is if you are going to be stuck in the same way that you worked in 2019, you are at a competitive disadvantage because your direct competitors are going to be thinking about the same problems as you've been tackling as well and what our research has shown with the 69% of companies already addressing their digital change and their digital transformation projects, you will be at risk of being stuck in the old ways of working. What we know customers expect, businesses expect, and employees themselves expect is that the world will no longer be the same as it was.

When people are no longer expected to go back to the office full time, customers having gone through that digital experience, realizing that we don't have to do all of our shopping in a shopping center, that we can get through Christmas, we can get through birthdays and holidays without the need to go visit shopping centers. That we can get loads of our daily interactions through digital touchpoints. If you don't think about what this means for your business, you will be stuck in a Kodak moment. By not pursuing the enterprise modernization programs regardless of how hard they might seem, if you don't do this now, your business won't survive.

Tania:

For leaders who are going to boards of directors or even to their C-suite to request support and or funding for these types of engagements, what do you find are the most important things that they need to convey? What points to come across?

Sarah:

So we get opportunity to really have a look at all the assets that we own and work out, which of those assets still serve our business. So as part of the modernization project, what we tend to find is that there's a whole bunch of systems that cost us money because we operate them, because we have to support them and maintain them that actually are no longer serving the value to us as a business and also to our customers. So if taking the 80/20 rule, there's 20% of cost savings that you can get by reducing everything that we're holding onto. We also see operational efficiency because as we modernize our processes, we're thinking about the easiest way to get value to the customer. So by enabling our development teams to quickly and rapidly get that value and the code out into production by providing a tech platform is speed to market.

So the speed to actually get the value back into the business, as well as just the cost to develop the projects goes down significantly. The other advantage that we get is by looking at all of our assets, we can start consolidating all of the assets together. So we're working with a client where taking a look at everything they had, we had about 30 different log frameworks in there, and all those 30 different log frameworks needed a security patch. So there was repeated effort that we had to do to each one of those log frameworks to upgrade them. Now when we moved to the tech platform, we didn't scale it down to only one, but we had a couple of options that the project teams could use and then the platform team themselves took care of the security patching. So we got a lot of operational efficiency and cost savings through that.

Tania:

You've talked a lot about the impact across multiple aspects, not just technology. Can you tell us a little bit about the impact that you've seen or a workforce or best practices around internal organization?

Sarah:

So the one thing that we know with our modernization projects is the team structures that supported the existing systems, they need to evolve to support as modernized system and when we say modernized, what we're talking about is a system that is continually evolving and has that continuous improvement baked into it. So not only does the system itself think about the evolutionary architecture and we constantly improving on it. Our processes are constantly being improved. And we're seeing that teams that are shifting to be more cross-functional and formed around business products and problems being more effective in the business. As we build out internal platforms to let teams have autonomy, if we also shift the teams to have that cross-functional where we've got business, we've got tech, we've got all the different roles, like user experience represented within the teams, they start to have that autonomy to innovate and to build products and take them to the market faster.

So what we see as we start our modernization journey is as we evolve our systems and there's a little bit of a Conway's Law that happens, our systems get broken down, but our teams get broken down at the same time and the teams start to form more so around the business value that we're producing and less around the role that the developers or the business analysts play within the team, within the organization. So we see in lock stead this organizational transformation, which requires its own change management process to accompany the modernization of the systems.

Tania:

As we embark on this and have cross-functional teams and lots of different pieces and parts begs the question, what's kind of an anticipated timeline for a successful enterprise and modernization, and what challenges can different leaders anticipate along that timeline?

Sarah:

This isn't going to happen tomorrow. If you think about your business, how long has it taken to build your business to date? We've been talking to companies that are 15, 20 years, a lot longer, even companies that have been around for five years, they're finding that everyone is very keen to do this modernization journey, but it usually takes about three to five years to actually really start to see the value. And just like we know how long a year is, I think finally we realize a year can be very long. We're going to get fatigued on this journey. So it's important to recognize that through that three to five year journey, it does take commitment and there will be times when we will not be thinking that we're getting the value from the program. Now maybe that is the case and that is where we encourage a continually evolving technical strategy, constantly revisiting the business strategy and constantly looking to see if the landscape that started the journey is still the same.

But we also know that it does take effort. The one thing through that three to five year journey that you don't want to do is only deliver the value at the end of the five-year journey. So as we go through the program, one thing is to recognize it's a long program process and the process needs to accommodate the people and the people change aspect to it because a lot of the time, that's the thing that will get in the way. By thinking about what thin slices are that we can deliver and taking that gradual replacement model where we're thinking about not minimal viable product, as you would in a grain filled world, but what's that shortest path to value? So that we can actually start seeing the small incremental changes, our customers can see that we are doing things differently and better, and that we do get that sense of that feedback loop happening to help inform the direction that we're going and also that we're making positive changes.

Tania:

Yeah, I think that's a very important point. We talk to a lot of clients who expect to see something immediately and why is this taking so long? And I think the full spectrum is not an overnight thing, and you're pointing it out quite nicely and showing those wins along the way, not only helps your progress, but also makes sure that you're on the right path. I think that's something that you were alluding to as well, which is very important is that it's something we talk about. It's about a modern digital business, not about digital transformation. You don't fully transform and turn on the light the next day and it's a whole new business. It's constantly evolving and I think that's really important because evolution really is based on all the things that are happening around us. Take the pandemic as an example, you can't predict it. Along those lines is there any new or emerging technology that you believe leaders should have on their radar if they're considering a project like this? I know this is constantly again, changing over time, but anything come to mind right now?

Sarah:

So a lot of teams trying to cram in as much of new tech as they can in the modernization journey. They use AI so that they can have AI built in there. They use CAFCA because that's the thing that the teams are using these days. I think the first thing that I would urge against is just jumping on the new technology for the new technology's sake. Even if it's on other company's radar, still assess it to see if it makes sense for you. Now, maybe the use of AI or machine learning might actually help migrate a whole big chunk of your customer interaction subsystem over and if there is a right fit for purpose, there are differently really exciting technologies coming out of the machine learning space and the AI space. Data mesh is another thing that it's emerging. Which is really interesting the way to merge these data streams together so that businesses can actually have access to all of our data. That's something very interesting as well.

A lot of that is put together whereas we see a lot of our modernization projects being put together with event streaming and the use of CAFCA. But I would say when looking at those new technologies, just make sure that they're a good fit for purpose, but also it's okay not to start with that new technology. If you baking in that evolutionary architecture, start by just pulling the old stuff into the cloud for instance, and then start assessing to see whether it could be replaced by one of these new technologies. Because one thing that we do know we will get a newness overload as we do these projects, and there is a limit to the amount of new technologies your team will be able to handle and master. So it's important to think if I'm jumping from an MFC app, putting it into the cloud and .Net with react, using containers. That's a huge amount of new tech already that doesn't necessarily sound new and exciting if you think about our industry, but it's new and exciting for your people because they've been stuck in data centers.

They've been stuck with MFC, C++ apps or mainframe systems. So new and shiny is very cool and it's good to keep on your radar and experiment with, but just have innovation tokens or something to dial back the number of new techs that you introduce at the same time.

Tania:

I think what I'm hearing Sarah, correct me if I'm wrong is meet your organization where it's at now and don't try to take it from now... for some organizations, it's quite a leap to go five years in the future, forget about 10 or 20 years in the future. So meeting them where they are now, helping them take one step at a time and advancing it, it helps better than to completely redo the whole thing from scratch and brand new. Which makes me question, what are some of the common things that you've been seeing with the clients you've been working with that are considering enterprise projects or things that you've seen in the last year? Any themes pop out?

Sarah:

So as we started in the lockdown, it was very tactical. So thinking about putting in the security practices required to expose our internal data centers and our internal systems, quickly throwing everything into the clouds to remove the need for people to be in the office to maintain the systems and quickly innovating on new customer channels. I think for me personally, the most innovative industry that I personally experienced through this was when gyms decided to offer online classes at home or something that we never thought could happen suddenly. I had my gym instructor in my living room and I was still doing my exercises. But now that first phase of advancements have been made, our clients are looking at it more strategically and more as that enabler for the business. So the industries which have been forced to take the pause have been able to use that time to work out different and new directions for their business and what that strategy might look like to meet and be more resilient and have that modern digital business.

They're also asking the technology leaders to help them enable them. So giving them that seat at the table, seeing how they could move to that tech core company, because that's that next generation of companies that we're seeing really advancing. We've been forced to take a break and as we've personally been stuck in our houses, and we're finally starting to notice the paint work deteriorating on our walls or the rooms which no longer serve our needs and with plenty of time and little to do, we're rushing out to hardware stores to buy the paint, to give our houses that attention that they deserve and so too with our systems and our technology teams. Which ones seem to be working okay and adequate for what the business was doing, they're not looking so good anymore, and they are starting to be refreshed.

Tania:

That is a great analogy Sarah, that I think many around the globe can really relate to, so thank you for sharing that. One thing that I think is obvious and you've talked to it a little bit, is just what measures success in this environment and how would you suggest business leaders measure their progress and how do you rate success?

Sarah:

So there's two indicators that we typically use. We've got the leading indicators and we've got the lagging indicators and as we go and look at what the next thin slice is, we have a think about what are those measures of success. Now a leading indicator might be the adoption rate. So the number of our customers choosing to use our new system over an old way of working and then over time, it would be around actually realizing the value through that. So those leading indicators to help us see whether it's actually being adopted, whether we can bring on a new customers into these new modernized interaction points.

For technical teams themselves, there are measures to see how the teams themselves are performing and I really like the work that the crew behind the Accelerate and the State of the DevOps report did on those four key metrics. So having a look at the speed that we take to get an idea out to production, and not only thinking about how quickly it gets to there, but also once it's in production, how stable our system is. So using those four key metrics from Accelerate to have a look and judge the effectiveness of our delivery centers.

Tania:

Sarah, I can absolutely see the passion in the stories that you're telling and the experiences you're sharing and it's something you've obviously been doing for quite some time, which I think is really great. I've been learning a lot through this, but I'm curious for someone who is just embarking on this maybe for the first time thinking about what this even means for their organization or for the first time actually spending any real money on enterprise modernization of their systems in general. What do you think is the most important consideration for enterprise modernization this year and as we hopefully come out of the pandemic soon, what are some of the things that people should really be thinking about or have top of mind?

Sarah:

The first is what is our technology strategy going to be and how does that actually support our business strategy? So really the first question is what is our business strategy? What is our problems, what are we trying to do with our business, how we were growing in different areas? Then taking a look at our technology organization and having a look at where we are, how that will be supporting that business strategy of tomorrow and thinking about what does our modern digital business look like? So we've got tools to help people think about the digital fluency model, which is on our website, where you can really assess where your business is in that digital journey and to work out what is that next thing that you should be thinking about and tackling.

Tania:

If we were to think future state, what will a typical organization find most valuable from a successful enterprise project this scale?

Sarah:

The ability to not repeat this. So that baked in resilience, that baked in continuous improvement, I think where these modernization projects fail is the fact that we're doing them five years, 10 years down the track. That what we have failed to do, we might have migrated the systems over, but we have failed to change the fundamental culture of our business to continually meet that changing landscape and having that resilience baked into our organization.

Tania:

Well, Sarah, I think there is a lot we can take away from this and clearly a long way for many organizations to go and as you mentioned, enterprise modernization is only as modern as today. So as things continue to evolve and you put your three to five-year plans together, just know that you have to be flexible and adaptable to both the things that we can't predict like a pandemic and things that we know we can predict like culture and people shifting things that are harder to shift. Any parting thoughts from you Sarah, as some of our leaders and some of our listeners think about what this means to them?

Sarah:

It's a long journey. It's a long journey and we need to be prepared for it, but we don't have to wait until the very end to actually know that we're going in the right direction and to start to see that value from this path.

Tania:

Well, thank you so much for joining us today, Sarah. I definitely took a lot away and I'm sure our listeners did as well. If you'd like to hear more, please come to our website, Thoughtworks.com/podcast.

Thank you again.