With many businesses reeling from the impact of the previous year and the outlook still uncertain, 2021 may not seem like the best year to put ambitious plans in motion. But the events of 2020 have, in some respects, created an opportunity by providing a massive impetus for enterprise modernization.
Organizations have seen that measured approaches to change aren’t sufficient when business models and practices need to be rewritten almost overnight. So, they’re tackling transformation with new speed and vigor. A recent survey of boards of directors by Gartner found 69% had accelerated digital initiatives in response to COVID 19-driven disruption, with enhancing operational excellence and optimizing costs among the main goals.
Boards of directors responses to pandemic-related disruption
By underlining the urgent need to base businesses on more flexible and resilient technology infrastructure, the pandemic effectively dismantled what’s often proven the biggest single barrier to enterprise modernization - a lack of funding.
For many enterprises COVID-19 opened the floodgates, prompting what consultancy Harvey Nash and KPMG have called “one of the biggest surges in technology investment in history.” By their estimates, companies splashed out roughly US$15 billion extra a week during the pandemic to support remote working. Security, customer experience and cloud are the top areas of investment focus.
Technology investment priorities post-pandemic
2. Does modernization mean replacing everything?
Modernization isn’t limited to technological change, but it is based on technology underpinnings. The first big decision many enterprises are confronted with is whether to work with the technology infrastructure they have, overhaul it completely, or aim for something in between.
According to Taraporewalla, the ‘lift and shift’ approach - in which systems are simply picked up and migrated to the cloud more or less intact - is the default recommended by many tech service providers. But best modernization practice is more selective.
“Our recommendation is to replace systems gradually - but not everything,” she says. “It’s a bit like when you move house. If you cull before you pack up, and get rid of a whole bunch of stuff that’s not used, then you’re packing and moving fewer boxes, so the process isn’t as hard.”
Patterns of cloud migration
Six barriers to scaling digital initiatives
Rather than a handful of hard data, says Subramanian, modernization should be gauged by a holistic “scorecard to help understand and evaluate the fitness of the organization – how quickly you can respond to things that are thrown at you, absorb and react. So at the C-suite level, there’s an understanding of the pace of change and to what extent the necessary capability and culture that’s needed is in your business.”
Examples might include technology metrics such as release times, mean time to recovery, and incident response - but also robust indicators “that are less metrics than business benefits,” Laycock says, such as the speed of change, ability to innovate, customer acquisition or employee retention.
An enterprise modernization scorecard
“Not only do you need to set the strategy at the beginning – you need to continually question it, and question the ‘why,’ to make sure you’re still delivering the value you need from the transformation,” Taraporewalla agrees.
Emerging technologies and practices or cloud-delivered capabilities have significant potential to help the modernization journey, but Laycock cautions against adjusting modernization plans to incorporate every promising technology shift.
“There are incremental improvements all the time,” she says. “But I tend to think less about how they help enterprises modernize faster, and more about how easy they make it for new entrants to get up and running. Organizations often overestimate how much work it would be for a new entrant to come after their business.”
The best basis for modernization, then, is never getting too complacent. Ongoing volatility and rising competition provide ample reason for enterprises to be nervous and question long-cherished practices. Those that channel this unease into positive change, introducing more flexibility and speed where warranted, while retaining the skills and practices that continue to create value for the business, will be poised to make the most of the new ways of working and transacting that have emerged from a transformative year, and the recovery.
Any modernization push in 2021 will require considerable commitment and resources, but the payoff is “changing the way that the organization operates to support constant change” says Laycock. “Continuous improvement factored into the budget will keep your estate flexible, keep it adaptable, keep it resilient and ready for what’s next.”