Source | www.strategy-business.com | Leon Cooper | Milan Vyas
A version of this article appeared in the Summer 2019 issue of strategy+business.
The life cycle of information technology is becoming shorter every year. New competitors are disrupting industries by leveraging state-of-the-moment digital practices and processes. Customer expectations are constantly evolving in an accelerating race for the most advanced, hyperconnected, seamless experiences. IT functions are under unrelenting pressure to support leading-edge capabilities such as data analytics, cybersecurity, automated processing, and integration with third-party systems. The easiest way to do this is through platforms that connect everyone to the same cloud-based cross-industry digital infrastructure.
In this context, your company’s legacy IT system, which seemed so capable a few years ago, is rapidly becoming obsolete. The systems modernization you need today is more than an upgrade; you’re playing a new game with new rules, in which you modernize not just the tools and functions, but the way you do IT. The vendors are largely the same, but the options and principles of the past no longer apply. Hardware no longer stands alone. Sensors and Internet connections are embedded in practically every tool, including those that used to be purely mechanical. Software is no longer sold as a package to install. It is offered as a platform, by subscription from the cloud, is automatically upgraded, and is programmed in new ways.
Yet some of the most important factors have not changed at all. Organizations must remain focused on their competitive edge. Modernization efforts must create value for the enterprise. Investors and other stakeholders are as demanding as ever.
Understanding what to get right — the elements of your IT system necessary to reach your goals — is essential. Knowing how to get it right — how to plan, sequence, invest, design, and engage the enterprise around your technological modernization — is equally important. Some efforts fare better than others. We have distilled 10 principles that are common to successful efforts. You can think of them as essential guidelines for your digital transformation, from your legacy system to the platforms of the future.
1. Put Customer Value First
Although any number of factors may trigger a decision to modernize IT, one explicit goal is paramount: to deliver value. Every investment in technology should amplify the benefits for end customers, whether through better experiences, higher product quality, or operating efficiencies that reduce prices and add value.
Start by developing a solid business case for the modernization effort, showing expected value and innovation. Explicitly include (and agree upon) the most important outcomes for customers. Articulate, with clarity and precision, how each facet of the new IT system will contribute. You should be able to point to measurable improvements in key metrics — for example, customer retention, user experience, sales, productivity, and recruiting.