Management Perspectives

Many companies struggle to find the money, vendors, and teams to modernise their infrastructure and applications. But as they approach an all-digital world, it is no longer a nice to-do activity, but essential for competitive survival. But removing legacy constraints is only one part of a digital strategy. There are many more that managers and executives should pursue:

• First, make sure that your company understands what legacy replacement really means. Legacy is not simply an ‘upgrade’. It should be understood as preparation for market competitiveness. Legacy infrastructures and applications undermine initiatives that leverage emerging technology for competitive advantage. In order to ‘play’ in the digital world, companies need to see modernisation as a launch pad, not as replacement therapy.
• The end-of-legacy should immediately enable the development of a new digital strategy—a real one that was perhaps for years constrained by the reality of what ‘could’ versus what ‘should’ be done. Now there is no distance between business and technology. Said a little differently, all companies are, to some extent, technology companies. Post-legacy strategic thinking should proceed aggressively and creatively toward a business-technology strategy— comprised of objectives, scope, and competitive advantages—that enables profitable growth. It should also backfill the business model and business processes that fulfill the strategy. In short, post legacy companies should feel free to play in the all-digital world with a new business technology strategy that is communicated throughout the organisation. There should be no doubt that the company has been ‘freed’ of legacy constraints and is now positioned to aggressively compete.
• The need for transparent business processes and the business models they comprise, is top-of-the-list for post-legacy companies. Companies should identify the processes that can be improved, automated, eliminated or re-invented that will generate profitable revenue. They can do this through process mining. They should develop process inventories that describe and explain their products and services so they can see where opportunities— and landmines—lie.
  Process mapping is a discipline unto itself. Companies should invest in business process modelling, business process mining, and business process management – BPM3 – before they turn to the technologies that will enable process/product/service improvement, automation, elimination or re-invention.

• Next, post-legacy companies should identify the emerging technologies that will help them improve, automate, eliminate or re-invent their processes/products/ services. These days it is all about AI, machine learning, and generative AI, but there are many other technologies waiting to help. The key step here is to ‘match’ processes to technologies. This is where the real leverage lies.
  Some of the emerging infrastructure technologies include 5G/6G, no- code/low-code/ generative AI programming, data lakes and data fabrics, edge and fog computing, quantum computing, blockchain, cryptocurrency, hybrid/ multi-cloud computing and cybersecurity meshes. Some of the applications-focused technologies include social media analytics, wearables, augmented reality, virtual reality, robotics, robotic process automation, the internet of things, the internet of everything, 3D modelling and manufacturing, total experience technology, the metaverse and, of course, AI/machine learning/generative AI.
  The matching process should involve rapid prototyping to determine if the process improvement, automation, elimination, or re-invention is impactful. A prototyping shop should be created to enable companies to ‘fail-fast-and-fail-cheap’.
• Companies need to understand the full range of core competencies they need realise their business-technology strategy. They need to understand the distinction between brains versus brawn. Companies need brains to define their strategies, business models and enabling processes/products/services, and brawn to help them execute, which amounts to a sourcing strategy where companies should in-source brains and sometimes outsource brawn—never the other way around. Core competencies should always include brains; seldom brawn. They also need to understand emerging technologies and their trajectories. Matching—the ability to understand relationships among processes/products/ services and technologies—is one of the most important post-legacy core competencies.
• Post-legacy companies should also commit to innovation. Now that their legacy infrastructure and applications have been replaced (as well as some budgets), they can focus on the technologies that enables next generation business processes, products, services and business models. This is must have core competency. Innovation should not be a haphazard activity, nor should it be strangled with processes, such as a strict stage-gating methodology. Balance is the watchword here.
  While companies should encourage ideation, they should manage it within and slightly beyond their companies. The last thing companies need is an ideation free for-all. They should develop a set of due diligence criteria for advancing through the gates form ideation to impact hypotheses to prototype testing. The objective should be new processes, products and services, not fidelity to any official innovation methodology.
  Companies should also be careful about formal innovation organisational structures with their own chiefs, teams and budgets. The risk is that these organisations live to protect themselves, not to serve the overall innovation mission.
  The process-technology matching process should be the basis for innovative thinking. It can be organised as short-term, medium-term, and long-term— which is how most of us think about innovation. Post-legacy companies should not restrict innovation to long-term disruption, but should include innovation at all phases of a company’s lifecycle.
• Companies need the right talent to take all of these steps. It is likely that the talent necessary maintain and support legacy technology is completely different than the talent necessary to prosper in an all-digital world and take the steps described here. But post-legacy talent focused on business-technology strategy is hard to find and even expensive to keep. Another core competency? Absolutely. Incentives management is also part of the challenge, since the talent you recruit to your company is the same talent your competitors need. If you look at just one technology talent—generative AI—there is a shortage that has made the recruitment and retention challenge enormous. When did prompt engineering become a skillset?

Perspective

Post-legacy companies should keep some things in perspective. Here are seven:

1. Digital transformation can be incremental, modernisation-based, and disruptive. Companies should temper their post-legacy transformation with a mix of transformation targets.
2. AI, machine learning, and generative AI are as important as the media portrays. Companies should invest heavily in these technologies since they have major transformation potential.
3. Cyber attacks are inevitable. There’s no amount of money that can prevent all attacks. Some will occur. Make sure you’ve invested in insurance and the necessary technologies to satisfy the cybersecurity auditors. While your customers will be annoyed by breaches that affect them personally, they may not leave because of a single breach.
4. Track regulatory policy closely. One stroke of the pen can change your world.
5. Manage your post-legacy team carefully. Make sure everyone understands that now that legacy constraints have been removed, the company is free to re-invent itself with a whole new business-technology strategy—and that is exactly what it intends to do.
6. Make sure you innovate, which is the lifeblood of competitiveness.
7. All of this requires talent that understands business processes, emerging technologies, sourcing, process-technology matching, prototyping, and business-technology strategy.