Why enterprises need to modernize?


Written by: Gautam Khanna, Vice President & Global Head, Modernization Practice, Infosys

As the business environment is becoming more dynamic and unpredictable, adaptability has become essential for sustaining growth and profitability. According to the 2021 Deloitte Global Resilience Report, two-third of the CXOs still feel that their organizations are not resilient enough to face the world, while 70% lack confidence in their organization’s ability to adjust to unforeseen situations.

The business landscape is continuously evolving through disruptive innovations. For example, one of the world’s leading electronics device manufacturers is now getting into electronic vehicle manufacturing. A Chinese internet service provider has launched an autonomous taxi service. Innovative companies, including start-ups, are altering the age-old banking industry by reforming the supply chain. Other external factors such as financial, societal, political, and natural events also force businesses to evolve continuously. Now, more than ever, organizations need to be nimble and adapt to change to remain competitive. “Disruptive innovation with a focus towards sustainability” has become the new mantra to be future-ready.

As a strategic imperative, organizations need to continuously redesign and evolve their products/services, processes, and people. A recent survey from Mckinsey claims that to be future-proofed, 72% of CXOs are planning to redesign their process, and 76% are looking to modernize their systems with NextGen technologies.

Legacy systems hold organizations from being future-ready
While modernization initiatives are surging across industries, many organizations still operate in legacy environments due to fear of change, lack of skilled talent, and budget constraints. Those organizations often struggle to keep pace with the speed of innovation, changing business context, and customer demand. A few key factors that get affected due to legacy systems are as follows:

  • Legacy systems impact organizational adaptability: Legacy systems are often rigid, inflexible, and difficult to maintain. Any changes in the processes, application, or architecture are seen as risks, which can be a roadblock for future innovations. Organizations are not willing to accept these changes easily as they fear they will hinder their business.
  • Legacy systems affect organizational responsiveness: Organizations operating on legacy systems do not have the ability to respond to changing customer demands and business needs rapidly. This curtails them from rolling out new products and services with lesser time to market.
  • Continuing with legacy systems will make organizations irrelevant for the future: As legacy systems are getting outdated, they often lack upgrades, and associated skills are becoming rare, making legacy organizations inapt for the future.

    As legacy systems make it harder for organizations to achieve desired business results, modernization has become imperative to remain relevant. A Crisil survey suggests that 60% of the organizations that adopted digitalization performed better than their non-digital competitors during the pandemic.

    The modernization process can be rolled out based on the organization’s needs and urgency. The most common ways to modernize are:

  • Transforming small components of the legacy system on an incremental basis.
  • Both old and modernized systems coexist for an extended period, and extensive data exchange occurs between them.
  • The legacy system is completely modernized, and the new system does not interact with the old system.

    While modernization has been proven to be relevant for an organization to sustain, the above methodologies can lead to business disruption. The best approach to address this would be to adopt a non-disruptive approach to modernization.

    While design principles, methodology, and technologies are key principles of non-disruptive modernization, it is driven by the philosophy of ‘micro-changes’. Organizations also need to align their non-disruptive strategy across several layers of their operating model like user experience, application integration, and digital infrastructure.

    With accelerated technology adoption, IT skills, business processes, and constantly changing market demands, organizations saddled with legacy systems are accruing higher business risk. An organization with the right skilled workforce, an appetite for change, and a drive for innovation can execute a successful non-disruptive modernization.
    However, modernizing without a clear vision, goal, and strategy may result in business disruption. Hence, organizations need to carefully assess their current state and choose the best approach with aligned technology to accomplish business objectives and reach their full potential with zero business disruptions.


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