With popular culture killing off all of our familiar technology in favor of the latest "it" technology, it’s surprising that one of the five key technology trends for 2016 from Deloitte’s Consulting’s “Tech Trends 2016” report is that legacy IT systems are alive and kicking.
Looking Back to Move Forward
The new report, “Innovating in the Digital Era” has this to say about core legacy business systems:
“Core systems that drive back, mid, and front offices are often decades old, comprising everything from the custom systems built to run the financial services industry in the 1970s to the ERP reengineering wave of the 1990s. Today, many roads to digital innovation lead through these 'heart of the business' applications. For this reason, organizations are now developing strategies for reimagining their core systems that involve re-platforming, modernizing, and revitalizing them.”
An indication that core systems continue to run the business is found in the level of investment they are drawing. Deloitte’s 2015 CIO Survey found that “legacy/core modernization” was cited as a ‘high investment’ by more CIOs than another category. Yet, this same legacy/core modernization category was second to last in its ability to impact the business in the next two years (‘Emerging Technologies’ was last). If these technologies won’t impact the business, why are organizations continuing to invest so heavily in them?
The reason is deceptively simple. All the things that can impact the business like mobile enablement, moving to the cloud, business analytics and big data, as well as security and privacy technologies — depend on, or have to integrate with, incumbent core legacy systems. It’s not realistic to simply rip and replace decades old systems.
So paradoxically, you need to look backwards carefully in order to move forward successfully.
The bottom line is that to take advantage of the shiny new business models, technologies and opportunities, organizations need to modernize their core systems.
Follow the 5 R's
This sounds complicated: How do you move forward if you can’t jettison the legacy IT baggage that is slowing you down?
Deloitte suggests focusing on the following five R’s:
Replatform — modify existing platform infrastructure. Examples include updating software versions or porting code bases. This is usually a huge task and should only be done when necessary, or if the expected impact will be big enough.
Revitalize — add layers of new capabilities to existing systems. For example, focusing on user experience can deliver enormous value; creating apps for common business processes can radically improve business operations over using a generic web interface.
Remediate — integrate and reconcile duplicate data and systems. Simplifying data management and flows go a long way to simplifying how business gets done.
Replace — introduce new systems when it makes sense. The move to the cloud is inevitable for many needs, but do it in a selective way that doesn’t just replicate existing on-premises systems, or require a complete retooling of business processes.
Retrench — fight the urge to jump on the new technology bandwagon and leave well enough alone when you can. “Don’t fix it if it ain’t broke” is often a wise business decision.
The Deloitte Trends report covers a lot of ground, starting with the need to "right speed IT." Right-speeding IT means considering overarching factors such as the impact on all departments, platform architecture and requisite organizational changes before deciding on the scope and pace of each IT project under discussion.
Other trends to impact businesses in 2016 highlighted by Deloitte include virtual/augmented reality for business applications like training and field service, Internet of things for improving customer interactions, manufacturing processes, and supply chains, autonomic platforms for increasing the speed of development and implementation cycles, blockchain for creating new trust models between organizations, and business analytics/big data for creating a competitive advantage. Read the entire report here.
Get on the Right Track
The new Deloitte report highlights the reality that technology adoption lags far behind industry hype. Replacing complex and entrenched technology is only one half of the challenge. Changing business processes and worker behavior is often a more daunting task.
Which is why I find the report’s Amtrak case study so noteworthy. While focusing on updating core systems, the goal of the Amtrak project is to: “deliver a seamless and personalized customer experience across Amtrak.com, mobile, call centers, in-station kiosks, and third-party touchpoints, but it also encompasses a training plan for business and front-end users.”
Scheduled to roll out in 2017, it is intended to create a customer experience transformation. From the report’s case study, it looks like Amtrak is on the right track. All aboard!
Title image by Justin Luebke