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By George Earle and Mike Mason
This is the first part of a two-part series looking at application modernization. You can read the second part here.
Senior IT executives are anxious. A jaw-dropping 95% of them admit their business is falling behind. They’re being outpaced by an elite set of competitors—ones that have already transformed their IT dependent business operations—that have become digital businesses. These transformed companies are powerhouses: 96% of them exceeded revenue targets last year, and they’re more than twice as likely to meet revenue goals.
These companies enjoy other advantages too: they complete more IT projects on or ahead of schedule, and on or under budget, and their overall IT spending is lower. Digital organizations with highly evolved DevOps operations are also 24 times more likely to automate security, leading to more secure and security proactive organizations.
As a result, the 5% Transformed Elite are accelerating away from their competitors, perhaps permanently.
In this article, we’ll explore steps and techniques that allow companies to transform and modernize their applications, what it looks like when you get there, and the implications that has.
The Transformed Elite don’t have some kind of exclusive license or access to digital technology, market-responsive behavior or customer intel. Their secrets aren’t branding or marketing, but selected innovations and characteristics that were purposefully identified and built.
Everyone’s heard of Amazon’s “two pizza” teams, and that’s an important part of its collaboration strategy, but what’s more important is the capability those teams give to the business: Jeff Bezos has said that Amazon’s success is proportional to the number of experiments it can run in its business, every hour, every day.
Part of Amazon’s success comes from not being hindered by legacy systems. While this legacy has enabled other businesses to compete up until today, it won’t help them in the future: legacy estate reduces profits, eats up the operational budget and stifles your ability to innovate fast—your innovation cycle time is measured in months, if not years. What’s more, it impedes your ability to transform: in the competition for tech talent, nobody wants to work for a digital dinosaur.
Application modernization is fundamental to your ability to transform, your ability to deploy innovations in customer engagement or supply chain management, to deliver automated and flexible operations. And to use data to drive future growth.
Look at where the Transformed Elite standout. It’s their ability to harness innovative technology and make it a part of their business fabric. You can see this happening all around. Companies, such as Ocado, are using machine learning to improve the handling of inbound emails and drive up customer satisfaction. Or at tire maker Michelin, who has created a trucking service offering by deploying IoT sensors in its products.
During our work with the Transformed Elites, we’ve identified a common set of characteristics that they all exhibit. These digital business characteristics are essential to create new digital revenue, attract and retain talent, respond rapidly to marketplace changes, and expand one’s ability to commercially operate in new channels and markets.
The essential digital business characteristics of the Transformed Elite are:
- The customer at the center—ability to create meaningful and lasting customer experiences across multiple channels.
- Business outcome orientation—aligned investment around clear business outcomes. The pursuit of net-new revenue streams, products, services, and business models.
- Responsive to business shifts—can change direction and respond at the pace of the market, responds to business shifts using continuous innovation and rapid responses. Works in smaller chunks, with faster feedback and decisions.
- Test-and-learn culture—experimentation mindset and frictionless execution mechanisms. Makes knowledge-based and data-driven decisions. Uses “test and learn” culture to acquire knowledge before making major investments along the transformation journey.
- Technology as a core capability— alignment that technology is a key strategic unfair competitive advantage. Understanding of the benefit that technology brings to the organization. “Technology in the boardroom.”
- Strategic use of data as part of business strategy—decision making, product and customer interactions are driven by data. “Data in the boardroom.” “Data in the basement.” Data to infuse decisions at every level in real time.