Core systems modernisation
For COO, CFO, CIO, CTO and Line of Business Executives
The foundations for business modernisation.
A vast majority of executives believe they are well advanced on their technology journeys making use of cloud to modernise their businesses. However, most of the efforts to modernise with cloud adoption so far have been largely focussed around IT undertaking ‘migration’ initiatives of business and technical applications with a target outcome of cost savings, operational efficiencies and reducing technology debt.
In our view, this only represents the first 30% of the business value that modernisation that cloud promises.
These executives also said their business accelerated their transformation efforts over the last 2 years in the face of rapidly changing market environments.
In financial services for example, that meant income under pressure with balance sheet margin compression, and the race to capture deposits and streamline costs to optimise margin spreads. For public agencies, this meant the continuing need to modernise an offer improved services to citizens and communities that needed careful use of a citizen’s personal data and effective and relevant agency communication of services and entitlements to each citizen.
Notwithstanding the hype and race to inject AI, and use it effectively, responsibly and securely, the need for businesses to rapidly develop superior digital capabilities does not seem to be slowing down.
So what does this mean? and what are the next couple of (correct) steps on this journey?
We believe that ‘migration’ approaches are not enough. It is now necessary to refocus digital capabilities with rethinking ‘modernisation’ of core systems. Core systems being systems of engagement (like customer channels, CRM systems), systems of integration and analysis (that stitch your business information and provide insight; by the way, AI needs coherent datasets to be useful in any way), and systems of record (like your business’ corporate, sales, customer transaction data).
Businesses that focus on modernisation opportunities that deliver value in business terms will find the remaining 70% of the value, enabling business agility and growth. Executives with their teams should evaluate, prioritise and undertake incremental value-based initiatives whose success can be measured in clear business terms. For example, ‘3x reduced cost to serve the customer’, ‘4x faster time to market’, ‘250% productivity gain’, ‘3x sustainability energy efficiency gains’.
Business drivers as modernisation opportunity use cases
We set out below some of the main business drivers as modernisation opportunity use cases that
Increase Business Acceleration
AI and analytics providing business insights from enterprise engagement and transaction systems
Real-time information flow between ‘legacy’ and 'modernised’ systems
Real-time access and integration to core systems and data with minimal technical code changes
Optimise change and workforce productivity
Common and contemporary tools the workforce use to ‘do work’ and ‘collaborate’ with refreshed operating models so that teams have shared understanding and connected to each other (up and down stream) across business functions. Execute ways of working consistently avoiding duplication or mis-aligned tasks.
Redefine human and machine job roles, automate routine tasks, and release your human team to focus on higher value, engaging work, reduce overall cost profile and technical debt.
Increase asset cost efficiency
Reevaluate your ‘fixed’ run cost arrangements, model and choose flexible pricing, consumption-based models where it makes business sense.
Consolidate technical system infrastructure and shrink physical footprints, favour common and enterprise-wide configuration and deployment management tools to reduce overall costs, speed to execution and ongoing management overheads.
Increase risk and compliance management
(Re)structure selected and sensitive datasets for privacy, security, compliance and control whilst using the data for business and customer value.
Strengthen data protection and segregate ‘treated’ data for use with AI models to reduce data breach exposure and cost effective use of data machinations for trialing and scaling innovation use cases.
Modernising core systems at the risk of impacting business continuity and customer and operational transactions has always been complex. Constructing and developing an incremental, value-based backlog of trials is an intelligent way to ‘eat the elephant’ and determine the sequence of business, human and technical changes to deliver sustainable business value.
The world, its markets and an organisation’s place in this landscape do not stay still. The pace of competitive, economic and sustainability pressures is accelerating.
Are you ready for the next step on your modern journey?
Thoroughly Modern Journeys is a business design practice that helps senior executives to get the best value from technology to improve their businesses. We are passionate about building business value helping executives and their teams design their organisations to be more customer and employee centric, and sustainable.
Ciaran O'Connell is the founder and Managing Partner of Thoroughly Modern Journeys. He has worked with many Australian and international public and private sector companies to evaluate and exploit emerging and disruptive technologies. Ciaran has helped these clients develop new business models, technology strategies, operating and organisational models and implement complex technology-enabled solutions to improve their businesses.
