LEGACY SYSTEMS VS DIGITAL TRANSFORMATION

In 2024, propelled by the surge of modern technology and its integration into daily operations, digital transformation initiatives permeate every facet of business. These initiatives encompass endeavors aimed at enhancing customer experiences, innovating business models, and leveraging data analytical insights for strategic planning and decision-making purposes.

Why are legacy systems still in use?

A piece in TechTarget from 2021, reported that replacing legacy systems is the top target for IT investments for organizations and a survey sponsored by AWS and Tata Consultancy Services found that 70% of CEOs emphasized modernising legacy applications as a top strategic priority. Despite the pressing demand for digital transformation, legacy systems persistently remain in widespread use. Upon closer examination, the rationale behind this persistence encompasses the following factors:

? Lack of training and support: One of the prominent concerns for businesses is the lack of an in-house team to assist in the transition to digital transformation initiatives. With the lack of essential IT skills, it becomes cumbersome and difficult not only to initiate the shift but also to execute a successful one. Moreover, employees may resist the idea of 'repairing' something that is not visibly broken. This is due to the aversion towards changes that can cause upheaval in an existing environment.

? Functional Stability: Despite being outdated, legacy systems perform core functional roles that make up the stable backbone of a company or organisation. Legacy systems are dependable to the extent that they create hesitation to transition into new systems. There is an existing notion that if the already existing legacy systems continue to fulfil the needs of a company, the need for change initiatives is not a pressing necessity.

? Challenges posed by migration of large data: When a new system or initiative is implemented there is the obvious task of migrating data from the older systems to newer ones. As simple as it sounds, the actual performance of this task can be daunting for companies. It is a complex process that requires proper planning and execution. It involves integrating data from various sources as well as time, specialised tools, techniques, and allocated teams. This is the main reason for the delay on the end of organisations when it comes to digital transformation.

Digital Transformation: The Need of the Hour

72% of Data and Analytics leaders are either involved in or leading their company’s digital transformation techniques, according to Gartner (2024). Additionally, 64% of organizations, as per McKinsey, expressed the importance of digital transformation to stay relevant and competitive in 2024. On top of this, 3 in 4 companies, according to Baker McKenzie, have started their digital transformation journey. Gartner stated in 2022 that 56% of CEOs say digital advancements have led to boosted revenue.

From the above, it can be said without a doubt that digital transformation initiatives are the one thing that corporations, either big or small, are running after in 2024. From enhanced efficiency to better customer experiences, as well as a cut in maintenance costs of old systems, the advantages that digital transformation offers are numerous. It also provides the agility and ability to adapt, ensuring that businesses stay relevant and have a competitive edge in the market.

According to Forbes, 84% of companies fail at Digital Transformation. With the pros of digital transformation being apparent, the question is how to bring about a transition? Here is the basic framework to navigate a successful digital transformation:

1. The first and most key step is to assess the current environment of the company. This includes everything from analyzing infrastructure, business processes, current customer engagement, to studying insights from data obtained from sources.

2. After a successful assessment, the next step is to prepare the workplace for an environment suitable for the change. It is crucial to bridge the gap between employees, customers, and the reasons for which digital transformation is the need of the hour. This includes collecting views and opinions from employees on the current reality of the business, services that need improvements, flow of productivity, and gathering feedback from customers.

3. The next step would be to conduct a competitive analysis to understand how competitors are moving with trends, their place in the market, and how they are adapting to technological transformations.

4. After creating a solid action plan, it is important to ensure that a company has the right digitally equipped team to initiate and bring about the transition. The right leadership and team ensure that the transformation is fruitful and guiding both employees and customers, breaking the task at hand into small manageable tasks.

5. Pilot programs and testing should be done adequately to see how new technologies and systems function before their full implementation. This minimizes errors and gives an idea of potential risk and failure areas, therefore making the adaption to a new system quicker.

6. Finally, mechanisms for feedback should be established. This step, although frequently overlooked, is of utmost necessity because the key to a successful digital transformation is not only the act but also the ability of the company to sustain the change successfully.

Laybacks in transitioning

One may assume that digital transformation is a subject with no flaws. Contrary to the ample benefits it offers a business, whether large or small, it comes with its drawbacks. Here are some drawbacks of digital transformation:

? Since it is a relatively new concept, there is a lack of standards and compliance laid down for practices.

? The cost of digital transformation initiatives is extremely high. Although, in the long term, the return and profit after digitally transforming an organization are robust, the initial investment can be pricey for many companies.

? There is an imminent risk of failing to sustain a successful change after transitioning, mostly due to skill gaps and shortages of talent. Therefore, providing adequate training and support before a change is important.

? There is an obvious disruption to employees who are used to the traditional systems; bringing a change takes a lot of time and does not happen overnight. There is also the possibility of resistance from employees even after the transformation has taken place.

? There is a risk of cybersecurity because, with digital transformation, all data are stored electronically, making them susceptible to breaches.

In conclusion, it is valid to say that Digital Transformation can be a daunting task for many businesses. However, it is important to note that change is inevitable, and the sooner companies adapt to the transformation, the greater its returns in the future. With the right framework, support, and team, digital transformation can be navigated successfully.