By Dr. Houssem Jemili, Partner at Bain & Company Middle East
Until recently, many companies saw technology modernization as a necessary evil, something to postpone as long as possible to avoid the disruption sure to accompany it. Today, more of them recognize that disruption is part of the attraction. Modernizing systems can and should serve as an opportunity for companies to reevaluate timeworn and inefficient processes and update them. One way that companies modernize their systems is by updating their enterprise resource planning (ERP) and other integrated management systems. Increasingly, these systems can help companies by providing ways to create more value by delivering improved processes.
First, these systems help companies develop an end-to-end view of their business processes, not only by facilitating seamless connections, but also by tapping the expertise of industry partners to provide guidance on best practice for each particular industry and segment. Second, customers shift from a capex model of purchasing large systems to subscription models, even systems that are not delivered, as Software as a Service (SaaS) can increasingly be purchased with similar financing models. Finally, building on both of these points, upgrading systems can provide a platform for investing in more next-generation services, such as analytics and AI, which can help grow the business.
What sets leaders apart
First and foremost, leaders set out to achieve transformational results, rather than single-digit improvements. They spend more time thinking about how to take advantage of future opportunities.
Most adopt Agile methodologies, building up cross-functional teams that are empowered to test and learn, and to make decisions about where to focus investment to move initiatives forward, from the C-suite to the front line.
Leaders also work to ensure they have a clear view of technology spending, so they can track how investment leads to results. Every initiative has a business case, and executives can articulate how a specific technology investment is creating business value.
Finally, these companies are comfortable with technology, elevating it to the same level as other critical business functions. This helps them embrace transformation, which creates an energy that carries the momentum forward. Employee engagement in the transformation is usually pretty high, because the benefits are made clear to all and senior management keeps an unwavering focus on the transformation, offering consistent messaging about the connection between change and value creation. Frequently, employees feel better prepared for the challenges ahead because the company is keeping pace with change.
The elements of a successful transformation
Successful transformations are more likely when senior executives and the board align on the ambition. Leading organizations take a zero-based approach, redesigning processes from scratch, introducing new ways to work, and creating new business models. Critically, they empower the people who actually run a process, who are closest to the market for that process, to make changes to improve it.
In addition, leaders present a clear business case for the transformation, showing which processes will change and how this will improve the business. This case needs to be based on hard data, and should also present the transformation as a portfolio of changes. Budgets need to be flexible—not yearly, but monthly, and senior managers must be willing to change or accelerate investments where necessary to gain advantage.
This business case should reflect the value of adopting a more modular architecture with more standardized components, which can increase the pace of innovation and improvement.
Ongoing change management is, of course, essential and needs to be guided by a cross-functional team empowered to design the future state and make the changes necessary to reach it. Change management needs to happen at all levels, from the C-suite to the front line, and must be rooted in a clear understanding of the ways that people and their jobs will have to change
Finally, executives leading a technology modernization transformation can help ensure success by following a few tried and tested principles. First, get on with it. The quicker a company engages with the challenges of modernization, the sooner it can begin to see results that will deliver a competitive edge. Second, don’t make the mistake of viewing this only through the eyes of the CIO or IT team. Successful modernization programs keep a laser focus on the customer’s needs and the business goals of serving those. Lastly, don’t think of this as a single event. Business and digital transformations are the beginning of a journey that can continue to create positive momentum and beneficial outcomes for years to come.