3 Questions To Guide Cost-Effective Technology Modernization

By Larry English

New technology is debuting at breakneck speed, and many companies struggle to keep up. Especially mid-size companies, which must balance the necessity of modernization—which often comes with a hefty price tag and major organizational disruption—with constrained budgets. How can these companies modernize cost-effectively?

It’s a puzzle many organizations still haven’t solved. According to the 2024 Gartner CIO and Technology Executive Survey, on average, only about 40% of organizations’ processes have been digitally optimized.

The Problem With Technology Modernization Projects

Companies struggle with many facets of legacy modernization. For one, companies have trouble aligning on what modernization efforts to chase. When you’re still operating on legacy systems but there’re also AI and other emerging technologies to consider, there’re too many competing opportunities.

Another issue is the standard way of replacing outdated technology: through costly, disruptive projects that take months to over a year to deliver any value. The timeline is too long, too many things change along the way, and nothing is accomplished. It’s too high-risk, too-late reward.

Finally, many companies also approach their modernization strategy from a severely limited lens, thinking only in terms of applying the latest technology to their systems, says Faisal Hoque, award-winning technology entrepreneur and No. 1 Wall Street Journal bestselling author of “Reinvent: Navigating Business Transformation in a Hyperdigital Era.”

Hoque suggests that companies instead need to anchor all technology modernization efforts in how the technology will serve and improve the larger business strategy. He says leaders need to differentiate between modernization that keeps systems up to date and modernization that impacts the entire business model—and chase both types.

“A lot of people look at modernization solely from the technology migration point of view,” he says. “I would instead look at what can you add on that will tie into and modernize your overall business strategy. How can you revamp your business model to cut costs or produce goods faster or service customers better? The successful CIOs are very much focused on business model modernization and business model change versus technology modernization.”

For example, when a company implements a chatbot to interact with customers, that’s modernization that sustains your organization, keeping it up to date with modern business practices. When you take the technology one step further and use that chatbot to collect valuable customer insights, that’s modernization that leads to digital transformation.

Full Article @ Forbes.

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