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16 July 2019

Why Digital Transformation Depends on Legacy, by Pierre Salbaing Director of Business Development at AZUR Group

Digital transformation is already a loaded term, probably because of the transformation part. We’re already pretty cool with the digital part. So what exactly is being transformed and how? What’s the end result going to be? When an enterprise embarks on a digital transformation mission, these types of questions and apprehensions are going to manifest throughout the entire organization. The stakeholders concerned will span the spectrum from employees worried about their jobs being automated, to departments concerned over disruptions to cross-functional operations within the company, to the business itself as it takes a gamble on its digital transformation strategy.

And whenever we hear or read “digital transformation” it’s inevitably followed by a series of other hot tech buzzwords: Internet of Things, Artificial Intelligence, Machine Learning. (Even worse is coming across a string of acronyms like IoT, AI, PaaS, IaaS, SaaS… These can be really off-putting to non-tech people, including the ones making the decisions.) All of this suggests that a successful digital transformation requires a complete upheaval of a company’s legacy technology, systems, IT and operational infrastructures, business-critical processes, and so on. It can also be terrifying. Faced with this overload, executives making the decisions (and holding the purse strings) worry about the fate of their legacy systems and operations. This can be even more pronounced in sectors like manufacturing, since they deal with actual things being made using other things. Their agility is more limited as a result.

So as we’ve been hearing about all of these new and upcoming technologies, “legacy” has assumed a negative connotation for many. But what’s ironic is that any successful digital transformation needs legacy technologies, systems, data, processes and, obviously, employees. The “rip and replace” approach can easily lead to disaster on various fronts and at different levels. Even though digital transformation by its nature disrupts, it shouldn’t be disruptive to the people it’s meant to benefit.

But the digital transformation mission isn’t to replace but to modernize legacy, and in doing so prepare it for the future. Digital transformation is an ongoing project, not a one-shot deal. The company’s legacy operations might not be optimal, but they’re working. Employees’ legacy applications might still reside on their hard drives rather than on cloud platforms, but they know how to do their jobs. Data might still be stored and manipulated in Excel, but it’s still an enterprise’s goldmine, and the results derived are valid.

With all of this in mind, digital transformation partners need to recognize that all things legacy are a company’s greatest asset and use these as a springboard for modernization and optimization. Legacy and digital transformation need especially close consideration when it comes to tools and data, operations and processes, and employees themselves.

Legacy tools in an organization can’t simply be replaced with new ones. There will always be a learning curve when implementing new technologies, and some training will always be required, but completely ripping up legacy systems can cause serious disruption to company operations. People like to think that their way of doings things is the best way as long as it consistently produces good (or at least satisfactory) results. It can be hard to imagine how new technologies your company is implementing will make your day-to-day work easier. Things have been going fine up until now, so why rock the boat?

Worse, employees can start to resent having their old work tools, habits and processes replaced with new ones that they have to learn and master. And if they become frustrated with new software or cloud platforms, for example, they’ll often just go around the organization’s IT governance policies and install unauthorized applications, a phenomenon called “Shadow IT”. Here’s where digital transformation can leverage legacy. Instead of ripping up and replacing the existing IT infrastructure, build on it. The value of raw data should be maximized. Most companies don’t leverage this, instead aggregating it in silos and getting different KPIs from it.

In terms of company operations and processes, it’s important to not underestimate the value of legacy business rules and a company’s intellectual property. These are the result of a company’s success and should be the springboard for optimization. Don’t reinvent the wheel, as they say. Make it roll smoother and faster instead. Leverage legacy business logic and processes that have already demonstrated viability, productivity and profitability. Among other things, digital transformation seeks to develop operational agility. We know that the silo mentality needs to transition to cross-functional collaboration and communication between departments. But if you blow up the silos, you’ll spill all the grain stored inside. The company still needs everything it’s carefully stored away over the years. It’s nothing without it.

And when considering the role of organizational and operational legacy in digital transformation, we can’t forget employees and the company in general. Employees themselves are just as much an organization’s legacy assets as its technologies, systems, operations and intellectual property. Digital transformation partners have to make a concerted effort towards a holistic approach, and this must include Human Resources. Employees whose experience and practice are more on the business side of things might fear having to learn new apps, having to improve IT skills and having to move to automated business processes. Abandoning legacy completely can lead to the risk of digital transformation magnifying differences in skill sets within teams and throughout the organization. It can also widen gaps in terms of digital skills versus business experience. We need to make the HR as much a part of digital transformation as IT.

Finally, and taking a step back, it’s also critical to look at the big picture and carefully consider company culture. As outside consultants, there’s a real risk that digital transformation partners might encounter resistance at all levels. Our first instinct might be to dismiss this as simply fear of new technologies, but there’s more at stake here. An organization’s culture has developed and evolved (for better or worse) over the years. It’s an integral part of legacy.

In short, digital transformation partners need to recognize the value of everything that makes up a company’s legacy. It goes far beyond technology, and this is what we need to remember and put into practice. Legacy is a foundation to be built upon, not bulldozed and replaced with something completely new. Don’t burn down the house someone else built. There’s a reason it’s still standing.