Oracle Primavera Contractor

Outdated IT systems are often the biggest Achilles’ heel for established companies seeking to compete successfully against upstarts.

Every executive knows the problem. Established companies try to get as much as they can from their investments in legacy systems. When they come up against the systems’ limitations, they devise patches or work-arounds. While useful in the short term, over time these remedies can create incompatibilities among discrete layers of the technology stack and among applications within a layer. Companies may find that they are actually increasing their operating costs in the long run and missing opportunities to embrace more efficient and more innovative ways of working through digitization.

By contrast, newer online competitors—unburdened by legacy IT systems—benefit from agile product-development cycles and delivery systems, digital operating models, and lower operating costs. They can experiment and test software releases frequently with users to respond quickly to market shifts. They can pursue hyper-targeted marketing strategies, learning as they go from the consumer data they collect.

To realize similar advantages, established companies will need to simplify their core IT systems while still keeping the lights on. That’s what one European utility did: by eliminating the operational drag from its legacy IT system, it was able to shave its costs of providing customer service by 15 percent while still significantly improving customer-satisfaction scores. Based on our work with organizations in a range of industries, we believe two approaches may be the most effective for successfully realizing improvements in the short term while also transforming the IT architecture over the long term: planning and scheduling-field. Each has specific requirements that must be weighed against an organization’s appetite for risk, its financial resources, and the maturity of its IT systems.

Large incumbent organizations must address the barriers to digitization imposed by their legacy IT environments. Two-speed or greenfield models can serve as effective paths to transformation. With less hardware and software baggage and a more modern IT architecture, established companies can simplify their processes and IT environment and sharply improve their performance.

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