Overcoming the Paradox of Legacy Technologies
Let’s start out with a story.
Jack’s Insurance Company launched in the 50s. It started out as a small, independently-owned business based out of a mid-sized town. Jack started the business because he saw a market gap in his town for a reliable and affordable insurance company.
Jack’s Insurance Company did well and grew. Their business model was based on great customer service, a personal touch, and a proprietary insurance product that helped his customers get the best coverage for the lowest rates.
His customers loved it and the company continued to grow so much they expanded. In the 80s his company had offices in several towns in his region and business continued to boom. Jack was no longer alone at the top – he had a group of trusted advisors, a board, and chief officers to handle all the major aspects of the business.
Still able to get the best coverage for the lowest rates, Jack’s Insurance Company was growing rapidly. He expanded brokerage offices in all the major markets in the U.S. They established a headquarters in a high-rise building in a major city and now the office no longer relied on typewriters and phone call, but Microsoft Office products and emails.
At the behest of their CTO, Jack’s Insurance Company launched a website that helped them get even more leads from across the country and allowed them to work with customers who aren’t near a physical office. From the outside, the company looked like they were on the cutting edge, but on the inside, they still relied on physical documents, parcel mail, and in person meetings to meet the needs of their new and growing customer base.
Fast forward to 2019, Jack’s Insurance Company is one of the premier national insurers. They’ve made smart acquisitions of smaller competitors that helped them maintain an edge in this highly competitive international insurance market.
But something was changing in their business. Their existing customers seemed more than satisfied with how Jack’s handled their business, but they were struggling to attract newer, younger customers.
They didn’t have an easy-to-use app. Turnaround times for their quotes were long compared to some of their newer competitors. After some competitive research, they found out that their competition had developed a process that allowed them to handle all of their quoting and compliance completely digitally and avoid shuffling physical documents between departments scattered around the country.
Jack decided it was time to catch up, so he started working on digitizing the businesses processes and products to give new prospective customers an experience that they craved. But the process stalled. His current CTO let him know that Jack’s Insurance Company had been using a database and CRM tool that had been developed in the mid-90s built on archaic, fragile code. The existing employees were hesitant to so quickly change their process which had been working well for decades. Last but not least, their technology infrastructure wouldn’t be able to support the new tech they wanted to implement both in terms of performance and cyber security.
What started as a great idea to keep his business at the forefront of the insurance industry now looked like a unmanageable risk. Jack’s Insurance Company, which had built it’s business on their existing tools and techniques, was now tethered to it and it was holding them back.
They then had to make a decision: do we drag our business kicking and screaming into the digital age, or do we rely on the tools, techniques, and infrastructure that made us successful in the first place?
This is the paradox of legacy technology and systems infrastructure.
Psychology of Adopting Risk & Seeking Change
Large businesses have all gotten successful by having something that customers want. In many cases, it’s the differentiator that helps them beat out the competition. Whether that is a new technology, IP, unique product, or ability to provide a higher quality service, knowing what has driven your success is an indicator that you understand your business. It also makes you adverse to risky moves that might upend your success.
Change is never easy. Coupled with the risk of harming your business, it can seem impossible.
Understanding Your “Risk”
When businesses or professionals are presented with a decision, risk usually comes into play as a determining factor. In order to make an effective decision, you need to start by clearly defining your risks. In the case of moving away from legacy infrastructure or systems, you can define your risks as:
- Frustrating customers/employees who have come to rely and trust your existing processes
- Potential loss of customers/decrease in retention
- Incurring new technical issues
- Sunset of tried and true product features
- Additional cost for infrastructure, security, data, and support personnel
And the list goes on. Depending on your industry/product/company size, your risks can differ.
When you’re looking to modernize your business model, defining exactly what issues might come up throughout the transition process can help you mitigate and potentially eliminate them entirely.
Outlining Your Digital Transformation Goals
As a recent piece in Forbes made clear, committing to digital transformation is not simply a matter of adding on more updated technological elements but rather re-visioning your entire business so that digital transformation is part of every facet of your strategy. While this may sound like a dramatic shift, articulating clear goals as part of this process will help your organization stay true to its mission and purpose, all while joining the 21st century.
Some research indicates that overhauling legacy systems can ultimately reduce operational costs while boosting overall revenue. If your overall goals focus on these benefits, keep in mind that your progress may be several years in the making and will definitely require some upfront investment. Developing and tracking smaller, more concrete goals can help keep your team focused on the tangible impact of digital transformation on your customers, as well as your teams, in order to keep your vision clear and organizational motivation high.
Define Your Purpose
For any organization, no matter what the size, it’s key to be purposeful in your transition so you can prioritize steps along the way as you either replace or augment your current legacy systems. For example, as a recent article published in InfoWorld notes, it’s a good plan to assess current structures and integrate where you can, instead of completely replacing every aspect of your system. To retain a clear sense of purpose, the piece recommends that your team first “identify and establish optimal points of integration for legacy systems” as opposed to scrapping everything. In addition, a piece in CIO reminds leadership that during a legacy infrastructure transition, “business outcomes should always take priority, not systems — modern or legacy.
A Process for Overcoming the Paradox of Legacy Infrastructure
With a full understanding of your company’s risk, goals, and purpose, the next step is mapping out your digital transformation.
For established businesses, the best way to lead a large-scale change is through piece-meal integration of new tech and processes. Whether you’re building out new tools internally, working with 3rd party vendors to fill technological or infrastructural gaps, or adopting new internal techniques to help streamline your business process, making iterative changes within your business will help you isolate changes that were particularly successful, and others that may have caused issues.
In Jack’s case, the incorporation of certain key modern tools led his leadership teams to reconsider their systems across the company. By adding in appropriate supports, including a specialized software platform designed to help promote seamless integration during messy transitions, Jack’s company was able to let go of what wasn’t working while retaining the fundamental business culture that grew his company from the bottom up.
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