By now, most companies have taken at least the first steps toward doing business in a digital world. They’ve set up flashy websites, built mobile apps, opened e-commerce stores and engaged in social media.
While these digital initiatives can deliver value, many executives have been lulled by a false sense of progress. Others have been disappointed that their digital efforts haven’t helped their business more. Sooner or later, every company trying to go digital will run headlong into roadblocks, likely due to legacy IT. Companies have discovered that their legacy IT is not ready for digital.
Companies get tripped up when they try to connect their digital initiatives with the organization’s hundreds of legacy IT systems and databases. In many cases, those systems have been in place for decades and can’t interface with new digital apps and architectures. And while these legacy systems are packed with potentially useful data, many times the digital apps can’t easily access it.
Companies may have whizz-bang digital apps, but their operating models often haven’t kept pace, and neither have the skills of their IT employees. Legacy IT, in short, can become the Achilles’ heel that thwarts digital success.
Organizations have begun to realize they need substantial work to make their legacy systems, data, operating models and skills ready for digital. A Bain & Company survey of 150 technology decision makers shows they plan to spend 55% of their incremental dollars on modernizing their existing IT to make it digitally ready, leaving 45% for digital initiatives.
Some companies have learned the hard way about the pitfalls of moving ahead in digital without simultaneously addressing legacy IT. Fast-food companies, for example, have spent years building systems to efficiently manage all aspects of meal preparation. These systems were designed to serve two streams of customers—those at the front counter and those at the drive-through window. So far, so good.
In a digital world, though, customers expect to order meals from their smartphones. The food companies have responded by creating front-end digital apps that enable customers to see the menu, place an order and designate a pick-up time. They can then retrieve their food either at the front counter or the drive-through window.