The pain of legacy-to-digital transformation is an epidemic

There is a cure, but not C-suite approved yet.

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Unless it was born in the digital-age, your enterprise is likely to suffer from the chronic pains of legacy-to digital transformation – locked-in budgets, lacking innovation, tired organization, mismatched skills, unabating vendor issues, unbearable complexity and bureaucracy, and the list goes on. The problem is not you, your management team or your company’s culture; it is an epidemic caused by the shortcomings in the digital-age of a 60+ year old operating model, which is ubiquitously used by traditional organizations to manage enterprise technology.

In earlier articles, we lengthy discussed the short-comings of the traditional enterprise IT operating model, a.k.a. efficient IT, and suggested an alternative model, a.k.a. lean IT, as a stepping stone on the legacy-to-digital transformation journey. Lean IT – think of iterative, agile, product-orientation, continuous improvement – is not a new concept but it hasn’t become mainstream at traditional enterprises yet, even though the underlying lean principles are most relevant and well proven. Why?  There are two major roadblocks. First, the case for lean in the enterprise IT context is not as clear as it was in the manufacturing industry, where it was born.  Second, there are several unanswered C-suite questions about an enterprise-scale adoption of lean IT.

As a reminder, lean principles were invented by Toyota as the only means of survival in the global automotive markets half a century ago. Post WWII, Toyota lacked capital, skilled workforce, and economies of scale necessary to compete against established mass-manufacturers. At the same time, customers around the globe were getting tired of Model-T, and asked for variety. Survival instincts and changing customer needs opened a window of opportunity for Toyota and the like to change the rules of the game, their C-suite took up the challenge, and top-down led transformation programs embedded the lean principles at every living cell of their organization and ecosystem. Today, the results of these efforts are self-evident.

Similarly, moving from industrial to digital age created a tremendous window opportunity to change the rules of the game for enterprise IT; however, it is certainly not at a point of survival; in fact, it is doing quite well by the traditional measures focusing on efficiency, reliability, and getting the job done. The future looks cloudy, though – the business-IT divide is as real as ever, shadow IT spending is increasing, and leading digital providers, like Amazon, Microsoft and Google, are displacing traditional enterprise IT starting from the bottom of the technology stack. The point of survival is not an "if," but a "when" question for the traditional enterprise IT.

As attested by the lean IT community, there are many successful implementations of lean IT to date; however, they are almost exclusively grass-roots, bottom-up initiatives aiming for better collaboration among teams and eliminating waste in IT operations. Given the historical successes of lean principles and the undeniable needs of the traditional enterprise IT to remain business relevant in the future, there is much more to expect of lean IT. Specifically, lean IT has the potential of transforming the way traditional enterprises manage their technology capabilities; but first, following challenges need to be addressed by the lean IT community to become part of the c-suite agenda:

  • Value: There needs to be a direct link between the actions taken by the lean IT programs and corresponding bottom line results. For example, what is the productivity/quality improvement, if business engagement in product design and development increases by 10 percent? Without this level of specificity, the lean IT programs will continue to be de-prioritized against proven IT approaches, such as consolidation, rationalization, centralization, outsourcing and re-engineering.
  • Approach: Lean IT implies several pivotal changes to the way technology is managed, e.g., projects vs. products, push vs. pull, plan driven vs. iterative, benchmarks vs. continuous improvement. The impact of these changes on the traditional IT operating model is not fully defined. For example, traditional performance management practices evaluate and reward individuals, whereas lean IT shifts the focus from individuals to teams. What does this mean to existing incentive structures, performance metrics and management controls?
  • Road map: It is well known how to start a a lean IT initiative bottom-up and expand it team by team. What is missing is a top-down approach that starts small, and scales up rapidly as tangible value is identified and committed.
  • Workforce: It is not the workforce, but the system that needs a fix. The existing workforce is a vital ingredient of a successful transformation of enterprise IT, and lean IT needs to articulate what is in it for them.

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