Digital transformation is a critical effort for your enterprise, even though it will look different based on your industry and where your organization is making tradeoffs to prioritize certain areas for transformation.

The strategy you employ to accomplish transformation sets the stage for whether your organization succeeds or stagnates.

Every company must respond to rapidly evolving technologies and customer expectations so they can:

• Address changing customer demographic and expectations quickly,
• Reduce complex decisions to practice,
• Enter and capture new markets,
• Automate manual and time-consuming tasks, and
• Mitigate risks by having insight into process and performance metrics.

To succeed, we recommend taking a strategy of incremental modernization and transformation. Together, innovation and integration provide the ability to deliver incremental transformation. We coined the term “innovate and integrate” to capture the ethos of our approach.

Why not just adapt to market disruptions?

Many organizations look to adapt their existing systems to new standards, making the smallest, most minimal change to avoid cost.

While this sounds fine, we have seen many large organizations adapt to new and changing technologies without innovating.

Adaptation does not improve anything. It just adds to technical debt by placing more demands on aging and unmaintainable application architectures and infrastructures.

All businesses aim to utilize new technologies to improve market share. If some continue to add to their technical debt by only adapting and not innovating, they will potentially miss out as other market leaders or innovators prioritize transformation and possibly surpass them.

Adaptation and stagnation: a market leader falls from grace

A familiar former market leader, Blockbuster, centered their business model around brick and mortar stores. They did not realize that their consumer behaviors and expectations were changing.

Netflix disrupted the industry by changing the way movies and games were consumed. So Blockbuster adapted and established a mail-to-home service, eliminated late fees, entered the movie kiosk business, and started a video streaming service. All of these changes occurred as a desperate big bang in response to loss of market share.

Overall, it was too little, too late and they lost their customers by trying to catch up by adapting to a changing consumer demographic. Blockbuster provides a poignant example of how adaptation can lead to total business failure by following versus leading.

Innovate and integrate

Successful modernization strategy requires insight, vision, and leadership to accomplish. We will note here that while our focus is on how to deliver high-value technology products as efficiently as possible, success will rely on concentrated market research and business strategy efforts occurring in parallel with your technology modernization— a collaborative feat. Consider the following as you proceed with the technical portion of your efforts.

To take advantage of modern software architectures, you have to do what Blockbuster was unwilling to do—start fresh instead of preserving antiquated methods and systems.

To do this, innovation needs to occur in small, controlled, incremental iterations that allows organizations to introduce new methods, ideas, or products without the pressure of “betting the farm” on a single effort. Incremental innovation also helps you plan for market changes by allowing the flexibility to change course as you modernize.

Since modernization projects can take months, you stand to lose momentum, visibility, and communication with users whose feedback you need to successfully meet demands while mitigating business risks. An incremental approach provides better momentum insight through an interactive approach that keeps changes close as they occur.

Another benefit of incremental modernization is that you can define smaller deliverables and checkpoints so if you fail, you fail small and fail quickly with more opportunities to change your direction and accomplish your project. We believe in transformation efforts that avoid compounding losses, and in our 17+ years of business, this has enabled us to deliver solutions that have made measurable impacts to our clients.

To facilitate incremental modernization, integrate new or existing functions to support operations and achieve improvements you planned— collaboration must exist. Creating pathways for collaboration between existing functions and new technologies is a pivotal part of making incremental modernization work. Without integration, you can’t implement innovative solutions that work in concert with your business and its suppliers.

Innovation and integration: an example of success

One of our insurance customers had legacy information systems, disjointed processes, and prior failed modernization attempts.

They had built up a reliance on their existing systems, processes, data, and personnel over more than 30 years and it was almost beyond their ability to see past the costs of just running the business. All efforts were focused on making minimal changes to keep the system afloat and avoid costs.

Acknowledging this reliance helped us to redirect their strategy. They abandoned overhauling their legacy systems and instead focused on modernizing their underwriting system. In contrast to the case of Blockbuster, we helped them to make a strategic decision on where to modernize that would provide the most value, not promote a catchall approach that could wager their whole business.

We produced immediate insights for their business. As a result, they were able to match the pace of their market and save significantly in operational costs. Their new dynamic underwriting system established a first foothold for building next generation business solutions while integrating with their existing workflows and information suppliers.

Our case study "Improving Speed and Accuracy of Underwriting for a Fortune 100 Insurance Company" describes this example of success in full detail. 

How do you start innovating and integrating?

Recognizing the trap laid by the reluctance and unwillingness to start anew is your first step forward. Embracing new methods, ideas, and products into your strategy can lead you out of the spiral of “just keep the lights on” and toward a point of insight and clarity.

Your next step should be to identify key business objectives to achieve or impediments that could prevent growth. Clearly define a reasonable target to find where your business requires modernization the most. Regardless of where you are right now, an incremental modernization strategy helps eliminate potential for significant cost overruns, drastic overhauls, and dramatic letdowns.

Adopting a modern software architecture for innovation that leverages cloud-native development that includes microservices and containers provides the ability for organizations to adopt and follow this approach successfully.

To find out about microservices and our pillars of modernization, take a look at The Insurance Handbook to Digital Modernization. While we focus on the insurance use case in this free e-book, the strategy within is applicable to almost all legacy information systems.

As always, you can also reach out at any time with questions.

Best wishes as you embark on your digital modernization journey.