Bain & Co: IT – Digital’s Achilles’ Heel

ATN-300-300x300.jpgInsightaaS: It's likely that all InsightaaS readers have been exposed to Bain & Company, one of the world's foremost management consultants. In the past, we have featured Bain in Across the Net several times, commenting on IT-related strategy in contexts ranging from energy to financial services to IoT.

Today's piece features a reflection on how legacy IT can act as a constraint on digital transformation. It includes examples of how legacy IT has impeded success of customer-facing applications in fast food and in banking, and provides another example of how a retailer shifted its approach to align investment with outcomes and reaped benefits in areas where management was willing to embrace Agile principles.

Citing a Bain survey, the authors report that decision makeers "plan to spend 45% of their incremental dollars on building digital capabilities and 55% on modernizing their existing technology stack to make it digitally read." The piece explicitly endorses this balanced approach: it observes that "Some companies have approached digital with a two-speed IT mindset: a faster gear for the customer-facing parts of the business and a slower pace for the rest," adding that "our experience suggests that a two-speed approach to digital—a faster gear for the customer-facing parts of the business and a slower pace for the rest—is suboptimal, and concluding with the premise that "Companies ready to forthrightly address the technological, organizational and financial impediments blocking their path stand the best chance of winning in digital."

Most companies have taken the first steps toward doing business in a digital world. They’ve set up flashy websites, built mobile apps, opened e-commerce stores and taken to social media. Regardless of what companies offer—whether it’s a machine tool or a bank account—they now transact business with their customers via digital channels at least some, if not all, of the time. Thanks to Big Data, companies can now learn more about what their customers want and need. And, because of the abundance of information available online, their customers can learn more about their products and services, and more about those of their competitors as well.

While 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 will encounter roadblocks on its digital journey. The obstacles are likely to arise when a company tries to connect its digital initiatives with the organization’s hundreds of legacy IT systems and databases...

Read the entire post: http://www.bain.com/publications/articles/it-digitals-achilles-heel.aspx

Access the interactive Bain "Digital IT Readiness Diagnostic:" http://www.bain.com/bainweb/media/interactive/it-diagnostic/index.html

 

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