Analyst Perspectives

The digital transformation movement was about making wholesale changes in the use of technology across all lines of business and functions. It required organizational change on a large scale, including adapting the organization’s culture, retraining or rehiring the workforce and process realignment. Change management and a significant time commitment to implement change were necessary while maintaining existing operations.

Many organizations were not ready for the monumental undertaking that transformative initiatives required. Some organizations are unable to show alignment between business goals and projects funded via digital transformation initiatives. We assert that through 2025, after concerted investment in digital transformation, two-thirds of organizations will require a new digital business and technology agenda for modernization.

In the wake of challenging – or abandoned – digital transformation initiatives, chief information officers and IT leaders are revisiting transformative programs and technology investments. And they’re realizing that transformation alone is insufficient for business success. The Office of the CIO must look beyond digital transformation to embrace contemporary digital systems, including necessities to maintain governance: applications, automation, cloud computing, data, digital security and workflow management.

Digital modernization focuses on maximizing the efficiency of existing software investments and resources. Rather than overhaul the organization’s infrastructure, limited budgets and resources are applied to implement advanced systems, tools and processes. Updating systems is plausible for most organizations, regardless of size or budgetary constraints. Contemporizing digital systems allows for a phased implementation and follows existing methodologies and frameworks, minimizing disruption from change and enabling a smoother transition for the organization and its workforce.

Updating digital systems enhances operational efficiency and productivity, improving customer experience and engagement. The resulting increase in agility and flexibility helps organizations adapt to evolving market demands, empowering data-driven decision-making, cost optimization and resource allocation. CIOs are focusing on the installed base of legacy systems, mitigating the risk associated with cultural and process-driven change and using technology to navigate evolving business priorities as they evaluate the benefits of bringing digital systems up-to-date.

Legacy systems often lack the flexibility and scalability required for digital efficiency or transformation. Systems must operate on-premises and do not support cloud computing or mobile devices. The lack of updates and vendor support creates a technical debt that makes it difficult to adopt current technologies and implement changes quickly. The digital landscape and evolving customer expectations require agility and responsiveness. Legacy systems hinder organizations from adapting to market changes, necessitating digital modernization to overcome these constraints.

Many organizations face resistance to change and fear disruption to existing operations. Digital modernization affords a more gradual and incremental approach to updates and maintenance, reducing risks associated with large-scale transformation projects. A paced approach to enhancements enables teams to learn and adapt while minimizing downtime. Business continuity and risk mitigation are critical, and contemporizing systems incrementally ensures smoother operational transitions.

Organizations must address immediate business needs and remain competitive as markets evolve. Market demands often require immediate attention and responsive approaches. Using advanced systems allows organizations to focus on optimization that aligns with business priorities. As seen with sales offer management and the need to support more than a one-time sales model, competitive pressures and customer expectations are constantly changing. Modernizing systems enables organizations to adapt quickly, respond to changing market conditions or deliver new business models without undergoing a complete transformation.

Beyond technological challenges, the Office of the CIO must deliver the infrastructure, services and user experiences necessary to impact business. It must also communicate business value to stakeholders, including working within cost and resource constraints, preparing and leading the organization through change and communicating the business impact of modernization as short-term wins and return on investment.

Updating digital systems makes good business sense, though not every organization understands how change is beneficial toward future objectives and growth. An approach of adaptability and flexibility is at the heart of digital modernization. Short-term results can be achieved by building upon existing applications and infrastructure. Business-centric key performance indicators (KPIs) including improved efficiency, cost savings or enhanced customer experiences demonstrate accountability and goal attainment for the organization. Given budget constraints and fewer resources, CIOs and IT leaders must choose between updating their operations and technology initiatives in support of the digital era or risk falling behind competitively from stagnation.

Regards,

Jeff Orr