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Platform Modernization: Navigating the Build-to-Buy Continuum

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By Meghan Stiling

Chief Digital Officer

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For many organizations, 2021 has been a year of rebuilding after the COVID-19 pandemic. According to Gartner’s most recent CEO survey, “Many companies will spend the next few years recovering revenue, profit and growth to pre-pandemic levels.” The good news is that 60% of CEOs anticipate an economic boom versus 40% predicting stagnation this year and into 2022. When asked where senior leaders will invest in speeding their economic recovery, 83% cited digital capabilities, as it was “the only area in which a higher percentage of CEOs would commit to increasing investment,” reported Gartner.

Post-pandemic, companies are looking to shore up digital capabilities by modernizing platforms and information technology systems.

But where to start?

Platform modernization isn’t a cookie-cutter solution that fits every company and situation; rather, an ongoing effort to tailor your technology for specific needs.

Eighty-three percent of CEOs are investing in digital capabilities improvements.

SIGNS YOU NEED TO MODERNIZE YOUR IT PLATFORMS.

Your first step toward enterprise-wide platform modernization projects should be getting your team to agree on what will influence your platform modernization direction, such as:

  • Your business goals
  • Your industry
  • Your competitors
  • Your company size

Below are a few factors commonly driving these decision-making processes.

  1. Performance can’t cope with demand: Systems initially built to support a growing business now struggle with daily demand. Batch processes that used to complete overnight easily are now consistently taking six, seven, eight hours or more. Capacity levels, once selected based on peak times, are the new baseline.
  2. Security and compliance: You abandon upgrade paths because of customizations, undocumented subroutines, and incompatibility with enterprise limitations. Software versions and patch levels are behind and out-of-date, leaving you at risk for known exploits or security vulnerabilities. You are unable to keep up with the requirements needed to comply with changing regulatory and compliance standards.
  3. Spending on maintenance outpaces innovation: Your organization spends too much time and money on patches, backups and troubleshooting software and hardware issues. Your budget includes funding for specialized legacy resources and extended support/maintenance contracts. The potential cost of maintenance could be better spent creating innovative systems that lead to a competitive advantage.
  4. Platforms are spliced together by workarounds: It takes years of institutional knowledge to understand and execute core business functions. Much of your business logic is duplicated and spread across disparate and unscalable technologies throughout a system’s lifetime. That’s because your team is spending more time keeping the existing platform running instead of reengineering poorly deployed technology and inefficient processes.
  5. Project delivery isn’t based on business value: You avoid or delay critical projects that support new priorities because of unknown ripple effects throughout the enterprise. What’s more, your technology and feature enhancements may not be linked to business value such as productivity and revenue growth.

There also can be a less measurable but equally valid motivation to modernize platforms — fear of missing out in a fast-moving business environment that rewards first-to-market companies. Software development velocity is increasing, and companies that can innovate rather than focus on operations will benefit.

Assessing these motivating factors is just the beginning. The next step focuses on evaluating the right new components, optimizing your existing environment, and assembling them to make the most effective investments.

Consider including custom components in your architecture to build organizational agility into a packaged backbone if this is your reality. Custom components can help you organize your digital transformation into manageable pieces. 

Starting with API frameworks or other abstraction layers needs while you tackle breaking down a large legacy system along a platform modernization roadmap. Evaluating technology decisions across a continuum of build-to-buy components allows you to take advantage of a packaged core yet support the differentiated needs of your business, your customers, and your employees with custom-built features in your digital transformation roadmap.

MODERNIZING ON A BUILD-TO-BUY CONTINUUM.

Once you decide to modernize, how do you get there? Large software developers often sell the promise of buying modernization, but it’s not that simple. No two businesses are the same, and no single off-the-shelf software effectively covers every business.

Should you build it all yourself then? 

Unless the software is your business, your organization is likely not set up to support and maintain a complex portfolio of custom applications and development processes. Moreover, creating new digital products requires new processes and time to train employees to use them. How do you reconcile this choice? 

Don’t treat modernization as a binary buy vs. build decision. Instead, consider options along a continuum of build-to-buy components assembled together. Doing this allows you to take advantage of commodity processes provided by commercial applications, satisfy your users’ needs, and optimize the value that still exists in your legacy systems.

Build + Buy = Success illustration.

INSIDE COMMON Platform MODERNIZATION SCENARIOS.

The ideal approach is a bespoke solution along the build-to-buy continuum that combines the right mix of options and flexibility to meet your unique business requirements. Here are four examples to illustrate solutions along this continuum.

Example 1:

Consider a commercial enterprise HR solution that functions across multiple geographies.

A software evaluation process aligns with the most critical business functions in Location A. However, in Location B, government regulations have unique requirements that are at odds with out-of-the-box functionality. Does this disqualify the purchase? Do you now have to build all the base functionality to account for the unique requirements of Location B?

In this case, custom components at the most suitable locations allow you to take advantage of the core HR functions while allowing for regional variances.

This way, it is not just about buying the commodity. It’s about where to insert a custom component to maximize these backbone applications’ organizational agility and fit. You still get the efficiencies from the packaged applications, but you can selectively add functionality to meet specific or unique needs.

Example 2:

Imagine you’re part of a business that relies on complex reports and analytics as a competitive advantage.

Data is combined manually from multiple operational systems across the enterprise. Should you buy an operating platform that centralizes all information into a single location? Or build a reporting and API management platform from scratch?

Neither. 

An off-the-shelf API management tool provides core functionality with the added flexibility to create customized APIs. This solution reduces the need to access underlying data.

This abstraction layer will also give you the flexibility to access additional data or add new systems into the ecosystem without negatively impacting operations. Furthermore, this will allow you room to tackle an extensive legacy system along a broader modernization roadmap.

Example 3:

You’re a technology leader for a well-known brand that deals across several unrelated business lines and industries.

The business has a history of making acquisitions and bringing new companies and their customers under its banner. It also has just moved into yet another unrelated line of business through a recent acquisition. The software packages that support this acquisition provide sufficient functionality but lack visual appeal and branding. 

This situation conjures several questions: Do you need to build a new system from the ground up to gain user satisfaction and brand consistency? Or should you try to adapt your current systems to incorporate this new line of business?

Likely neither still. 

By skinning the acquired unit’s systems with custom UIs that offer cohesive branding, layouts and design, you can retain the existing systems and fill the experience gap.

Legacy or packaged software may meet your functional requirements, but it doesn’t “feel” like a fit for your business, brand or customers. In these cases, you can create custom experiences, UIs and processes around the application’s core. This approach is helpful to supplement a new packaged application that doesn’t quite fit or modernize user interaction with legacy solution components.

Example 4:

Your company is planning to develop a custom application to meet the needs of a new business unit recently established to improve organizational efficiencies.

The first focus is to improve the field sales team’s processes, where the business has a history of developing custom applications and operates an established DevOps practice and agile methodology. The recently established product team documented the critical product features and is moving to estimation and prioritization. 

One core feature is scanning and interpreting paper purchase orders from the field into the primary corporate systems. Should the development team build a bespoke OCR (optical character reader) application? Does the decision to create a custom application need to be abandoned?

No.

You should leverage a commercially available OCR tool as part of the overall solution architecture. Leveraging existing OCR technology will allow you to include the necessary capabilities efficiently and direct its development resources toward integrating the data and developing the unique features of the solution.

Even if you focus on custom development, rarely is it efficient to build every feature or capability. Be sure to break down solutions into feature sets and analyze those features against commercially available tools. You’ll often find a fit for one or more areas and allow your development teams to focus.

Platform modernization isn’t a cookie-cutter solution that fits every company and situation. Instead, view it as an ongoing journey you tailor for your technology and specific needs. Or “60% of CEOs expect an economic boom in 2022." - Gartner CEO Survey 2021

Each of these examples illustrates the value obtained by combining custom components with legacy or commercial applications. While there are costs to this strategy related to ongoing maintenance, resourcing and DevOps, when deployed strategically, it’s worth it. The customizations give your business necessary flexibility and nuance while enabling you to take advantage of existing investments, efficiencies and processes within your organization.

SUCCESSFUL PLATFORM MODERNIZATION.

Once you decide to take advantage of custom components and move to the right on the buy-to-build continuum, it’s essential to set your organization up for ongoing success. Prepare your teams to manage and maintain the commercial software and the custom components.

Commercial software management requires skills related to vendor relations, licensing and upgrade coordination. 

Just as with full-scale custom applications, even custom components will require ongoing care and feeding. Changes to adjacent applications, continued progress along with your digital roadmap, or ongoing enhancements due to changing business requirements will need to be performed.

By planning for this maintenance and support during the transformational program, you’ll put your organization and IT ecosystem in a position to continue to respond to changing business demands. By selecting a partner focused on collaborative development, you can build these skills into your organization throughout the modernization effort. This approach can take much of the organizational stress out of the process, ultimately allowing you to obtain technical autonomy and lower costs rather than relying on an agency for ongoing support following the initiative.

The path to platform modernization is rarely a case of build or buy, but a mix of the two. To create flexible, efficient, and modern ecosystems, IT leaders should focus on the options available across the build-to-buy continuum. Leveraging custom components at specific points in your ecosystem will allow you to get the most value out of your commercial products, the most satisfaction from your users, and the most efficient use of your resources.


Learn how Nerdery can help through our platform modernization services.