7 signs it’s time to modernize your IT systems

Technology continues to advance at a furious pace. That’s great, because a strong IT environment is necessary to take advantage of the latest innovations and business opportunities. The bad news, however, is that IT system modernization requires significant financial and time investments.

When addressed properly, application and platform modernization drives immense value and positions organizations ahead of their competition, says Anindeep Kar, a consultant with technology research and advisory firm ISG. “There are multiple examples of organizations driving home a first-mover advantage by adopting and embracing technology modernization when the opportunity presents itself early.”

On the other hand, there are also many cases of enterprises hanging onto obsolete systems that have long-since exceeded their original ROI. Kar advises taking a measured approach to system modernization. “Leaders who adopt a crawl-walk-run approach, with thoughtful risk-taking and a strategic focus on actions and results, maximize the business value from IT modernization.”

Is your organization overdue for an IT systems update? Here are seven signs it may be time to modernize.

1. Technical debt impacts the bottom line

A red flag that it’s time to modernize IT systems is when technical debt begins piling up. Rather than view this situation as a hindrance, it can be framed as an opportunity to reassess the value of existing tools, with an eye toward potentially squeezing more value out of them prior to modernizing them. This is true whether it’s an outdated system that’s no longer vendor-supported or infrastructure that doesn’t align with a cloud-first strategy, says Carrie Rasmussen, CIO at human resources software and services firm Dayforce.

A first step, Rasmussen says, is ensuring that existing tools are delivering maximum value. “Take an assessment of the current tools in your toolbox and score them based on how many features you’re using compared to how many are available,” she advises.

Rasmussen says the modernization process should begin by forming a strategy team and directing it to build the business case for why change is needed. “As leaders, we have to focus our time, our people, and our money, so a modernization strategy and its deployment should involve people in each of those areas,” she notes.

The one thing an IT leader should never do is sprinkle investments across multiple areas, Rasmussen says. She suggests prioritizing the areas that will likely bring the greatest business value.

“You usually can’t move the needle on everything while working within typical budgets, so instead focus on moving the needle on the one or two things that really make the most difference,” Rasmussen advises. “Make sure you’re thinking about where modernization can make a competitive difference and start there.”

2. The enterprise has grown substantially

Factors such as rapid business expansion, evolving business needs, time-to-market rates, and margin expansion can all drive a decision to modernize IT, given the fact that the current infrastructure is no longer aligned with business goals, says Munir Hafez, senior vice president and CIO at consumer credit reporting agency TransUnion.

Start by identifying the problem or trend, then drive toward creating a solid business case and building consensus and support, Hafez advises. “Identify the benefits and ensure that you keep business value at the forefront.”

Assuming the biggest challenge is technology-based, there are few problems that can’t be easily solved, Hafez says. “Often, technical leaders don’t devote sufficient time to communication, change management, and stakeholder management,” he observes. Hafez adds that most modernization projects typically fail due to a lack of a realistic expectations, defined requirements, and ineffective change management.

3. Security weaknesses arise

Security and risk vulnerabilities are important signs that modernization is immediately necessary.

“Once an organization sees signs of security vulnerabilities or compliance risks, it’s a clear indicator that they need to consider modernization,” says Vikas Ganoorkar, global cloud migration and modernization leader at IBM Consulting. He notes that recent surveys by Gartner and Forrester show that over 50% of organizations cite security and efficiency as their main reasons for modernizing their legacy systems and data applications.

An effective IT modernization plan requires collaboration across multiple stakeholders. If you want it done right, you need buy-in from the top, starting with executive leadership, as well as other key IT and business leaders and teams, Ganoorkar says.

“When planning for IT modernization, it’s important to approach the process systematically to minimize risks and align technology with your organization’s long-term business objectives,” he advises. “Start by evaluating your organization’s current infrastructure, applications, and processes to identify critical pain points, inefficiencies, and opportunities.”

Ganoorkar also recommends setting priorities based on business impact, cost, complexity, and risk. “Ensure that your plan supports one or more of your organization’s key business strategy goals, such as improving agility, reducing costs, boosting security, or enhancing customer experience.”

4. Business agility begins to sag

Many CIOs start thinking about modernizing their IT systems when their enterprise begins losing agility and fails to take advantage of market opportunities simply because their existing systems can’t keep pace with current needs, says Alan Thorogood, research and member engagement for Asia/Pacific at MIT Center for Information Systems Research.

As a first step, Thorogood recommends identifying the most logical pathway to modernization. For example, will the organization focus initially on operational efficiency, customer experience, or a blend of the two? “Eventually, an organization needs both greater efficiency and improved customer experience, but there are multiple ways to achieve that goal.”

The biggest mistake CIOs make when modernizing an IT system is underestimating the project’s scale. Thorogood reports that his organization’s recent research shows that it takes 7.2 organizational restructurings to fully complete a digital transformation. “CIOs should be ready to course-correct during their modernization efforts, which means they will need a way to keep track of progress.” He advises using dashboards offering real-time data to monitor the transformation.

5. Dated systems show signs of misfit

A tell-tale sign that it’s time to start thinking about modernization is when there’s an overreliance on outdated technology. “Legacy systems — especially core systems in such key areas as human resources, finance, and sales — start to creak and just can’t keep pace with evolving business needs,” says Alex Galbraith, CTO for cloud services at cloud services provider SoftwareOne.

Outdated technology typically exhibits a variety of negative indicators linked to poor performance, including scalability, flexibility, high maintenance costs, and other issues that should be carefully monitored, Galbraith says. System obsolescence also leads to difficulties integrating with newer technologies as well as a lack of vendor support, he adds.

It’s all about keeping your finger on the pulse of your IT ecosystem Galbraith says. He recommends building a user feedback loop and carefully studying satisfaction metrics. “These can reveal what it’s like to be at the ‘sharp end’ of struggling systems, providing valuable insights into declining efficiency and effectiveness, and will quickly highlight opportunities for improvement and modernization.”

6. Internal outcry mounts

Listen to what your power users are telling you about your systems, advises Doug Murray, CEO of network management software provider Auvik. “Understandably, many enterprises may want to ‘sweat the assets’ in order to get the most out of their systems, but this tactic comes with risk,” he warns. “Such organizations wait until their systems become brittle and begin negatively impacting the business.”

“If users are complaining about usability, performance, functionality, and interoperability, it’s likely time to upgrade,” Murray says.

7. Services experience frequent disruptions

A growing number of enterprise-wide service disruptions, combined with negative workforce chatter, is an often-overlooked sign that it’s time for modernization.

“This could present itself through more frequent escalations, slower delivery of key metrics, or a noticeable rise in tickets from both customers and internal teams,” says Scott Frost, CIO at application strategy, design, and engineering firm 3Pillar. “These issues often reflect a deeper problem within the IT infrastructure and can serve as early warning signs.”

Frost recommends building a business case that clearly identifies the problems the enterprise is facing due to antiquated systems and practices. “This should include a clearly defined approach, expected benefits, and how those benefits will be measured,” he states. Key details such as costs, long-term maintenance strategies, and the project implementation plan, should also be addressed.

If funds for a full modernization aren’t available, Frost suggests identifying the most pressing business goals. “Align your modernization efforts to these goals.”