Our Modernisation Journey

For a long time the default response to an aging legacy core business application was wholesale replacement - those were the golden days of the ERP and the ‘off the shelf’ package solution.

More recently organisations have started to think about what they could do differently to leverage the investment they have made in their ‘legacy’ applications and how they can better manage the risks associated with whole-sale replacement. There’s certainly no shortage of horror stories about large-scale system replacement projects going off the rails, and the price tag of some of those projects is eye watering - out of the price range of most organisations in New Zealand.

So what are the alternatives? The key to understanding what alternatives are available to you is a clear understanding of your ‘why’. Why do you need to do anything about your legacy application at all? Perhaps it’s about supportability - the application mostly does what you need from a business perspective but the software and hardware it runs on is no longer supported? Perhaps it’s about usability - maybe you need it to run on a mobile device but it’s been written to run on a desktop computers? Is it a workforce thing - are you struggling to find people who ‘code your language’? Whatever the reason the good news is that you have a range of options available to you including modularising, modernising, replatforming, extending, replacing etc. The picture below shows our ‘Modernisation on a Page’ view, explained in more detail below.

For us the ‘why’ was centred around enabling our organisational transformation. The context in which we operate is changing rapidly and we need to ensure we have fit for future capabilities and platforms in place to navigate those changes.

Our legacy application is over a decade old and is a monolithic application made up of a 11M+ lines of Java code. To get it future ready we needed to focus on first modularising the application as a lead into then modernising or replacing the various components.

We have invested a lot in building the right capabilities and culture within our teams to support the shift we need to make. Modularising is as much about changing the way our teams work as it is about technology changes such a microservices, APIs and changing code repository structures etc. Moving towards a Feature Driven Development process, and bringing along the right DevOps, Agile and CI/CD building blocks, represented a change to our working practices, processes, tools and the way we think about things.

One of the key challenges facing organisations who move towards delivering online services is agility and speed to market. Customer don’t want to (and won’t) wait weeks or months for changes or fixes to your application. That may have been ‘ok’ in a traditional enterprise IT context but it won’t work when you shift to external customer delivery. You need to be able to respond to change in a timely manner and that takes investment in infrastructure and capability. For us modularisation is a critical enabler of the move towards a build pipeline model which allows us to better meet those challenges associated with being an online service delivery organisation.

The delivery pipelines also underpin our move towards a product-centric team structure, where each team can run its own product-based delivery at its own cadence.

As part of modernising the application we also had to make some changes to the underpinning infrastructure. Our shift towards being more evidence-based and intelligence led as an organisation means we need to make some big changes at the data layer. Whilst we run enterprise grade databases today we know that over the coming few years the volume and velocity of data we deal with will increase significantly. We need to ensure we have a suitable data infrastructure that can not only support advanced analytics but over time allows us to get further into the realms of machine learning, analytics and AI.

We are also looking at what investments in business intelligence and data analytics capabilities we need to be making which will build on this modernised data layer.

All of our infrastructure is currently either virtualised (on-premise model) or cloud based. Our current batch based/key date driven model means we have a few high capacity days a year - for example, around 100,000+ users visit the website in one day in January each year. We have traditionally capacity managed to those peak workloads but the hybrid model we’re adopting allows us more choice around where we run our workloads and the ability to burst during high peak usage times. Our shift towards being event driven - rather than batch based - will also help to alleviate some of those peaks over time.

Using a mix of virtualisation, containerisation, serverless and software as a service allows us maximum flexibility in relation to the platforms and infrastructure we use to deliver our products and services.The adoption of cloud and ‘as a service’ based offerings mean your finance model is going to change - we are adopting a FinOps based model to work through these changes and implement the right risk and cost control points.

We have made good progress on our modernisation journey - having delivered a major modularisation and upgrade release earlier in the year - and we are already starting to see the benefits of a more flexible, responsive architecture.

At the same time we are working on the development of business to business (B2B) and business to consumer (B2C) APIs, sorting out our Digital Identity Management (IDM) platform, replatforming legacy line of business applications, looking at our business intelligence & data analytics capabilities as well as shifting our operating model to be DevOp-esque.

Piece by piece - step by step - we are putting in place the building blocks which will support our organisation transformation into the digital age.

Stalling transformation, its a leadership thing.

A rapidly growing number of organisations are reporting their digital transformations as either about to stall or stalling. In fact, according to a November 2018 survey by IDG, more than 50 percent of companies polled have abandoned their transformation projects. Forrester echos this, claiming that half of all digital transformation projects have stalled.

Those are some worrying stats at a time when all industries are undergoing disruptions and fighting for long-term relevance. I believe we’ve long passed the ‘transform or die’ stage; it’s no longer even a choice however too many organisations, and exec teams, still don’t feel that sense of urgency. Give it a few more years and those organisations will become the taxi companies of the transport industry.

Various analysts attribute these stalls - or deadlocks - to a range of factors: budgets, competing priorities, organisational and technology silos, security concerns and that fantastic catch-all of culture all get mention in these various whitepapers.

In my experience the issue is dead simple in the majority of cases; it hinges on leadership. Organisations simply have the wrong type of leadership to drive transformation. The old adage of ‘what got you here won’t get you there’ has never been truer.

So how do you know if you have the wrong type of leadership? There are a number of qualities to look for to assess if you have the right type of leadership in your organisation:

• Self-awareness - the right leaders know their both their strengths and weaknesses, and are prepared to be open and real about them. The industrial age thinking that management have all the ideas and answers has really had its day. If you have to constantly convince senior leaders that it was ‘their idea’ to get anything done then that should be a red flag.
• Greenwashing and unjustified optimism - another casualty of the industrial age management wisdom is the drive for positivity, especially the kind that happens just before an organisation folds. I’m a huge believer in positive thinking and pushing forward but the reality is you can’t effectively manage by fairytale. If you’re always greenwashing or editing memos to paint a positive story then that should be a clear warning flag. It’s something I fondly call ostrich management - head in the sand…going nowhere.
• Decision making and autonomy - modern leaders empower and energise their teams to achieve results. Devolution of decision making is something to watch for - if every decision feels like it’s yet another memo heading up to the exec team then that is usually a bad signal.
• Problem solving and exploration - complexity is increasing all around us on a daily basis - divergent thinking and exploring possibilities are essential qualities of leadership. Leaders should facilitate the solving of problems - not aim to be chief problem solvers themselves, which usually turns into micromanagement.
• Measuring value and contribution - again, the industrial age ‘time served’ model simply is no longer fit for purpose. Measuring someone’s contribution is about results - here and now - not how long they have been around. The ‘job for life’ days are over and we need to shelve the thinking that came with it. Jack Welch of GE fame advocated regularly culling the bottom 10-15% of performers which seems a bit brutal but equally modern, agile organisations simply have no room to be piling up the deadwood. If your leadership structure is heavy with people whose value and contribution is unclear to most people around them then perhaps its time to review it.
• Collaboration and influence - modern leadership is inclusive and collaborative, bringing all parties along on the journey as much as possible. Influence has replaced authority as one of the most powerful tools in your leadership toolkit. An operating model where conversations only happen in pockets and decisions are made at the ‘apex’ kill collaboration and innovation and are something to watch out for and avoid.
• Resilience and navigating ambiguity - leadership teams that are constantly asking for more information before making a decision have a bumpy ride ahead - the world is increasingly ambiguous and being able to navigate that ambiguity (and it’s results) is an essential trait of fit for purpose leadership. A balance of data and ‘gut based’ decision making is required and if your organisation gets paralyzed by wanting more data it will simply be left behind by others who are willing to operate in a more ‘just in time’ manner.

The best leadership teams I have worked with have focused just as much on how they lead as they have on who/what they lead. Leaders should be holding each other accountable to exhibit the right values and behaviours, especially at an executive level. If you’re not having a conversation to check in on how you’re leading on a regular basis then I’d suggest that should be top of the agenda for your next exec team session. Be willing to be hard on yourselves as leaders and actually act on what you find - too many teams spend too much timing explaining away things rather than actually acting on them to fix whatever issues exist.

I totally understand there are plenty of people who have built careers on doing what they have always done, and that change is confronting - we are however moving beyond industrial age management into digital leadership which is a different ball game and change is the new normal. Steady state - or stalling - simply isn’t good enough anymore. We need to usher in a new generation of digital business leadership - we owe it to our organisations, our customers and most importantly our people.

Next Gen Digital Execs

It’s a conversation I’ve heard so many times before. The executive says: ”I don’t understand technology and don’t want to; I’m interested in the business outcomes.” The technology manager laments that the executive doesn’t get technology even though the whole business runs on technology and things come to a grinding halt whenever systems go down.

The interesting, and crucial, point which both of those perspectives miss is that in fact digital business isn’t about technology at all. It’s about what technology can enable the business to achieve. The governance & management models that were used to manage machinery & plant in the industrial age don’t work in the digital age because technology and business today as synonymous.

There are very few businesses today that aren’t reliant on technology for their everyday operations and yet there are still so many executives & directors around that wear the ‘I don’t understand technology badge’ like it’s something to be proud of. For me it shows a lack of awareness and understanding of digital business. It’s a bit like saying ‘I don’t get that balance sheet thing’.

A few years ago technology adoption was seen as a choice with most executives seeing technology as an ‘opportunity’ but the speed of disruption has overtaken this to the point where digital transformation is no longer a choice, its an imperative. Organisations that aren’t equipped for Digital Transformation are being increasingly marginalised. The problem is that many don’t see it coming due to a lack of digital governance and literacy.

Now I’m not for a moment suggesting that executives & directors should all be fixing their own laptops before taking up their roles but they need to be aware of what technology means for the organisations they are leading and directing. Digital business and technology doesn’t stand still for a nanosecond and so what’s even more important than that understanding is the ongoing commitment to growing and expanding their knowledge of digital business as it evolves.

Transformation is incredibly uncomfortable - it takes existing skills, knowledge & assets and unsettles them, often greatly diminishing their value almost overnight. That applies not only to processes, facilities and materials but to people. Just like the way we do business needs to be constantly changing & evolving so do the people & skills leading those businesses.

The way we govern & manage needs to be in step with how we do business (digital) and the assets (technology) we use to deliver products & services to our customers. Using industrial age governance is never going to help an organisation succeed and thrive in the digital world.

The corporate and public sector landscape is littered with failed projects with countless reviews pointing to ‘governance’ as the most common reason for failure. I suggest it’s not that there is a lack of governance - most projects I have reviewed have arguably been over governed - but that the governance being used is wrong. It’s a bit like trying to hammer in nails with a wrench just because both are tools - results are likely to be unpredictable and suboptimal.

The next generation of executive needs to be committed to ongoing growth & development - being willing to check what used to work when business was analogue at the door in favour of skills & experiences that businesses need to survive and thrive in the digital age. I’m still perplexed by how few (comparatively) digital executive leadership training and development offerings exist in the market. So often it’s left to Chief Information/Digital/Technology Officers to ‘educate up’ within their organisation as they go.

I would suggest that organisations that will succeed in Digital Business (and its early days) are the ones that recognise and integrate digital & technology competencies into their development programs early, at every level of the organisation including the executive team. Executive leadership development (such as Exec MBAs) need to be re-oriented around doing business in the digital age. With technology automating some many things I would argue there are plenty of opportunities to make space in the curriculum by retiring legacy skills.

Now is also the right time for to seriously consider new management tools such as reverse mentoring, which flips the traditional mentoring model of a executive or older staff member advising a (more seemingly) junior one. Interestingly reverse mentoring has been around since Jack Welch was running GE but few organisations have actually implemented it - I suspect that again this is because it challenges conventional wisdom and views on experience, who has the answers etc.

I would argue that this sort of mentoring arrangement is far more powerful than the traditional model as both parties stand to gain a lot from this arrangement; if both enter the agreement with the right mindset.

The online world is a rich source of business and technology information. Social media provides a rich source of information & insights about your organisation and sector. Chances are your customers are talking online, do you engage with them in an authentic and meaningful way or do you see social media as just another channel to push our your corporate communications (another overhang from the industrial age) and answer basic questions the call centre should be handling? Social media is all about customer engagement so grab a twitter handle and dive in!

And just for the record there is no such thing as a digital strategy - your business strategy should be digital by default. If you take away nothing else from this post then let this be it.

Directors and executives need to have an in-depth understand (on an ongoing basis) of what digital disruption/changes in technology mean for:

• the products & services they deliver to their customer, and how those are delivered and experienced.
• their teams and how they continue to re-engineer, re-skill and optimise the way they operate.
• their operating model and how that need to continue to evolve to remain relevant.

Specific vendors and technologies will come and go over the coming decade and so organisations need to be focusing on building digital capabilities and competencies (starting with digital governance and leadership) to help them not only survive the transformation but thrive & grow through it.

End of This Tour - Q&A

Over the last 3 months I have spent quite a bit of time mentoring, advising and speaking on a range of digital and technology related topics. The interviews and panel discussions have all been fun and I’ve met some great people along the way but they have also demanded a lot of my time (most of it being my own time, outside of work hours) and given other time pressures starting to stack up at the moment that’s going to be unsustainable. So it’s time for a break.

I will still be working with some specific groups on key initiatives but please don’t be offended if the response to your request to speak at your next event is ‘no’ - nothing about you or you event, there are just too many conflicting demands on my time.

I thought I’d capture some of the common or re-occurring questions (and my answers) from panel discussion and interview as a blog post, hopefully providing you with some useful insights & experiences (from my perspective - as always I reserve the right to be wrong or to change my mind).

So with that said, let’s get into it.

What is a “digital culture”?

In my experience digital culture is many things to different people and is applicable to multiple topics — but it all boils down to one thing: the relationship between humans & technology and how that shapes our everyday lives. It’s about how technology, and the access to information (internet), shapes the way we think, interact, behave and communicate. In most organisations digital culture manifests itself as increased agility, a closer connection with the customer, the willingness to take more calculated risks and to adjust course based on the data collected along the way.

What’s the cost to organisations of pursuing a digital cultural change?

Today almost every industry & sector is being disrupted by technology and so I think pursuing a digital culture is no longer a choice most organisations can afford not to make. In a digital world, one of the biggest risks is not taking risks. Developments in things like artificial intelligence and machine learning will undoubtedly change our everyday lives, our society and the economy yet no one can foresee (with too much certainty) exactly how things will change. Having a digital culture will allow you and your organisation to navigate these times of uncertainty & capitalise on the opportunities they bring rather than pulling the blanket over you head & hoping it passes.

Organisations often count the cost of pursuing digital change in terms of cannibalizing exist revenue streams - instead they should focus on the opportunity to remake and grow those revenue streams in a digital world.

How do you measure the success of the digital cultural change and when does the journey end?

Culture change is not an activity with a clearly defined beginning and end - the reality is that the journey never ends but it gets more interesting and impactful with time.

I have previous measured digital culture change along 4 key metrics:

1. People Measures - this is largely about self assessment. How do people that work at your company feel - do they buy into the vision, can they relate it to their role and what do they say about the organisation in non work circles?

2. Customer Measures - how do customers and the community experience your products and services? What are you doing well that you should continue doing, what could you be doing better and what should you stop doing all together?

3. Business Indicators - how does what you’re doing around culture link to your vision and link with your business imperatives? This is the realm of business efficiency powered by cultural change. Business indicators usually fall into two categories: tangible and intangible; both of which are important.

4. Financial Measures - in my experience if you take care of your people, customers and business then the money takes care of itself. The aim is usually to increase revenue, avoid cost and take risk out of the equation as much as possible.

In an organisation who is responsible for driving the change to the current culture?

I think the answer is everyone, but it needs to be led from the top. The most successful change initiatives I’ve been part of have been based on cross-functional teams demonstrating a range of transformations and building the rationale and momentum for change. Never underestimate the squeaky wheel as a catalyst for change.

I’ve always maintained that the culture of an organisation is the behaviour of it’s leadership. Consciously or unconsciously leaders model what is expected - and accepted - in the so doing set out the culture of the organisation.

Change requires space - it’s very hard for people to participate in change initiatives if they are working flat out all day. The key is to allow people the time, space and license to figure out what a digital culture means to them.You can support that through coaching, mentoring, education workshops and setting out some time ring-fenced for change & innovation.

What are the benefits and potential challenges which an organisation might face when embedding a digital culture?

Each organisation is different and working out what embedding a digital culture might mean for your organisation can take some time. Benefits I’ve seen realised relate to improved efficiency, faster decision making, improved customer experience, being able to reach new markets and of course improving profitability/service delivery.

The main challenges I’ve seen have included resistance to change, lack of understanding of the need for change (these two often go hand in hand), not having the right people around the table, not collecting the right data to inform decisions as you go and the cost & complexity of integrating with legacy systems & processes.

Sometimes organisations are presented with so many different options that they simply don’t know where to start. In that case starting with the squeaky wheel and building some momentum is a good place to look first.

What strategies are available to change/challenge the existing culture within an organisation?

In my experience the most successful strategy for change is based on leadership - selling the vision of the future and helping people to see themselves in that future. It’s about creating enthusiasm and energy for change - seeing the opportunity and embracing uncertainty. That way everyone takes a stake and ownership in the change and rallies towards a common goal(s).

The second approach is centred around management; redefining roles, measures and control systems creates a way for people to make the transition from today to the future in a relative ‘safe’ and easy to understand way.

The last - and least effective - approach is around control. Using coercion and disincentives as a last resort, if the first two approaches fail. In my experience the control approach is really a stop gap and often is simply an off ramp for people who don’t want to or can’t make the change with the organisation.

Will we all be replaced by machines?

Machines have been replacing humans for decades - you only need to walk through a car manufacturing plant to see how many robots already carry out tasks previously done by factory workers. It’s not a case of whether this trend will continue but rather how rapidly it will accelerate in the coming decade, enabled by machine learning, algorithms and artificial intelligence.

To date the focus for machines has been around increased efficiency and decreasing error or defect rates, the next stage is for machines to move into jobs that require more than just precision automation and repetition.

Machines will definitely change the nature of many jobs but I think in many cases they will augment - rather than replace - them. The usage of machines will create the opportunity for workers to focus on different, potentially more valuable, activities. For example, ATMs have been around for about 50 years but during that time the number of bank tellers has actually risen slightly - the nature of what they did changed when ATMs were introduced.

I think the introduction of more and more machines will change how we think about jobs and what a job in the future will look like.

Which technology do you think will make the biggest difference, why and how?

That’s a really tough one to call. I think my top three would be autonomous vehicles, artificial intelligence and wearables. I think all three will significantly change the way we live our lives within the next 5 years but different industries and geographies will adopt the technology differently.

For me the major disruptor continues to be Moore’s Law. The relentless improvement in price, performance, size and power utilization of computing power that Gordon Moore predicted back in the 1960’s is in my mind still the uber disruptor. Who knows what is just around the corner as a result of this relentless march of technology progress.

Digital culture is about being able to adopt and leverage technology developments are they become available and maximise their value to your customers and organisation.

What’s the secret to successful high performing teams? What is the ideal team makeup in terms of roles and size?

I’m an advocate of product teams that fit the ‘two pizza’ rule - the permanent team size should be no bigger than you can feed with 2 pizzas. The team should include cross-functional team members who can take a product or service from inception to production - albeit sometimes they might need some external help or input. If possible each team should publish a clear set of interfaces/APIs so that other teams can integrate with their product easily.

Team members should all align behind a shared vision and set of goals.and in my experience visual management tools such as Scrum, Kanban or similar work really well in this type of team dynamic.

That’s the desired state - it’s not always possible to start out that way (especially if you have legacy systems) - and it may be a matter of working progressively towards that team structure.

Inter-team communication is vital - frequent information sharing sessions and demonstrations keep teams connected and foster innovation/fresh thinking.

Hopefully you found this an interesting read - if you have any burning question then fire them at me and I’ll do my best to answer them based on experiences.