Going beyond legacy tech replacement to achieve digital success

08 January 2023 Consultancy.asia 5 min. read
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Before businesses take a great leap forward into tech-enabled transformation, they need to take a step back to ask themselves one big question. How do we build the environment – with the right talent, culture and ecosystem – so tomorrow’s processes run on tomorrow’s technology?

Technology is upending businesses across the world. According to the Tech Horizon report series from EY, just 1% of respondents had completed a tech-enabled transformation in 2020. This has grown to 11% in 2022.

However, few transformations live up to the promise on the packet. In fact, just 10% of transformations across the Asia Pacific region exceed expectations, while a third (33%) fall short. Why is this?

How companies are transforming to meet customer needs

Going beyond legacy replacement

Sooyeon Kim, leader of EY’s APAC Artificial Intelligence practice within the Technology Consulting business, places the spotlight on one of key reasons for underperformance – the fact that new technology should not only replace legacy systems, but at the same time should also reimagine the business processes it supports:

It doesn’t make sense to upgrade to state-of-the-art technology but maintain business-as-usual processes. For this reason, many business leaders have historically viewed technology transformations as risky propositions. “If our processes can’t handle it, why would we upgrade our technology to state-of-the-art?” was once the common refrain.

But out-of-date business processes and underinvestment in technology proved a dangerous combination during the pandemic.

Four technologies continue to be viewed as the digital foundation for a successful transformation

Since then, businesses have begun investing in technology at scale and speed. Investment in data and analytics, for instance, has accelerated rapidly in 2022, with 57% of respondents prioritizing this over the next two years, compared with 31% in 2020. This is followed by cloud (49%), internet of things (44%) and artificial intelligence and machine learning (35%).

These four technologies are at the foundation of successful transformation. But the technologies themselves aren’t as important as the business environment underpinning them. How do you build this environment? Four areas of focus:

1. Focus on key domains
Rather than investing in a single technology tool or platform, choose a combination of technologies based on your organization’s goals. Start by pinpointing your company’s “secret sauce” and then focus on the key domains where you can drive revenue and growth.

2. Change as fast as your customers
Consumer preferences are evolving at light speed and enterprises must adapt. Certainly, you must invest in the right data analytics and technologies to better understand your customers’ needs. But a shift in mindset is also mission critical.

Commit to innovation and new product development to improve customer-centricity and build trust by establishing governance measures for the ethical deployment of technology.

How companies are using data science and artificial intelligence (AI) in their transformation

3. Embrace data and next-generation analytics
Few organizations are truly data-centric, but many are well on their way by shifting resources to fill their gaps in data in analytics. Use data to create intelligence and insights and to continuously improve your operating model, products and services. You may also need to come up with measures to justify your continued investment.

4. Challenge processes to create new value
True tech-enabled transformation does far more than digitize paper-based processes. It reengineers processes, automates tasks and connects systems at a massive scale. To do this successfully, every task should be challenged. Why do you perform this task in this way? Is there a better way? By identifying the processes that can be streamlined – or even, in some cases, eliminated – we can focus our human talent on the tasks that are high impact and high return.

Get this right and reap the rewards. As the 2022 Tech Horizon report confirms, the companies with tech-enabled transformations that exceed expectations are forecasting a 6.2% increase in revenue growth for 2022. In comparison, transformations that fall short are associated with a 5.4% forecast in revenue growth.

Transformations that exceed expectations are more focused on innovative strategies to acquire digital and technology-related skills

Smart companies are using technology and data to enhance efficiencies, cost savings and the customer experience. But the smartest companies are also laying a foundation, with the right skills, culture and ecosystem of partners, to ensure tomorrow’s processes run on tomorrow’s technology.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the EY.