Designing a profitable modernization strategy for AI readiness

This weblog will stroll you thru how one can design a modernization strategy that unites technique, processes, and know-how.

In our final weblog, I outlined what modernization actually means and why it issues. This weblog will stroll you thru how one can design a modernization strategy that unites technique, processes, and know-how. Getting these components proper will assist place your group to efficiently undertake new improvements like AI. I’ll begin by overlaying just a few frequent challenges to modernization, after which, I’ll use the Forrester Application Modernization Checklist to point out how a holistic modernization strategy can assist deal with them.

However earlier than we dive in, let’s recap what we’ve realized thus far: modernization means updating and enhancing property throughout all enterprise areas in order that they work nicely with evolving software program and the cloud. Profitable modernization goes past tech upgrades or cloud migration—it’s a holistic strategy to modernizing folks, processes, and skillsets.

The result’s know-how that’s extra aligned to significant outcomes, particularly relating to AI. AI is value excited about as catalyst and accelerator of modernization. In actual fact, 61% of enterprise leaders say their group plans to speculate most in generative AI as they put together for the following evolution of generative AI-infused apps¹.

Organizational and technical boundaries complicate modernizing for AI readiness

Although modernizing is crucial, it’s additionally difficult. On the technical aspect, companies might rely upon sprawling legacy app estates. An IDC survey discovered that a median 50% of a corporation’s utility property is legacy, which frequently ends in fragile interdependencies and bottlenecks². That is solely exacerbated when new applied sciences are added into the combination that enhance the complexity of knowledge know-how (IT) environments.

On the operations aspect, issues are simply as irritating. Many firms wrestle with handbook processes and safety considerations that decelerate modernization, made worse by a continuing scarcity of expert IT professionals³. Then there’s the query of management buy-in; as a result of modernization could be expensive, it’s difficult to justify it to key determination makers.

“It’s a multi-million-dollar train for banks to modernize their core. And for giant banks, it might even be tons of of tens of millions of {dollars} and a multi-year effort. So, a number of banks are hesitant to go on that modernization journey to the cloud and even to a more moderen core.”

Jeroen Unger, Director of World Alliances, Backbase

Failing to deal with these challenges can have critical penalties like elevated danger, platform-wide setbacks, and skyrocketing working bills. Companies might discover themselves locked right into a long-term recreation of catch-up that reduces agility and prevents innovation.

Guidelines: Constructing a holistic modernization strategy

Taking a holistic modernization strategy is vital. As we lined in our final weblog, companies that efficiently modernize their operations accomplish that by uniting their group from the highest flooring to the frontline⁴. However what precisely does that appear to be? Let’s stroll by the three vital focus areas really useful by the Forrester Application Modernization Checklist: technique, processes, and know-how.

1. Implement a transparent know-how technique (particularly round AI and coaching)

The place to start out:

Guarantee you’ve buy-in from management.

Embrace a mixture of broad and centered approaches to AI and generative AI.

Be certain that all organizational models and know-how stacks are well-aligned.

Any modernization effort must be justifiable to your management workforce. Be certain your technique is clearly aligned to tangible enterprise targets, since management typically focuses on outcomes that immediately influence efficiency. If app safety is one among your priorities, for instance, join this aim to cloud’s potential for price and publicity discount by built-in, superior security measures and compliance instruments.

It’s additionally essential that your technique contains an strategy to AI. Since AI is comparatively new, pay shut consideration to rising use instances that trace at its potential influence. From accelerating software program growth lifecycle, sooner anomaly discovery, and clever code completion, AI may also velocity up course of documentation by robotically producing studies, creating content material, or driving personalization on a deeper stage or extra clever enterprise processes. This wasn’t misplaced on main Australian grocery store model Coles, which obtained on board rapidly after realizing AI might be used to foretell what merchandise must be at what retailer at what time.

“Our total provide chain is being pushed by a machine studying engine. So, it’s giving perception at an excellent localized stage. We’re additionally utilizing it to make sure that we’re scheduling our workforce members primarily based on buyer demand and ensuring we preserve the cabinets stocked appropriately.”

John Cox, Chief Know-how Officer, Coles

A transparent technique additionally means constructing a roadmap for implementing, measuring, and monitoring modernization and AI initiatives over time. Remember that outcomes for the primary few months alone might not paint an entire image of success—advantages like upkeep, monitoring, and administration price discount might present up later. As a substitute, assume creatively about measurement, particularly by way of what issues on your business. You would possibly use cross-team metrics or behavioral adjustments to guage how groups are adopting new instruments. Or, for those who’re in retail, perhaps you’d monitor how lengthy it takes for patrons to maneuver from purchasing to buying.

Lastly, don’t overlook to contain your workforce. Any holistic modernization technique ought to embrace a plan for upskilling staff throughout all departments to make sure widespread adoption of latest instruments and applied sciences.

2. Undertake fashionable operational and know-how processes

What to do first:

Map operational processes on to modernization actions.

View cloud migration as a method, not an finish, to realizing AI worth.

Undertake fashionable operational approaches and monitor the outcomes of this shift.

Subsequent, check out your processes. Whether or not that’s your governance or app growth workflows, they need to map on to your modernization actions. When you’re seeking to modernize your legacy purposes, for instance, take into consideration how new tech just like the cloud would possibly issue into your growth course of. This step is vital to get proper—many companies report their greatest obstacles to modernization are organizational and political in nature. It’s additionally particularly necessary to develop plans for infusing AI particularly into your current workflows, like European PayTech firm Nexi did.

“With the standardization and momentum that comes with the [Microsoft] Azure transition, we centered on automating extra processes and taking one other leap ahead.”

Lars Einar Harberg, IT Director eCommerce Funds, Nexi Group

Don’t overlook to make use of metrics to trace your course of updates, too. Modernization outcomes are measurable once they’re tracked in opposition to cross-business unit, cross-team (e.g. gross sales, advertising, and product) KPIs (key efficiency indicators) and OKRs (targets and key outcomes). Suppose you need to measure operational effectivity, time-to-solution worth, high quality, and depth of observability and manageability. You might want to guarantee that the way in which you measure isn’t solely significant to 1 set of stakeholders.

3. Replace know-how stacks supported by strategic partnerships

What to do first:

Restrict know-how sprawl and improve tech stacks.

Set up your strategy to safety early on.

Hunt down strategic companions.

The final cease on our guidelines is the apparent one: know-how. Your modernization technique should embrace a plan to combine your know-how stacks with assist from strategic companions. Built-in know-how stacks are units of software program, platforms, and instruments that work collectively to keep away from silos and level options that create inefficiencies. They can assist companies generate higher knowledge, unlock richer insights, and successfully incorporate AI.

However as a result of these stacks add complexity on the backend, guarantee your efforts are guided by trusted advisors. Nexi realized this early on and developed a strategic partnership with Microsoft, which supplied complete sources and assist.

“We labored intently with Microsoft inside architects to double-check on architectural selections. Microsoft helped us transition from a pure growth mindset to a DevOps mindset, embracing ‘you-built-it, you-run-it’ as a basic philosophy.”

Jens Barnow, Senior Vice President, Group Know-how, Nexi Group

Your plan must also embrace a method for addressing safety considerations early—ready till issues come up can decelerate modernization at greatest and compromise safety at worst.

Begin your modernization journey in the present day and lead your online business into the long run

When modernization is finished proper, the outcomes could be transformative. We’ll check out the precise advantages in our subsequent weblog, however many organizations report outcomes starting from elevated effectivity to improved technical capabilities. And naturally, many grew to become AI-ready. In response to one Forrester examine, 75% of respondents agreed that migrating to the cloud was important to AI and machine studying adoption⁵.

So, are you prepared to start modernizing your online business? Begin by studying the primary weblog in our collection on the fundamentals of modernization and take a look at the Forrester Consulting Application Modernization Checklist that Microsoft commissioned. Don’t overlook to remain tuned for our subsequent weblog and discover the next sources: