One of the most crucial decisions that technology leaders or business heads need to make is to determine the right time to migrate or completely overhaul their existing technology. This has been accelerated with the pandemic, which has demonstrated how integral technology has become to survive and sustain any business today.
According to a recent McKinsey Global Survey, many businesses have accelerated the digitization of their customer and supply-chain dealings, not to mention their internal operations by 3-4 years. And that is not all, their product portfolio too has shown some change with the share of digital or digitally enabled products having accelerated by 7 years[1].
The role of technology has thus shifted from being a source of cost efficiencies to being a critical component driving the business continuity and growth strategies.
So, when businesses are reviewing their technology assets they need to ask themselves: Why upgrade and why now? What are pros and cons related to upgradation of current solutions?
Why upgrade and why now?
Business evolution and continuity: The pandemic has brought in a major evolution in the way businesses across industries and sectors operate. Companies are re-evaluating their business continuity strategies to stay afloat and ahead of competition and have been forced to review their technology infrastructure and upgrade the same in order to adjust course to ensure business continuity and growth.
Availability of capital, resources, talent, and scalability of processes at play: Large enterprises are found to be at a better position to upgrade or migrate to new and emerging technologies, due to designated IT budgets and a well-structured IT infrastructure. However, the same cannot be said for the Small and Medium Enterprises (SMEs) as factors such as capital, resources, talent, and scalability of processes come into the picture.
Enhancing the effectiveness with IT infrastructure management: In order to have an agile and robust IT management in place, it is imperative to upgrade these through steps such as virtualization of workloads, investing in cloud services, and evaluating the need to upgrade software or hardware, among others.
Frequent downtime due to poor internet connectivity or faulty servers or legacy software: Outdated software and devices can result in downtime, which adversely impacts productivity, processes, as well as the reliability of outcomes. Moreover, obsolete servers and devices use more power, resulting in increased energy expenses.
Pros for upgrading technology
Improved productivity: Today, it is a well-accepted that technology makes business faster and more agile by enabling workloads to be processed quicker and better, thus improving overall productivity and efficiency across business processes and operations.
Improves communication: Better and wider range of communication and collaborative tools for internal and external audience (employees, customers, and vendors) offer better interactions and connectivity.
Data security and privacy: Latest technology solutions are more versatile, having enhanced security-checks in place which reduce risks of data breaches/theft as compared to aging systems.
Meeting the evolving business dynamics: The transition to digital-first operating model has enabled businesses to create value chains, meet the changing demands of their customers, and achieve greater agility and resilience in operations.
Reduced reliance on manpower for repetitive/transactional job tasks: Job tasks that are high-volume in nature or time-sensitive or use multiple people to execute or require compliance and audit trails, can hugely benefit from implementation of technologies like Business Process Automation (BPA), which can help in streamlining and standardizing processes, thus increasing overall productivity and reducing costs.
Cons of technology upgradation
Costs of upgrading/migrating to new technology, especially for Small and Medium Enterprises (SMEs): For SMEs that run on tight budgets, making investments in expensive technological upgrades or migrations is a major area of concern. And while subscription-based deals may look more attractive, they need to be evaluated carefully as they tend to be binding fixed term contracts.
Integration/incompatibility issues: Force fitting technology on to existing or outdated hardware /operating systems, etc., can often lead to integration or compatibility problems. Obsolete hardware can also put the critical data at risk due to incompatibility with the latest security updates and patches.
Need for reskilling/upskilling/training employees: Often, the new business technology apps or solutions may have complicated features that employees may not be comfortable using, making change management a necessary overlay to any change.
It is already an established fact that businesses cannot sustain and grow without technology as a key enabler. What is required is for organizations to work closely with their technology service providers, who can then help businesses evaluate their technology needs and find the best solutions that fulfil those requirements.
While it may seem that the disadvantages to technology upgradation are significant, the long-term advantages and return on investment are far more, not to mention the much higher cost associated with a “do nothing” approach.
[1] https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever
