We know how it goes. The aging systems in the company are deemed too complex and that it can never be fixed. The business opts to leave it and have IT continue to manage it in the interest of short-term gain. And the vicious cycle of technical debt continues until the business falls behind nimbler competitors.
There must be a better way.
In our new paper, Run Optimization: Overcoming the Biggest Barriers to Digital Transformation, one of the options that we discussed is leveraging outsourcing as a vehicle to fund modernization. This can be tremendously valuable in helping to speed up technical debt elimination, but a key lesson is that to do this right, the contract must be focused on both service delivery and modernization.
Consider a large organization that outsourced the operations of a core business process to a vendor. Anytime there was a bug or something that had to be changed, the vendor had to fix it. But they also had to spend a little time making it less complex, like reducing the number of lines of code.
Having this KPI meant that the vendor made the system more efficient while fixing a problem. As a result, the system modernized itself over time. In five years, it had been modernized without a modernization project or funding to do it. Having the right program and the right outsourcing vendor in place proved invaluable for the organization.
Whether you’re identifying cost-saving opportunities and reinvesting the savings to modernize, or if you’re modernizing as you go, technical debt minimization should be a self-funding program. IT leaders must make modernization business as usual, not a one-off project.
Domenic leads the firm’s research, marketing, and communications function as WGroup’s CMO. He is a skilled strategic advisor, a thought leader on IT transformation, and a subject matter expert on a broad range of topics including M&A and Run Optimization. He works closely with WGroup’s consultants, and helps clients drive their businesses forward by optimizing business performance, creating value, and achieving cost savings.