Why Legacy Infrastructure Holds Large Organizations Back

By: Phil Simon| - Leave a comment

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Throughout history, many organizations dominated their industries by virtue of their sheer size. That is, organizations that reached a certain level of revenue and/or market share could expect to realize some level of prolonged success—even with legacy infrastructure and technologies. To paraphrase from Seinfeld, to the victor belonged the spoils.

By and large, however, this is no longer the case. Today and often without much warning, startups and small companies disrupt incumbents quickly. (For more on this, see The New Small.) Uber, AirBNB, and other on-demand companies are cases in point.

Thorny People Issues

At a high level, these upstarts often do many of the same things as their larger brethren do. These ambitious newbies just do them better, quicker, and/or cheaper. For instance, Uber provides quick and affordable rides without the hassle of calling a cab and coordinating location.

Of course, in a fundamental way, it’s always been easier for startups to usurp or leapfrog incumbents. Has this always been the case? Sure. For instance, by starting over after World War II, Japan was able to quickly modernize its infrastructure, grow like a banshee, and establish itself as a manufacturing behemoth. It didn’t have to supplant legacy technologies.

At an enterprise level, greenfield sites need not deal with employee training, thorny data and integration issues, etc. I’ve said many times that there’s no magic “cloud” switch that ports mature applications to more modern delivery methods. Mature organizations further suffer from an ability to subtract and simplify. That is, they’ll add new applications, technologies, and components without retiring antiquated ones. The resulting morass of system eye charts and spaghetti architecture drive many CIOs to drink.

And let’s not forget the other elephant in the room: aversion to change, especially at high levels. As I’ve seen firsthand, plenty of CXOs are loathe to retire “their” applications. Personal pride stands in the way of updating antediluvian applications and technologies. These execs often block any attempt to modernize a company’s infrastructure.

Brass tacks: Lamentably, many organizations these days today can’t act quickly enough to respond to market conditions, but don’t take my word for it. IBM’s white paper makes the case that IT infrastructure prevents quite a few companies from meeting new business requirements and capitalizing on new opportunities.

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Simon Says: Consider subtraction as well as addition.

There’s no simple solution to this problem. Cultural, regulatory, and internal political issues hamstring many organizations and enhance startups’ inherent advantage. Perhaps its best for C-level execs to think about how quickly their organizations can respond to new opportunities. If it takes too long, then adding more complexity only exacerbates matters. Consider subtraction by subtraction, not by addition.

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About The Author

Phil Simon

Professor at ASU’s W. P. Carey School of Business

Phil Simon is a frequent keynote speaker and recognized technology authority. He is the award-winning author of eight management books, most recently Analytics: The Agile Way. He consults organizations on matters related to communications, strategy, data, and technology. His contributions have been featured on The Harvard Business Review, The New York Times, Fox News, and many other sites. He also teaches system design, analytics, and business intelligence at Arizona State University’s W. P. Carey School of Business.

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