You’re a COO or Business Manager with the remit of cutting your organisation’s operating costs. Or, perhaps, you’re a Business or Technical Architect tasked with simplifying your business group’s IT stack. With many organisations preferring to buy vs. build, your approach is likely to include selecting and implementing a third party system, then migrating existing system functions and data. A sensible approach, right?
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Yes, except that many organisations overlook the primary objective when mobilising “simplification” programmes. Success can only be achieved when one or more existing systems (and the costs associated with them) are switched off. Otherwise instead of having to manage “n” systems you now have “n+1” systems along with the interfaces between them. In this scenario, your “simplification” programme has actually had the opposite effect!
In our experience, the issue frequently stems from a poorly defined and implemented governance model and its impact on the decision to select and migrate to a third party platform. Such decisions are typically made by siloed or vertical business lines or a subset of the users of existing systems. This means that even if that line of business is successful in achieving its objectives, there are likely to be other users, trades or data which are not migrated because another line of business owns them. Consequently, they require a legacy platform. The worst news for these orphaned business units is that they are likely to be forced to pick up an increased cost per transaction as the (often fixed) costs are distributed among fewer users.
What’s the solution?
At the outset, the goal of a “simplification” programme needs to target the total migration away from the non-strategic system(s). There’s no point in individual lines of business successfully moving trades off a home-grown platform if there are no plans to move all other business lines and their trades and data as well. A useful approach to achieve a “complete” migration is to establish – at the outset – how to get the most difficult trades and processes off the legacy platform, not just the easiest ones.
Citihub believes it’s only by taking the holistic view that true simplification can be achieved. An effective approach that we have deployed is to:
- Understand the current operating model across all lines of business;
- Work with business users, again in all business lines, to define requirements, including current and future business processes, and to define a target operating model;
- Work across business and technology teams to define the technology strategy (including the partitioning of strategic vs. non-strategic systems);
- Plan and execute a migration programme to exit the non-strategic platform;
Measure success in terms of what gets decommissioned, not just what gets deployed.