For many companies, the digitization process begins with the same question: How do we prepare our legacy IT landscape for the challenges of digital commerce? How can we use it to drive our digital sales/business processes and business models, to improve customer satisfaction across all channels, and to flourish in an increasingly competitive marketplace? The emergence of new digital commerce and marketing models is increasing the complexity not only of corporate structures but also of business processes and IT.
When digitally transforming and networking their operations, many companies are faced with a legacy IT landscape that developed organically, becoming increasingly complex in the process. There are many reasons for this complexity, but the most common ones are:
- Either the company has grown through mergers and acquisitions, or individual locations, departments, or subsidiaries have a high degree of autonomy in their IT decision-making.
- Systems have been in use for many years and, as a result, they are no longer state of the art; upgrading is complex and expensive.
- Systems have been heavily adapted to meet the specific needs of individual departments and/or business processes.
- Systems are directly connected to each other through point-to-point integration, which creates greater complexity and mutual dependencies (see section on “Order management as e-commerce middleware”)
In many cases, these systems have been operating reliably for many years and users are familiar and happy with them. Unfortunately, though, these solutions are often unable to keep pace with growing customer demands and digitization of commercial processes. This creates a series of operational obstacles that hamper growth:
- Adapting the various legacy systems leads to higher IT costs and risks. Expansion is a complex undertaking, and it is difficult to integrate new systems into the existing IT landscape.
- Integrating new digital channels or new partners is a frustrating and time-consuming process. It slows down expansion into new markets and hinders the development of standardized product and service offerings across multiple locations and companies.
- Companies lack the agility to respond quickly to changing customer demands or market conditions, to test innovative sales and business models, or to offer new products or digital services.
- It is difficult to maintain or improve service quality without complete visibility of customers, orders, and inventories. This leads to dissatisfied customers and increased costs.
Most companies have two options when consolidating and integrating their existing IT landscapes:
The first option is to completely replace the existing systems while they are still in use. This is analogous to replacing a car’s engine while the car is being driven, all the while jockeying for market position. Such an ambitious approach is both time-consuming and expensive and comes with huge operational risk. In addition, any added value will only become apparent after the new systems have been fully deployed. It is also necessary to train staff in advance and, in many cases, to overcome their resistance to the introduction of new systems. This all militates against the speed of action that is a key prerequisite for successful digital transformation.
The second option is to adapt or expand the existing IT systems. While this is an effective way of solving current problems, it also creates problems for the future. The higher the degree of customization and the greater the number of integrated systems, the more complex it will be to implement future changes. This is an issue because one of the most important characteristics of successful digital transformation is the ability to respond quickly to changing customer needs and market conditions. The agility of a company can be measured by the flexibility with which its IT resources and business processes can respond to change. Thus, a highly customized IT landscape is not an appropriate solution, but rather an impediment to digital transformation.
With this in mind, companies are increasingly recognizing that they need greater flexibility in their business processes—without radically changing their existing IT landscape. Indeed, they are now coming to the surprising realization that successful digital transformation requires totally new technologies and solutions. The most pivotal solutions are those that bridge the gap between existing IT landscapes and new digital sales/business processes and business models.
An order management system is one such solution, as it provides a link between established internal IT systems and business processes on the one hand and new digital commerce models on the other. It builds on existing IT landscapes by adding networked digital commerce functionality—without changing or replacing the existing IT resources. This enables companies to expand their opportunities and drive their new digital commerce models with greater speed and significantly reduced risk.
Do you want to read more about it? Download the free Whitepaper now!