Find Out How We Reduce Technology Debt For Our Clients:

 

Core Catalysts consults for a wide range of clients in several critical industries, including financial services, healthcare, insurance, telecommunications, and more. In today’s technology-forward business world, we find that many clients cite system modernization as one of the major business challenges they need our help to solve.

However, they may not express their challenges in these terms. Our clients’ requests more frequently sound like this:

“We have aging applications that our vendors no longer support. Our IT and BU teams are coming near retirement ages, and they are the only ones that can make changes and understand our systems.”

“We can’t roll out new products or services very easily because of the time it takes our IT teams to react, and this is affecting our ability to grow our business.”

“We just acquired a new company with aging systems, and we want to move to new platforms for the good of both businesses.”

In each of these cases, and many more, what companies identify as a challenge can be summarized as “technology debt,” the result of aging systems.

What Is Technology Debt?

Technology debt refers to the costs that businesses incur as a result of outdated technology. It stems from the cumulative cost of cutting corners in system design, implementation, and maintenance over time.

• Forbes presented striking statistics in a recent article on the subject: companies that had the least technology debt posted annual revenue growth of at least 20% more than companies that had the highest technology debt.
• Studies from CodeScene, CIO, Gartner, and Stripe all cite that the organizations waste 23 to 42% of their annual development time and expenses on technology debt.

No business should let technology debt increase over time so that it severely impacts an organization’s agility, efficiency, and financial health.

A Solution Is System Modernization

System modernization can comprehensively solve technology debt through a phased, prioritized, and pragmatic approach:

1. Clarifying challenges
2. Assessment, prioritization, and planning
3. Implementation

This approach can positively impact the reduction of technology debt without excessive investment. It also provides a way to emphasize quick wins and incremental improvements, which contributes to essential organizational buy-in.

Clarifying Challenges for System Modernization

Most technology-debt-related challenges share certain characteristics with each other. Although our services and solutions are highly customized based on a business’s individual needs, identifying common threads inspires confidence and leverages our experience solving modernization issues across many industries.

These are some of the most common challenges our clients face:

• The issues they are facing are complex and interdependent. There isn’t a single out-of-the-box solution that will meet all of our clients’ needs.
• The client’s current efforts to modernize are time-consuming and involve many parts of the organization, thereby detracting from current business priorities.
• The decision makers for these efforts cross the entire organization, and each person has a different risk tolerance.
• A major driver has recently appeared to give steam to making the changes now.

Core Catalysts recommends starting the system modernization process by clarifying these common challenges as they relate to a specific business. This helps our team fully understand what resources, personnel, and approach we should implement.

Assessment and Prioritization

The next step is a straightforward evaluation to determine whether system modernization is a viable solution and what approaches to take to ensure success. The following evaluative questions prove useful to our clients at the beginning of their modernization journey.

• Is there an obvious business case for making the changes?
• How many resources will be required to help with the modernization?
• How much will it cost?
• What are the risks associated with modernization?
• Who will make the major decisions on modernization efforts (governance structure)?
• Will we need external assistance from consultants?
• Do we search for off-the-shelf solutions versus custom development?
• Do we have the right team to make major modernization decisions?
• Do we have the right teams to implement changes?

Strategic Planning for System Modernization

After a client has concluded that they are ready for modernization, our management consulting firm recommends following these specific, practical paths to get started:

• Document the current state of business processes, IT support systems, back-office systems, like billing and collections, and more.
• Document the future state needs of the organization (business units representing end clients and all supporting organizations) and tying these to the overall corporate strategy.
• Identify the priorities for modernization and high-level timing (i.e., the wish list).
• Determine what solutions will be needed (third party software, new platforms, and more).
• Develop overall budget needs and clear with executive leadership and the board if needed.
• Research third-party solution providers.
• Develop procurement processes for soliciting and deciding on third party providers and solutions.
• Plan for organizational readiness and change management.
• Structure the overall implementation resources required.
• Form a strong governance and program management structure.

Proven IT Implementation Approaches for System Modernization

This phase requires a heavy dose of patience, many “reality checks,” and disciplined execution to achieve sustained success. From an approach standpoint, we’ve had success with the four approaches listed below, each of which offer their own unique benefits:

1. Microservices architecture: A modern, modular approach to software development and deployment, microservices architecture allows clients to lower costs and reduce technology debt in a manner that “layers” into the organization with minimal disruption.
2. Cloud migration: This approach reduces reliance on an unreliable vendor, lowers licensing costs, and taps the skills of current staff. Phasing the migration strategy removes on-premises, insecure environments and replaces them with a cloud-based solution.
3. Core consolidation: Core Catalysts has used this method to consolidate all portfolio companies on an enterprise accounting platform to prepare for sale. This delivered best-in-class reporting, and the data uncovered new revenue streams.
4. Open-source solutions: Although open source was traditionally considered a threat to corporate security, every name-brand technology leader uses this approach at the sponsor, creator, consumer, or community level. Not without risk, open-source solutions may provide a significant benefit for businesses looking to modernize.

Connect With Core Catalysts to Learn More About System Modernization

We’ve learned many lessons about how to effectively and efficiently serve our clients as they move into the implementation phase of their modernization project. We look forward to an opportunity to share them with you.

Contact Core Catalysts today to learn more about every phase of system modernization and how to partner with our team to resolve technology debt.

About Core Catalysts:

Based in Kansas City, Core Catalysts is a leading business consulting firm, helping clients nationwide resolve challenges related to process improvement, IT implementation, product and service commercialization, revenue enhancement, financial modeling, program and project management, and much more. Well-known as a high-quality solutions-delivery firm, we are on time and on budget every time, offering results that meet, and often exceed, your expectations.

References:

Kupper, Jeffrey and Richards, Doug. “System Modernization & Managing Your Technology Debt.” Presentation, 11th Annual FEI Kansas City Professional Development Day, Embassy Suites Olathe, Olathe, KS, November 13, 2023.