Why legacy IT holds back innovation
*Twilio allows app developers to easily add calling and messaging services. It made over $4bn in 2023. Telecom companies should have built this service themselves, but they couldn’t.
*Square has swept up 4m small business customers with payment processing and digital financial services designed for restaurants, retail and beauty businesses. This should have been offered by Visa or Mastercard, but it wasn’t.
Why do big businesses with vast resources and expertise fail to capitalize on lucrative digital opportunities?
Many blame complacency, culture, time, or lack of expertise. But this doesn’t entirely add up. Businesses spend fortunes on innovation and talent. The same experts drift between big business and startups, yet they perform differently in each.
We suggest that the reason big companies struggle with digital innovation is something else. They are not wired correctly.
Their IT infrastructure is built on legacy technologies that have been constantly upgraded, tweaked, and added over the years. The result is a complex maze of solutions, that hinders their ability to quickly launch new digital products.
While they do allocate substantial R&D budgets to develop core products over extended periods, the process of swiftly launching and refining a hyper-localized product or an app is a different story. It involves a series of steps, from idea approval to sandbox testing, system integration, access permission assessment, network testing, and more. This sequence can stretch over several months, a stark contrast to the agility of startups that can accomplish the same in days.
What if we could rewire this complex legacy IT? What if we could gradually dismantle it and reassemble it in a way that preserves all the business functions, but significantly enhances the business's agility? What if we could do this without disrupting the business's operations?
