Process optimisation — the constraints of legacy technology

The New Zealand energy sector is in a state of unprecedented change. Demand and supply sides are both being disrupted by factors such as the United Nations' 2050 decarbonisation target, the government's new large scale renewable generation options (e.g, the NZ Battery Project), and the rise of distributed energy options like household solar and electric vehicles.

In the recent IDC InfoBrief [New Zealand's State of Agility 2021], respondents were asked to rank the most pressing challenges that were inhibiting their organisation. Heading the queue was the burden legacy technology infrastructure and applications put on their business. Legacy systems are the biggest constraint because they are unable to grow and change at the pace that will be needed over the coming decades.

The key challenge right now facing the energy sector is that it will have to cope with not just growth, but complexity as well.

The desire for change is there, but like all businesses with embedded ways of operation, to execute on it is not that simple. Systems like core CRM (customer relationship management) or billing engines within energy companies are typically highly integrated and changes are long and complex to make.

Again, the recent IDC InfoBrief around digital agility is interesting. While it wasn’t sector-specific, it’s still very telling that when questioned around the automation of major operational processes, 44 per cent of organisations reported still using largely manual tasks while only 13.5 per cent claimed that their core processes have been automated and standardised.

Obviously, change comes at a cost, but there’s an even larger cost if an organisation chooses to stay stuck. Those organisations yet to embrace becoming digital agile are consuming up to 82 per cent of their IT budgets on maintenance and customisation of existing systems. Businesses are, then, massively constrained by the fact that so much of their available resources are going into just maintaining the status quo.

When you look at process optimisation, the way forward is to shift to an 80/20 budget breakdown to create more space for energy sector organisations to accelerate in creating the 'new' world.

At Datacom, we’ve undertaken a number of legacy technology modernisations. We’ve seen organisations able to take old systems and wrap them in modern technology, or put a bubble around their legacy constraint and find ways to interact with it or to reinvent these systems on new platforms. These technology modernisations typically have a dramatic impact on the costs, complexity, and functionality associated with transformed systems.

Technology is not the whole answer and agility is a necessary part of any smart solution. The only certainty is change, and one of the best ways of not just dealing with change but actually using it to maximum positive effect is to work on your process optimisation. This means embracing digital agility to ensure you’re in good shape for dealing with the demands of today and whatever lies ahead. There are so many moving parts to keeping legacy systems running in large organisations that working in a flexible, responsive way and linking to the customer response is the best solution. The days of undertaking behemoth projects in this sector, like others, should be a thing of the past.

The imperative for change is here and growing from the pressures of the changing market, whether it's governmental, regulatory, competition, customer experience, or maintenance of social licence. Viewing these pressures as an opportunity to embrace digital agility can help turn the constraint of legacy technology into a stepping stone for optimising processes and enabling transformation. When organisations get the digital agility transition right, they benefit by connecting better with their customer base, growing their market, and engaging with their staff. In a time of uncertainty, this has to be a good outcome for everyone.