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October 20, 2017
Cloud and innovation: Dealing with your heritage organization
By: Siki Giunta

In my previous blog on cloud-based innovation I mentioned some of the challenges in migrating from a heritage operating model to an agile one. How do you keep what’s good with your legacy org and phase out what’s not? In this blog, I’d like to delve into that subject of legacy in a bit more detail.

 

What’s good about heritage, and what’s not

Few companies would want to just uproot everything and start over. After all, the heritage organization understands the company’s process flows—meaning, how work actually gets done—better than anyone else.

But think about it: In a legacy org, people never seem to have enough time. They lack capacity. Once a process is set in motion, it can rarely be rolled back. By contrast, the cloud-enabled, agile organization offers plenty of capacity, has time requirements measured in nanoseconds and enjoys clear access to the latest technology, providing far more flexibility.

Creating a collaborative environment

Eventually, almost every successful company will need an agile, cloud-based operating model and organization structure to drive innovation and business transformation. But how does that transition happen?

One essential step is creating a collaborative environment where both the old and the new can thrive, while recognizing that the agile cloud business will have different talent needs than the heritage one. The right approach will be the one that best reflects how the new technology interconnects with the business and its changed strategic direction. In other words, technology leaders need to bridge the different requirements of the heritage organization and the new, agile one.

Thinking like a start-up

Most incumbents operate with organizational structures where multiple teams interact to plan, build and deliver services. The problem with that model is that the silos involved in each phase make speed to innovation and collaboration difficult to achieve.

Instead, companies should create flat, self-accountable, delivery “service teams” that work collaboratively as self-contained units without organizational barriers. This is an interesting way to handle the heritage or legacy organization. Companies can begin with an interim service-oriented structure within the heritage organization. Once the new, interim organization is in place and functional, migration to the target state begins and then evolves over time. This new structure minimizes traditional boundaries that impede collaboration. The service team structure offers increased agility and the ability to experiment with new ideas—“fail fast” and move on to new innovations.

Accenture: Re-skilling the workforce

Reskilling the heritage organization is another critical imperative. Accenture has gone through a transformation in its operating model and organizational structure, having invested more than $400 million in cloud technologies, capabilities and training for its client-facing workforce. To support these investments, it is currently reskilling its workforce and focusing on hiring “cloud-native” talent. It has also established an “Innovation Center for Cloud.”

Accenture’s internal IT organization is currently enabling agile, scalable cloud usage and services company-wide to make possible digital provisioning and operation. The program is establishing a robust new cloud IT infrastructure that can enable Accenture to implement digital services and capabilities. To date, Accenture has transitioned over 77 percent of its internal applications to the public cloud, with plans to increase that to 90 percent by 2019.

Choosing a path forward

Companies must determine how to establish cloud-based innovation in their organizations while also managing the heritage business. In my last blog I mentioned two potential paths forward: organic and agile. There are upsides downsides with each path. The organic path is “safer” but also slower. The agile path is faster but also riskier.

Although many companies will plan to make the agile switch, a sizeable number will fail to complete the transition due to organizational inertia and uncertainty.

C-suite leaders basically need to say, “We’re moving forward now with an agile, cloud-based model for innovation. We will help you make the transition, but are you with us or not?”

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