Many companies today function with outdated legacy systems and continue to hum along just fine. After all, their trusty systems, many of which were groundbreaking when they were first introduced, are what got them here in the first place.
For these lucky companies, their resilience and longevity may be due in part to a long-entrenched market position or a lack of competition. No matter the reason, they appear here to stay.
A larger tier of modern organizations, the ones facing normal to severe competitive pressures, risk failure due to technological advances rendering them outdated. If they don’t get a modernization plan in place, they risk becoming outmoded, leading to significant losses in revenue, customer trust, and stakeholder value.
Modernization is not an easy or inexpensive process, but it is a necessary one if companies want to remain relevant and avoid the fate of the four companies outlined in this post.
In this post, we explore the top four examples of companies that failed to modernize their legacy system and paid a heavy price.
Blockbuster
Blockbuster, the leading video rental chain of the 90s, failed to see how thoroughly online streaming technology would overtake the market. The company stuck to its brick-and-mortar business model and ignored its primary competitor, Netflix, which embraced the new technology and rapidly gained market share. Blockbuster failed to reinvent its legacy system, indeed its very business model, leading to a loss of revenue, decreased customer trust, and eventual bankruptcy.
Sears
Sears was once the leading retailer in America, a position it held for decades, but it failed to innovate and keep up with changes in the retail industry. A fundamental problem: the company’s outdated IT infrastructure made it hard for them to adapt to the e-commerce boom, sending it into a downward spiral and eventual bankruptcy. While it’s easy to imagine what a modernization effort would have looked like at the time with the benefit of hindsight, lack of a plan and execution finally did them in, in slow motion.
Kodak
Kodak saw its market share decline rapidly as digital photography gained popularity. Like Blockbuster and Sears, management never saw fit to adequately adapt to the emerging landscape with a wholesale investment in new technology that catered to changing consumer preferences. The company was eventually forced to file for bankruptcy in 2012.
Nokia
Nokia was the world’s leading mobile phone manufacturer for many years, but its market share fell off a cliff when competitors invested in smartphone technology that featured apps. Explosive growth in this new mobile computing technology made by the likes of Apple quickly rendered Nokia a non-player in the marketplace. By 2013 Nokia sold what was left of itself to Microsoft for $7.2 billion.
Companies that want to remain relevant and competitive must be willing to invest in the latest technologies and modernize their systems continually. Modernization is not an easy or inexpensive process, but it is a necessary one if companies want to remain relevant and avoid the fate of the four companies outlined in this post.
Pick the Right Migration Strategy with CM evolveIT
Our CM evolveIT tool provides a comprehensive suite of tools and services designed to help you assess your legacy application and help you pick the migration strategy most likely to achieve your company’s objectives.
The tool’s granular approach to modernization is designed to help you get the process underway with minimal disruption to your existing operations. You’ll be able to extract and re-engineer individual components before taking the final critical modernization step.
When your modernization effort is finally underway, CM evolveIT will assist with a suite of tools and services designed to automate the migration process, including code analysis and transformation tools that helps you understand the structure of your legacy code and identify areas for improvement.
Contact CM First today to learn more about how our CM evolveIT software can help you modernize your systems, reduce costs, and improve efficiency.
