No matter the company, no matter the industry, innovating and remaining competitive are basic to the very idea of business. Companies go to extraordinary lengths to employ the most talented people, create the most compelling products, and maintain the best public image. Structural innovation within companies themselves, on the other hand, is often ignored and even deemed unnecessary. This trend is particularly pronounced in the case of internal IT systems.
Corporations that spend millions on the design and UX of their websites are often performing internal tasks on software built for them in the 2000s or earlier. These IT systems are often complex, and once employees learn to use them there is significant resistance to innovation at all levels.
Let’s take, for an example, the investment banking industry.
Investment banking has always been, first and foremost, an information business. The increasing ability of computers to process complex information helped drive the industry’s astronomical growth in the first decade of the new millennium. New IT solutions emerged which allowed investment firms to conduct business smarter and faster than ever before.
However, what were once innovative solutions are now starting to become burdens and barriers to growth.
The continuous accumulation of IT systems over the last generation has created technology estates that are vast in scale and complexity. In current market conditions, where returns increasingly depend on lower cost-income ratios, the cost burden of maintaining these estates is proving unsustainable. The underlying “legacy architecture”–including specific technology choices, platforms and standards–is also inhibiting innovation and responsiveness to new digital competition.
— 2016 Accenture LLP report on the major challenges facing the investment banking industry.
This challenge faces almost every company with a complex internal IT system developed years ago. The complexity and poor interconnectivity of legacy systems is starting to reach a critical tipping point. Old tech is hampering actions critical to competitiveness, such as business intelligence and operational reporting, and companies are spending increasing amounts of time and resources attempting to reconcile outdated systems with the latest innovations in FinTech.
Without doubt, the single greatest barrier to the adoption of new IT tools is inertia. In many companies, employees have been using the same internal tools for many years. These tools are in most cases outdated, poorly-functioning, and highly reliant on low-value input labor, but they represent a familiar, known quantity, and the resistance to letting them go in favor of new, untested, and unlearned tools can be significant. Sales appeals based on future boosts in productivity and the elimination of low-value data processing work often fall on deaf ears, principally because employees do not want to have to learn to use new software in addition to their regular duties.
“If it isn’t broken, don’t fix it” is the prevailing attitude in such circumstances. A good example is the industry wide adoption of CPOE (computerized physician order entry) software in hospitals throughout the USA which has taken place over the last decade. CPOE has been shown to drastically reduce medication errors in hospitals, which has for many years been the most serious threat facing hospitalized persons. CPOE has additionally been demonstrated to improve hospital workflow when properly implemented. However, resistance to the new technology among physicians and hospital staff was initially intense—occasionally escalating to the point of “physician rebellion.”
Despite this unusually extreme resistance, CPOE has now been broadly implemented around the nation. This is largely thanks to a combination of strong administrative leadership, the encouragement of leading physicians amongst their peers, and an adoption process that aimed to make the transition as smooth as possible.
Encouraging the adoption of a cross-functional investment banking data rooms & tools can pose additional difficulties. Let’s take the integration stage of M&A as an example. In most companies with a pre-existing strategy, integration is performed by functional groups working largely in silos. These groups might report to a project manager overseeing the integration, or they might participate in regular meetings of the different functional groups to share information, but they are left largely to their own devices when it comes to integrating their functional tasks with the acquired company.
An Agile, cross-functional tool suitable to the needs of many different functional groups has obvious benefits in terms of increased visibility, streamlined-communication, higher quality analytics, and the identification of bottlenecks. However, the many functional groups it impacts will already have their own tools and techniques in place. Their response is going to be something along the lines of: “you aren't tracking our progress anyway—we shouldn't have to adopt your infrastructure because we are more comfortable using excel, powerpoint, and Microsoft project."
Taken as a whole, the challenges faced in the adoption of new internal technologies are intense and difficult to address. In many cases, rank-and-file employees simply cannot be brought on board and the decision to adopt new tools will have to be made at the upper levels of the company. If these decision makers focus on adopting only high quality, well-regarded technology suites from reputable software developers, they can help significantly reduce the painful interim period of adoption.
On the other hand, if a tool is extremely powerful and easy to use, it may find champions among the employees who use it on a day to day basis, despite the potentially painful transition. Ultimately, however, this transition will have to be navigated by every company sooner or later in order for them to remain competitive in a world of rapid technological innovation.
Overcoming Barriers To Adopting And Implementing Computerized Physician Order Entry Systems In U.S. Hospitals, 2004, www.healthaffairs.org/doi/pdf/10.1377/hlthaff.23.4.184.