Why Enterprises Struggle To Innovate and How to Change It

how to speed up enterprise innovation

Enterprise innovation is a full-on today: as of 2019, 70% of companies either already had or were working on their digital transformation strategy

Yet, companies are still struggling to innovate, and are losing billions of dollars because of legacy systems. According to a survey by SnapLogic and Vanson Bourne, firms in the UK and US are missing out on almost $140 billion due to disconnected data roadmaps, data locked in legacy infrastructures or lack of data strategies whatsoever. Moreover, 31% of the respondents reported suffering from privacy violations or data losses as a result of their attempt to move or integrate this data. 

Surprising as it may seem, established companies are struggling most with transformation initiatives and end up fighting a losing battle with startups. The stories of once-renowned brands like Nokia, Kodak, and Xerox are sad examples. Outside the high-tech sector, there’s a story of Toys “R” Us going bankrupt because of failure to adapt to the new, digitally connected world.

Obviously, recognising the value of digital transformation is not enough to innovate successfully. When it comes to established industry giants, there’s just too much standing in the way. After the 2018 bankruptcy, Toys “R” Us are back with completely renewed store concepts and different customer experiences. Yet, the complete revamp took them almost two years, and its outcome is yet to manifest. 

Key Roadblocks Preventing Enterprises From Embracing Innovation

So what is preventing organisations from reaping the digital transformation benefits? Why does innovation come at the cost of heavy investments and take such an effort? The truth is – large companies were not built to innovate. Here are some of the key roadblocks that hinder the advent of a new industrial era:

Legacy systems

Does ‘legacy’ equal ‘outdated’? A lot of people assume it does, while in reality, a legacy system may be physically new without actually serving its purpose. It may not be fit for achieving a company’s goals, yet, an enterprise may be unwilling to replace it. 

Make no mistake, though, outdated systems do pose a huge problem: lack of scaling capabilities and lack of integration with new solutions are seriously impeding digital transformation. For example, legacy systems are hindering the adoption of the IoT in the enterprise, as some of the old equipment won’t connect with modern IoT sensors. A SnapLogic survey reveals 41% of IT decision-makers report company data being locked-in in legacy systems, which means this data cannot be moved to the cloud or processed by another system.  

This is hampering collaboration, effective decision-making and innovation. 

Read more here about how to determine it's high time to retire your legacy systems and migrate to the Cloud.

Short-term thinking and tunnel vision

When a startup begins to bring revenue, it ceases to be a startup. It sets up mature processes and loses its entrepreneurial spirit. Admittedly, this change is inevitable; moreover, most successful startups are willing to embrace it. 

Somewhere along the way, though, it’s easy to fall into complacency and mistakenly assume that what once used to be a good idea will always bring revenue. 

Today’s business environment is extremely volatile, and staying afloat demands insight into upcoming trends and a long-term strategy. Most importantly, a company needs to be flexible in order to change on the go: a trait, difficult to achieve in a large, established organisation with fixed rules and processes. 

Resistance to change

People are, in general, reluctant to change and tend to treat disruptions, even positive ones, as a threat to their sense of security.

People resist change not only because it disrupts their usual routines and drives them out of a comfort zone. They also subliminally perceive change as a threat to their relationships and status.

The resistance to change may take many indirect forms: quiet sabotage, sudden quits, requests for transfer to other departments, quarrels, slowdowns or lack of output. While managers may recognize these forms of resistance, dealing with them is often problematic and requires concentrated communication efforts. The truth is – the staff involved in the transformation process will continue to resist it until they finally see its value. 

Lack of in-house expertise

As automation replaces manual work, the shift in required employee skills also becomes evident. Reskilling employees takes time, effort and money, and so does finding and hiring new experienced professionals. As of today, most businesses operating in developed economies experience a talent shortage. The demand for tech specialists exceeds the supply and results in skyrocketing salaries. 

The scarcity of technical expertise hinders digital transformation: organisations are in dire need of AI, Machine Learning, Data Science, Data Analytics and Data Engineering specialists. They also lack knowledge in cybersecurity, as digitization dictates higher security standards. 

Lack of collaboration among teams

Lack of collaboration also challenges digital transformation, as many corporate teams and departments tend to be overly protective of their data. A SnapLogoc survey reveals 25% of enterprises are unaware of which data other departments of their business have. 

This is a severe obstacle to becoming data-driven: the first steps towards gaining insights from data involve aggregating all existing data sets into a single pool. Lack of collaboration between departments renders these efforts impossible, so organizations can’t use data analytics to their benefit.  

The high cost of infrastructure maintenance and upgrade

The use of new disruptive technologies places high demands on the company infrastructure. Business intelligence (BI) apps, for example, capture and analyze immense amounts of data and need robust storage and compute capacities to run properly. Scaling an enterprise infrastructure in line with these demands, on the other hand, requires investments. 

A cloud shift may seem like a solution, because of its ease of entry, and pay-as-you-grow approach. With time, though, cloud tenancy costs tend to escalate, and the billing gets increasingly complex. On top of that, there are vendor lock-in, accessibility and security issues. 

Short-term goals

Most importantly, enterprises are struggling with innovation because it contradicts their immediate goals. They are bound with obligations to stakeholders and can’t afford to take risks because they are expected to bring steady revenue. Large organisations are also accustomed to doing things in the less time-consuming and the most cost- and energy-efficient way, and, inevitably, we can’t blame them for wanting to be effective.  

Obviously, a robust corporate ecosystem is not an environment where innovations can thrive. The truth is, instead of trying to recreate the spirit of a startup, established organizations need to look for alternatives – ideally, the ones, that wouldn’t disrupt their routines, processes, and culture. 

How Bespoke Software Development Can Be a Catalyst Of Change

So how does bespoke development helps enterprises innovate? The examples below illustrate how large established companies can leverage outsourcing models to enhance their business with innovative solutions and overcome challenges brought by legacy processes and equipment. 

Case 1: How tailor-made software saved UK’s leading aggregate supplier £4 million per year

Lafarge is a large UK aggregate supplier with 140 plants across the country, producing and transporting over 10 million tons of aggregate annually. The problem it faced was the kind businesses face inevitably after the customer demand starts to surpass the capacity of a legacy system. 

The company was struggling to deliver products to customers: the transportation costs were high, and the customer service suffered because of confusion and mistakes. Lafarge turned to Evolve to help them build a bespoke solution for this business problem. 

Evolve consultants started by defining the standards and best practices. We documented the interdependencies between the enterprise processes and systems and developed a bespoke order processing solution to automatically allocate and dispatch transport after the customer has placed an order. 

On top of that, this system had to integrate with a packaged optimisation app. So our cross-border team developed the bespoke software, which seamlessly integrates with this off-the-shelf system. 

As a result, the implementation of a bespoke transport management solution helped Lafarge save £4m annually and achieve better haulage utilization due to more effective allocation of orders.

Read the full case here

Case 2: How custom enterprise software helped a leading construction material vendor to improve customer experience

Breedon Hope Cement is a leading construction materials vendor with over 170 mixed concrete plants, 40 asphalt plants, 80 quarries and several other production facilities across the UK. The legacy proof-of-delivery (POD) process was becoming a major source of issues for the company. 

Two full-time employees were involved in accepting calls, locating the right documentation, and emailing the POD to customers upon request. All in all, the company received 1,000 such requests monthly, and the Credit Control department was struggling to fulfil them. The process was laborious and time-consuming. 

Bredon Hope Cement turned to Evolve for a solution, and in three months 1,000 calls became zero calls. We built a self-service portal, so that the customer could complete POD themselves. The portal integrated with third-party scanning software and helped generate and display POD for customers. On top of that, the portal had reporting functionality, so that the customers could report issues if something went wrong. 

As a result, the company not only significantly improved customer service but also cut bottom-line expenses due to reduced workload. 

Read the full case here. 

These stories are exemplary. Instead of engaging in the painstaking and slow transformation of the company culture and mindset, or waiting to grow internal expertise, both companies chose to use third-party bespoke software development to bring forth innovation. 

Surely, you may have solid reasons for wanting to foster and grow internal expertise, such as, for example, protecting your intellectual property. Yet, the talent shortage is likely to be your major stumbling block, especially if software development isn’t the core specialty of your organization. 

The good news is: your cooperation with a bespoke software development company may take many forms. You may outsource your entire project scope and hold your tech partner completely responsible for staffing and management, as well as its outcomes. Alternatively, you may go for extending your in-house software team for enterprise development with qualified third-party specialists, help your team fill the skills gaps and finally get all it takes for the project to take off. 

For example, instead of waiting for months to hire an experienced Data Analyst for your project, you may ask your bespoke software development partner to look for such specialists in countries rich in tech talent, such as Ukraine. The third-party handles the hiring and administrative aspects, but you get the final word when it comes to candidate evaluation and selection. On top of that, the staff on your extended team complies with your company rules and standards. 

For many leading companies across all industries, digital transformation is taking longer than expected, consuming budget and effort. Legacy systems, lack of cooperation, resistance to change, established processes and obligations to stakeholders can’t easily change overnight. Under these circumstances, bespoke software development is a viable alternative to radically transforming an enterprise infrastructure and reskilling the workforce. 

Evolve has more than 10 years' experience with building highly-efficient client-managed Extended Teams in Ukraine and we offer you to take advantage of our expertise and capabilities to ensure the smooth digital transformation of your enterprise.

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