This article first appeared on ThinkFWD.
In an environment of fast change and constant innovation, businesses can’t afford to let old technologies slow them down. Modern businesses that are agile enough to adopt the latest productivity-enhancing technologies gain significant advantages over their legacy-laden competitors.
A recent Harvard Business Review feature emphasized the useful distinction between ‘economic’ obsolescence (when an asset reaches the end of its accounting life) and ‘functional’ obsolescence (when an asset doesn’t help its owner remain competitive).
Unsurprisingly, businesses that plan to replace assets when they’re functionally obsolete are generally more competitive than those that replace them only when they’re economically obsolete.
This may sound esoteric, but most workers intrinsically understand that they need the right tools to do their job. Ernst & Young’s 2014 Australian Productivity Pulse report found that “35 per cent of workers reported being hindered by issues with legacy IT systems, while 70 per cent said their productivity would improve if they had faster access to more accurate data and analytics allowing them to make better business decisions”.
We understand that change can be difficult – expensive, uncertain and even intimidating. But businesses can’t let themselves fall behind their competitors. Technology startups have eagerly adopted mobile, cloud and other lightweight technologies that are funded from operational, not capital, budgets. This helps remove the problem of economic obsolescence and allows them to adopt competitiveness-enhancing new technologies. Their less agile competitors, meanwhile, are stuck with their existing investments in hardware and software while they wait for the clock to run out on their depreciation schedules.
Staff morale can also be negatively affected by frustration with obsolete systems, which in turn contributes to reduced productivity and increased staff turnover. This reduces business competitiveness – it’s not just a theoretical or HR problem.
According to a Vanson Bourne survey, most IT departments (86 per cent) are fielding complaints from users about legacy applications. These obsolete technologies cause staff members to feel “bored, frustrated, ambivalent and restricted” and are considered a problem by nearly half (44 per cent) of all IT managers surveyed.
Business agility is largely about adaptability, and workers know what’s at stake – Ernst & Young’s survey found that 33 per cent of Australians believe their role may not exist in 20 years because of emerging digital technologies and automation. Australia’s economy is changing and services of all kinds are taking over from traditional sectors like manufacturing, mining and agriculture.
Knowledge workers will drive growth and productivity in the new economy. They need to keep on learning new skills and adopting new technologies. Businesses that want to retain their skilled workers and their competitive advantage thus need to provide the latest tools and technologies to boost productivity and retain their staff’s trust and engagement. Only then will they thrive.
Whichever way you look at it, it’s a simple equation: old technologies are less efficient, are a drag upon the workforce and reduce your business’s competitiveness. The good news is that the reverse is also true: new technologies are more efficient, are a boon to the workforce and increase your business’s competitiveness. And with the current low cost of software, hardware and services, there’s never been a better, easier or more important time to upgrade your business tools.