Abandoned stadiums, eroding metal structures, pools of stale water — the world is littered with elements of derelict facilities. These megastructures cost several hundred millions of dollars to build.

So why do they end up eroding in just a few years?

The fate of almost every Olympic park in history illustrates how promising growth projects can turn into painfully expensive disappointments.

Mega sporting events that leave a trail of run down constructions in their wake are just one example of white elephants — gigantic, costly projects whose maintenance costs far outweigh the benefits they create.

If we look at the world of finance, we’ll find plenty of projects that share this profile, especially when it comes to the software that powers the sector’s complex system.

Looking from the outside in, it may seem that large financial institutions have an outdated software stack because they don’t invest enough in this area. But the counterintuitive truth is that putting more dollars behind software projects generally doesn’t result in tangible results. That’s because it funds white elephant projects.

How to recognize a white elephant by its footprints
White elephants are especially dangerous in the current context of constant technological change, heightened customer expectations, and new challengers with digital business models.

They emerge as ambitious digital transformation projects destined to overhaul a core part of the business. Then a few things happen along the way, causing them to balloon and overload the organization:

• Unclear goals that change all the time distort the project because the more people get involved, the more the project strays from its original objective
• The project’s scale spawns unrealistic expectations whose optimism is rarely moderated through independent evaluation
• Changing specifications during implementation cause budgets to blow up and delays to accumulate
• Project management focuses on big long-term outcomes with no intermediary testing and little or no consultation with end consumers.

If you look closely, you’ll find this manner of operating that leads to white elephants in almost every industry.

A white elephant adds pressure to an organization in many ways, but some consequences are more damaging than others.

Organizations that breed white elephants:

• Miss out on revenue opportunities because they ship costly projects with long time-to-value
• Dilute their competitive edge because they can’t keep up with market demands
• Deprive themselves of network effects by building products destined solely for the organization’s use
• Cause long-term stress for the entire company.

Like Olympic villages, white elephants eventually fall into disrepair, creating technical, organizational, and financial debt. They cause an endless stream of problems the company must solve. This is particularly obvious in enterprise software, the backbone of any financial organization.

How we avoid white elephants and help our customers do the same
The three principles that underpin our product development process also govern our company blueprint:

1. The fierce focus principle
2. The two-gear principle
3. The co-development principle.

Here’s how we apply them and how they translate into tangible benefits for our customers.

The fierce focus principle: build with intent
No organization is immune to white elephants and focus plays a big role in steering clear of that risk.

To maintain both a strategic outlook and make a meaningful impact in the present, we distill the client’s needs and use cases we want to address and concentrate on those.

We make this selection after listening to prospects’ and our clients’ pain points, and closely observing changes in customer behavior. Combining those insights with our ideas, expertise, and experience, we define the direction we want to pursue and really go for it.

Ensuring both accuracy and speed requires us to work with self-imposed constraints which also cultivate focus. This is especially important in the beginning when incremental progress delivers while polishing everything to perfection delays.

What’s noteworthy is that focus is a self-reinforcing principle: it requires focus to execute and forces focus to create meaningful results. Saying NO is just as important as saying YES if you want to avoid the risks white elephants breed.

The two-gear principle: simultaneously tackling current and future problems
At additiv, we translate our vision of the fundamental shift in wealth management into a new operating and sourcing model for our customers. We do this with the two-gear principle in mind: being close to the market (solutions that suit specific goals) and solving problems for a large group of people (ecosystem effects).

So our product development process has two angles, each with their speed:

• The proof-of-concept that transforms growth ideas into usable products financial service providers can quickly test in the real world. Accuracy and speed are essential here and we’ve had great results with this approach, especially in the fast-moving Asian market.
• The platform that underpins our products which we want to develop fast but very robustly. We choose to steadily prototype new features because its stability is fundamental for all our products and customers.

As an essential safeguard against white elephants, our two-gear principle ensures we never get stuck pursuing a goal that drifts away from consumers’ needs. That’s how we avoid launching a product that’s obsolete before it reaches the market.

The co-development principle: work with others to expand your range
Our third principle leverages co-development to build products that create ecosystem effects.

A select number of our customers are also innovation partners. We have joint sessions to review their needs, progress, and feedback, enabling everyone to keep their finger on the market’s pulse and promptly respond to its needs.

Our team works closely with these partners, pooling together know-how, market intelligence, and foresight to build new features into the additiv platform.

As a result, everyone using our orchestration layer benefits from these improvements. additiv customers are ecosystem partners, each benefiting from market-leading technology they can leverage to solve problems specific to their customer base.

Clear the path for growth
We rely on these three operational principles to effectively counteract operating practices that breed white elephants — both in additiv and in our customers’ organizations.

We believe they’re essential if you want to:

• get new products up and running faster and cheaper
• test and refine products to ensure compatibility with actual client needs
• gain flexibility and enable omnichannel capabilities without impacting the backbone of the company’s software architecture
• reduce the high cost-to-income in your organization
• minimize maintenance costs.

Our customers use our orchestration layer to gain the flexibility to launch new value propositions and products fast while also opening up new channels to deliver them.

The technology is here to enable financial institutions to operate without the limits of the past. Harnessing it can disrupt the legacy of white elephants, clearing the path for growth, no matter how fast-moving the environment is.

Established in 1998, additiv partners with the world’s leading financial institutions to help them capitalize on digitization. Its market-leading DFS® (Digital Finance Suite) is an orchestration engine that lets financial institutions quickly launch new propositions as well as giving them the intelligence to maximize customer engagement. Headquartered in Zurich, additiv is supported by a broad ecosystem of implementation and solution partners that enable it to deliver unparalleled customer success to wealth managers and credit providers globally.

www.additiv.com

See original blog: https://medium.com/additiv/avoiding-white-elephants-and-their-corrosive-legacy-39447946ea1d