For the past two years, the technology conversation has been dominated by artificial intelligence. But beneath the hype cycle, a more urgent and less visible transformation is underway — one that is reshaping how governments and regulated industries operate at their core.
That transformation isn’t about AI at all. It’s about the systems that quietly run everything.
In this episode of Commercial Disco, IBRS research director Dr Joe Sweeney makes the point plainly: while AI may dominate headlines, the most pressing challenge facing organisations right now is the overdue renewal of core business systems.
These systems, such as finance, HR, payroll and asset management, are the operational backbone of institutions. And across Australia, many are reaching the end of their useful life at the same time. The result is what Dr Sweeney describes as a ‘perfect storm’.
For years, organisations deferred upgrades. COVID shifted priorities toward immediate operational continuity, remote work, digital access, and service delivery. Meanwhile, vendors accelerated their push toward cloud and Software-as-a-Service models. Now, those delayed decisions have converged with rising costs, ageing infrastructure and shrinking support windows.
Organisations are no longer asking whether to upgrade. They’re asking how fast they can do it. But speed alone is not the problem, nor the solution.
What Dr Sweeney’s research, spanning 23 Australian organisations, reveals is that most system upgrades don’t fail because of technology. They fail because of how organisations approach them.
There is a persistent tendency to treat these programs as large-scale, technology-led transformations. That often means outsourcing strategy, adopting heavyweight consulting frameworks, and attempting to redesign entire operating models at once. The data tells a different story.
“The most important thing is the structure of who does the work,” Dr Sweeney says. “The more that you outsource the strategy side of things… the more likely it is the cost is going to blow out… and the project is going to run over time.”
In other words, the closer organisations keep their strategy, the better they perform.
This runs counter to long-held assumptions about expertise. While organisations often look externally for strategic direction, Dr Sweeney argues that the deeper understanding required – of purpose, constraints and outcomes – already exists internally. Where external partners do add value is in highly specific, technical areas: data migration, integration, configuration.
This distinction between what must remain internal and what can be delegated is critical. It also reframes the idea of ‘transformation’.
Many organisations approach system upgrades as an opportunity to reinvent everything. But in practice, that often leads to unnecessary complexity and slower delivery. As the IBRS research shows, core business processes themselves have not fundamentally changed — what has changed is the technology that supports them.
The organisations that succeed are those that recognise this.
Rather than attempting wholesale reinvention, they focus on identifying where real improvements can be made — targeting specific processes, prioritising measurable outcomes and aligning change management accordingly. They understand that value does not come from replacing a system, but from how that system is used.
This is what Dr Sweeney refers to as ‘time to value’, the point at which tangible benefits begin to emerge. And it’s here that many projects fall short.
Too often, organisations invest heavily in new platforms only to replicate existing processes. The result is a like-for-like replacement: new technology, same outcomes. The IBRS findings suggest that without deliberate focus on process improvement and change management, upgrades deliver limited incremental value despite significant cost.
That cost dimension is becoming harder to ignore.
While cloud adoption was once framed as a cost-saving exercise, organisations are now grappling with rising subscription fees, licensing complexity and new pricing layers tied to advanced capabilities. What was once a straightforward migration is now a financial optimisation challenge.
At the same time, a broader set of considerations is coming into focus — particularly around digital sovereignty.
Dr Sweeney notes a clear shift in how organisations are thinking about where their systems and their data reside. What was once framed as a question of data residency is now being understood as something much larger: operational continuity, economic value and national capability.
“It’s not just where your data is sitting,” he says. “It’s actually a business continuity issue… and an economic opportunity.”
This reflects a growing awareness that digital infrastructure is not neutral. The choices organisations make about platforms, vendors and ecosystems have implications that extend beyond IT — into resilience, supply chains and the broader economy.
For public sector leaders in particular, this adds another layer of complexity to decisions that are already high-stakes.
So, what does better look like?
The research points to a different model, one that is less about projects and more about programs.
Modern SaaS platforms are not static. They evolve continuously, with regular updates, new features and changing capabilities. Treating implementation as a one-off event misses this reality. Instead, organisations need to adopt an ongoing approach: iterative delivery, continuous optimisation, and active engagement with vendor roadmaps.
This shift from project to program may be the most important one of all. It requires tighter strategy, clearer priorities and stronger internal ownership. It demands that change management moves to the front of the process, not the end. And it challenges organisations to rethink long-held assumptions about where value is created.
Because ultimately, the problem is not technological. It is organisational. And as the current wave of system upgrades accelerates, that may prove to be the harder transformation to deliver.
This article and podcast was produced by InnovationAus.com in partnership with TechnologyOne.
Do you know more? Contact James Riley via Email.