Digital Transformation of Incumbent Service Firms: Legacy Removal Strategies

For strategic leaders of incumbent service firms, the challenge of digital transformation involves the removal of legacy IT systems without sacrificing critical income streams. We argue that the removal of these is a distinct component of the third core constituent of dynamic capabilities – transforming. Employing two case studies, DNB and Telenor, we explore the micro-level processes through which strategic leaders attempted to remove technology-related legacy to foster digital transformation. Both DNB and Telenor viewed legacy removal as critical for digital transformation. To theorize the micro-foundations of legacy removal, we examined the approaches top management either used or considered using to remove legacy. Our analysis revealed three distinctive approaches to legacy removal: escaping, shrinking, and terminating (‘big-bang’ versus ‘step-by-step’).