EP 02: The Real Reason 79% of App Modernizations Fail

When AI spending lands in the operating budget, the first thing many companies cut is people. This episode explains why that happens and what to do instead. Show Notes Why AI costs end up as headcount cuts: AI token spend is an operating expense, usually charged to IT, and labor is the easiest line to cut once capital and SaaS commitments are locked in. Cost myopia: cost is right in front of you, and value is further away. Leaders focus on cost because it's easier to control and because cause and effect between investment and value is hard to prove. Value engineering, explained: a practice that began at GE in the 1940s. It breaks a capability down into what its parts cost and the value each part produces. Value is benefits minus cost per unit of time. What chargebacks hide: centralized infrastructure costs left IT spend understated by 40–60%, until a corporate split forced every dollar to land in someone's budget. Avoiding the wrong investment: a value engineering analysis prevented a $20M platform spend and found that the real problem was back orders. Measuring what seems unmeasurable: if you find the right indicator, you can measure things that look intangible. Where to start: change is driven by pain more often than by vision. Fix what's in your control first, then deliver value in 90-day vertical slices that fund the next step. Key Moments  0:00 Cold open: measuring the unmeasurable 1:00 Why does AI cost cutting lead to layoffs instead of smarter IT budget decisions? AI spend, especially tokens, is an operating expense, and it usually lands in IT. Capital spend and SaaS contracts are locked in, so labor is the easiest line left to cut. The real problem is cost myopia: leaders manage the cost in front of them because value is harder to see and harder to prove. 11:23 What is value engineering, and how does it measure business value? It's a discipline that began at GE in the 1940s. You break a capability, process or value stream into what each part costs and the value it contributes. The basic test is simple: value is benefits minus cost per unit of time. 14:02 How do IT chargebacks and cost-only budgeting hide the true cost of technology? Chargebacks move costs around without tying them to value, so nobody owns the real number. In one company, chargebacks hid enough infrastructure spend that IT costs were understated by 40–60%. In another, a value engineering analysis stopped a $20M platform investment and pointed the money at the real problem, which was order fulfillment. 22:27 Can internal teams run a value engineering analysis and measure intangible benefits? Yes. These skills already exist in finance and engineering teams. Almost anything can be measured once you find the right indicator. 26:26 Will value engineering prevent AI-driven layoffs and improve AI ROI? Not on its own, but better math is better than no math. Financial models keep you from making the wrong cuts and the wrong investments, and they keep productivity gains from disappearing without ever turning into value. 30:32 How do leaders move from cost cutting to value-based decision making? Not by starting with culture, because culture is an effect, not a cause. Start where the pain is and fix what's in your own control first. Then deliver value in 90-day slices, and let each one fund the next. Follow Us On Social LinkedIn: https://www.linkedin.com/company/liminalarcgroup Facebook: https://www.facebook.com/liminalarcgroup Instagram: https://www.instagram.com/liminalarcgroup/ X: https://x.com/liminalarcgroup

In this podcast, Stacy Gordon sits down with John Greisner, a management consultant at LiminalArc, to explore why AI doesn't remove your software delivery bottleneck so much as move it. Drawing on Goldratt's theory of constraints from The Goal, John walks through what happens once engineering gets fast and cheap: the real slow point shifts to product management, funding cadence, and how much change your customers can actually absorb.   Stacy and John dig into why flooding your backlog with every new idea only makes that constraint worse, and why deciding better, smaller, and more often works instead. Watch so you can stop chasing engineering speed as the finish line, start treating decision capacity as your real constraint, and finally get the return on AI adoption that an operating model built for a slower era has been quietly blocking.   Follow Us On Social LinkedIn: https://www.linkedin.com/company/liminalarcgroup Facebook: https://www.facebook.com/liminalarcgroup Instagram: https://www.instagram.com/liminalarcgroup/ X: https://x.com/liminalarcgroup

Discover how organizations use business capability heatmaps and domain alignment to make deliberate, data-driven, and defensible modernization decisions that deliver business value at every step of the journey. Follow Us On Social LinkedIn: https://www.linkedin.com/company/liminalarcgroup Facebook: https://www.facebook.com/liminalarcgroup Instagram: https://www.instagram.com/liminalarcgroup/ X: https://x.com/liminalarcgroup

Nearly 80% of enterprise application modernization efforts fail, and the reason has nothing to do with choosing the wrong technology. In this conversation, Melissa Roberts, business architect and value engineer at LiminalArc, explains why modernization programs are designed to produce technology outcomes rather than business results, and why that design flaw kills them. Melissa Roberts and Stacy Gordon walk through the four primary drivers forcing enterprises to modernize, the IT/business alignment problem that stalls most programs before they start, and how a capabilities-driven strategy changes what a modernization program is designed to deliver. If you're leading or influencing a legacy modernization initiative, this is the diagnostic you've been missing. Wanting More? Why Most App Modernization Efforts Fail, and How a Capabilities-Driven Strategy Can Stop the Billion-Dollar Bleed: https://go.liminalarc.co/75j Follow Us On Social LinkedIn: https://www.linkedin.com/company/liminalarcgroup Facebook: https://www.facebook.com/liminalarcgroup Instagram: https://www.instagram.com/liminalarcgroup/ X: https://x.com/liminalarcgroup

A working AI pilot proves less than most executives assume. This episode digs into why AI initiatives clear a demo and then stall in production, and the constraint is rarely the model. It's whether the organization's data, applications, and ownership structure are actually ready to run on it. That readiness gap shows up two ways: AI use turning into the next shadow IT, and teams mistaking individual productivity wins for organizational proof. The conversation also breaks down a framework for sorting what AI can already do inside a business from what it can't do yet, and why context, not model quality, is becoming the real differentiator. Host Stacy Gordon talks with LiminalArc CEO Mike Cottmeyer in the relaunch episode of Future State Now, formerly SoundNotes, tracing the company's shift from LeadingAgile to LiminalArc and what AI transformation means as the next chapter of enterprise change.   Why AI Fails and What You Can Do About It  Get the eBook > https://go.liminalarc.co/jtu   Follow Us On Social LinkedIn: https://www.linkedin.com/company/liminalarcgroup Facebook: https://www.facebook.com/liminalarcgroup Instagram: https://www.instagram.com/liminalarcgroup/ X: https://x.com/liminalarcgroup   Visit Our Website https://www.liminalarc.co  

Many companies are moving to the cloud only to realize that they aren’t getting the cloud benefits. Not only are they not able to improve performance and scalability, but they’re also paying more than they were before. The reality is that the economic drivers pushing these companies into the cloud, inevitably lead to large lift and shifts where monolithic, legacy applications get moved to the cloud without the necessary modernization required to reap the rewards of cloud migration. Today, those same companies that moved to the cloud are looking to move back on-prem or toward a hybrid environment to cut costs, but what if there’s another way? What if you could strategically refactor your applications after they’ve been moved to the cloud and rescue your cloud initiative? Learn how cloud rescue can get you the benefits of the cloud while reducing costs.

For many organizations, cloud costs are spiraling out of control, causing them to rethink their cloud commitment. Some are exiting the cloud altogether and moving back on-prem. But what if there was a different way? An iterative and incremental way to start reaping the benefits of the cloud today without disrupting innovation or performance. In this panel discussion, we explore how LeadingAgile helps our clients reduce their cloud spend and economically justify transformation without disrupting things like innovation and performance. Contacting Mike Cottmeyer If you’d like to contact Mike, you can reach him at: LeadingAgile: www.leadingagile.com/guides/mike-cottmeyer LinkedIn: www.linkedin.com/in/cottmeyer/ X: x.com/mcottmeyer Email: [email protected] Contacting Len Greski If you'd like to contact Len, you can reach him at: Email: [email protected] LinkedIn: https://www.linkedin.com/in/leonardgreski/ Contacting Matt Van Vleet If you'd like to contact Matt, you can reach him at: Email: [email protected]  LinkedIn: https://www.linkedin.com/in/matt-van-vleet-8788342/ Contacting Rick McMichael  If you'd like to contact Rick, you can reach him at: Email: [email protected] LinkedIn: https://www.linkedin.com/in/rickmcmichael/

What are some of the challenges of securing a legacy monolith in the midst of a technology modernization project? What's the impact of AI on infrastructure and security? And why are we partnering with Rampart AI to ensure our clients can become cloud-ready safely and securely? We answer all this and more in our latest podcast. Contacting Mike Cottmeyer If you’d like to contact Mike, you can reach him at: LeadingAgile: www.leadingagile.com/guides/mike-cottmeyer LinkedIn: www.linkedin.com/in/cottmeyer/ X: x.com/mcottmeyer Email: [email protected] Contacting Lee Krause If you'd like to contact Lee, you can reach him at: Rampart AI: https://www.rampart-ai.com/ LinkedIn: https://www.linkedin.com/in/lee-krause-512763/

A big part of becoming a truly product-driven organization is getting better at understanding the needs of your customers, and improving your products to meet their needs. In this video, Mary, Dave, and Lance take on the topic of customer journey mapping and show you how this tool can help you align around the needs of your customer. They’ll explain how this technique can identify the customer experience and put specific actions in place to court correct and wee out any of the negative experiences customers are having with your product. Contacting Mary Lloyd If you’d like to contact Mary, you can reach her at: LeadingAgile: www.leadingagile.com/guides/mary-lloyd/ LinkedIn: www.linkedin.com/in/mary-lawson-lloyd/ Email: [email protected] Contacting Lance Kind If you'd like to contact Lance, you can reach him at: LeadingAgile: www.leadingagile.com/guides/lance-kind/ LinkedIn: www.linkedin.com/in/lancer-kind/ X: x.com/LancerKind Email: [email protected] Contacting Dave Prior If you’d like to contact Dave, you can reach him at: LeadingAgile: www.leadingagile.com/guides/dave-prior/ LinkedIn: www.linkedin.com/in/mrsungo X: x.com/mrsungo Email: [email protected] If you have a question you’d like to submit for an upcoming podcast, please send them to [email protected] Interested in CSM or CSPO Training? You can find all the details at www.leadingagile.com/scrum-training/

We’re back with an all-new episode of SoundNotes where we discuss the nature of products. What are they? How are they different from services and experiences? And does it really even matter? Watch this week’s spirited conversation to see how we’re thinking about and defining products, and discover how your organization might be spinning its wheels by even having the debate. Contacting Mary Lloyd If you’d like to contact Mary, you can reach her at: LeadingAgile: www.leadingagile.com/guides/mary-lloyd/ LinkedIn: www.linkedin.com/in/mary-lawson-lloyd/ Email: [email protected] Contacting Andrew Young If you'd like to contact Andrew, you can reach him at: LeadingAgile: www.leadingagile.com/guides/andrew-young/ LinkedIn: www.linkedin.com/in/atyoung/ Twitter: x.com/exclamation101 Email: [email protected] Contacting Dave Prior If you’d like to contact Dave, you can reach him at: LeadingAgile: www.leadingagile.com/guides/dave-prior/ LinkedIn: www.linkedin.com/in/mrsungo X: x.com/mrsungo Email: [email protected] If you have a question you’d like to submit for an upcoming podcast, please send them to [email protected] Interested in CSM or CSPO Training? You can find all the details at www.leadingagile.com/scrum-training/