Transform digitally or perish. In the last few years we’ve been constantly reminded of the risks of falling into obscurity if we don’t take the full advantage of what the digital era has to offer. Yet while digital transformation increasingly appears on business and IT leaders’ agendas, many organizations are yet to establish what it really entails – making the transformation process a bit of a mystery. An IT transformation maturity curve study commissioned by Dell EMC via Enterprise Strategy Group found almost all businesses are struggling with the transformation journey (95% of those surveyed agreed).
The main challenge for most organizations is that they were not started in the digital era. They bring legacy systems and operating models that have worked well in the past, so IT transformation creates a fear of “we don’t know what we don’t know”. At the same time, organizations agree that transforming legacy IT is essential to winning in the future and ensuring competitive advantage for the business.
One thing is clear – no two transformations are alike and every business with its own set of challenges and strengths will need guidance and support to begin the IT transformation journey. And each business will need to demystify what this journey will look like for them. Based on the research, organizations that have experienced benefits and improved business outcomes through transformed IT have four core truths in common. Using these, and through collaboration with strategic partners, they can better understand the unknowns and find a way to optimize their level of IT maturity to become fully transformed.
1. Embracing agile principles
Key requirements of the digital era include agility and a rapid evolution of operational processes, new products, and businesses models. Increased agility can be achieved in a number of ways, for example the adoption of software or the automation of IT processes. Software is often the key to unlocking digital business advantage: scalable, infrastructure-independent development frameworks, combined with agile DevOps processes, dramatically accelerate the development of cloud-native applications.
According to the research, transformed organizations that score highest on the maturity curve outperform others in their ability to quickly respond to business requests and complete their tasks and projects quickly. For these digitally mature businesses, automation is a key enabler of agility. Transformed organizations are more than four times as likely to have made excellent progress with automating manual IT processes and tasks. Looking more closely at software and automation are two known and proven steps towards successful IT transformation.
2. Investing in innovation
Organizations usually consider IT budgets in two categories: maintaining existing infrastructures and investing in new projects.
One thing is clear – no two transformations are alike and every business with its own set of challenges and strengths will need guidance and support to begin the IT transformation journey
For IT transformation, the balance and relationship between these budgets needs to shift. According to the IT transformation maturity curve study, transformed organizations that adopted innovative IT infrastructures reported that an average 46% of their budget was freed up and spent on innovation, much more than organizations that ranked as less advanced. Moreover, organizations ranking lower on the maturity curve spend around two-thirds of their IT budget on maintaining existing systems.
When demystifying and defining transformation strategy, IT leaders need to make sure current IT infrastructure is also enabling innovation—are legacy technologies creating performance bottlenecks, cost overruns, slower time-to-market, and capability shortfalls? This could be holding back transformation if so.
Transformed IT organizations also place strategic bets on a broad array of modern data center technologies, from high-performance, easy-to-scale storage systems, through pre-packaged, easy-to-integrate converged and hyper-converged systems, to flexible, software-defined architectures. An example of a successful IT transformation involves E-Konek Pilipinas, an IT service provider offering SaaS in the logistics and transportation industry in The Philippines. Through a re-focus on innovation, E-Konek Pilipinas was able to redefine its strategy and transformed the delivery and consumption of IT services, as well as dramatically reduced operational and capital expenditure by migrating to the cloud environment.
3. IT aligned with the business
Legacy organizations are often hampered by the ‘but it used to work for us in the past’ mentality. Such a mindset has no place in the digital era. Better knowing how IT transformation should take place requires IT leaders to establish clearly defined milestones and make sure that top management has a close eye on developments. In fact, when respondents working at transformed IT organizations were asked to categorize how their line of business stakeholders feel about the IT organization, 21% (seven times the rate observed among legacy organizations) reported that they are seen as a competitive differentiator and 49% reported they were seen as a valued service provider.
Transformed IT organizations keep digital transformation efforts on track as they ensure alignment with other business leaders. Frequent meetings with leadership and other stakeholders who can provide objective advice and feedback on meeting business expectations are essential. Such alignment can be reinforced with formal reporting structures that give CIOs direct access to their CEOs and other executive leadership positions.
4. Skills transformation
Transformed organizations realize that as legacy IT evolves, new skills, abilities, and ways of thinking about how IT serves the business will be essential to success. Only a few people in today’s workforce already possess required skill sets for the digital era. For example, GE, the 120-year-old company that has evolved from an organization that was predominately involved in selling industrial equipment to one that offers data and analytics software services across their products portfolio, has recently launched a proprietary skills curriculum to train their employees for new, highly valuable jobs needed in the digital era.
It’s crucial for IT and business leaders to conduct a thorough analysis of its most important resource to identify and work to eliminate skills gaps that could cripple IT’s ability to execute strategic transformation initiatives. Organizations might look for the guidance outside or develop a skills development training program in-house.
IT transformation is a first step on the digital transformation journey. It can come in many designs, depending on business requirements, yet the target goal is the same: an IT organization that has achieved a level of maturity that is agile, creates more opportunity for innovation, and has a fixed seat at the table with business decision makers. For many, that journey is filled with unknowns. But through a strategic focus on these four key areas, and collaboration with experienced partners, organizations can better understand the steps they need to take to define their IT transformation future.