Legacy IT is ruining digital transformation strategies: survey

Major companies are keen to embrace digital transformation, but are finding it a hard slog because they’re saddled with clunky and uncooperative legacy IT systems and infrastructures.

That’s according to a new research report from Tech Research Asia (TRA), commissioned by Telstra, that “looks at technology’s disruptive impact on key markets and industry verticals, and what businesses are doing to digitally transform themselves and compete with new market entrants and business models.”

Key findings:

  • 73% of companies surveyed said they are already exposed to digital disruption
  • 19% said that they’re not exposed to it now, but will be in the future
  • 97% already have a formal strategy to deal with it, led by the CIO and actively supported by the CEO
  • 61% are trying to disrupt new or current markets themselves.

But many companies face challenges in actually implementing their digital transformation strategies – most of them related to their own IT departments. According to the report, 35% of companies expressed frustration with their current IT technology platform, saying that their IT organization either doesn’t move quickly enough to support the business or doesn’t support its goals at all. Another 20% said it was easier to actually bypass the IT department than to deal with them.

Which is an interesting finding when you consider that one of the goals of digital transformation is to transform the company’s IT infrastructure and processes to serve as the supportive backbone of the overall transformation process. Indeed, next-gen IT tech is supposed to enable digital transformation in the first place.

The TRA/Telstra survey suggests that’s not happening – or at least not as fast as company employees would like. Another section of the report that focuses on strategies for the “future workplace” (enabled by a combination of enterprise mobility and cloud-delivered data and applications (including UC&C cloud collaboration tools and data management solutions) says that 76% of respondents believe their workplace strategy effectiveness could be more dynamic if their technology and network platforms were more flexible and agile, but 67% indicated their ability to work more collaboratively and effectively is “hindered by rigid technology and network platforms”.

“The research data suggests that organizations need to retune their networking and technology strategies, said Tim Dillon, Founder and Director of TRA and author of the report. “Less than 20% state that their IT organization totally supports their business goals, and yet these same business goals are tightly intertwined with digital and business transformation strategies. As disruption and competitive activity intensify, it is imperative that companies have the right foundations in place to support their future success.”

Some other interesting findings from the report:

1) The report lists the main business transformation goals of organizations, the top three of which focus on improving customer experience (via digital including engagement, satisfaction, multi-channel approaches and lifetime value), streamlining operations and moving commodity technology infrastructure to a managed environment to allow IT to concentrate on business growth and innovation.

Business priorities of digital transformation
Source: Tech Research Asia 2016

2) The top technology investment priority to support digital transformation is cloud infrastructure (private, hybrid and public), followed very closely by Big Data and analytics.

Security also ranks highly in digital transformation investment priorities, driven not only by the increase in targeted, criminal and state-sponsored attacks, but also the emergence of Internet of Things (IoT) technology and the growing complexity of governance, risk and compliance (GRC) requirements.

Source: Tech Research Asia, 2016
Source: Tech Research Asia, 2016

Source: Tech Research Asia, 2016

3) While over half of respondents globally expect to be exposed to more competition in the next two years, companies in Hong Kong and Australia felt especially vulnerable to disruption, while organizations in the Philippines considered themselves the least exposed, although they also expect it to have the greatest impact in the future.

Meanwhile, companies in India are the most wary of growth of future competition and disruption, with 75% believing they will be more exposed in the future, while only 38% of firms in Japan felt the same way. Singapore, the Philippines and India were the leaders when it came to the prevalence of their digital transformation strategy.

4) Unsurprisingly, the report found that the network still rules when it comes to digital transformation and “as a service” business models. However, companies have found this out the hard way, the report says:

87% of respondents told us that their business had suffered as a result of network problems and, on average, experienced 11 issues per year […]

Firms in Singapore experienced the lowest number of significant problems, averaging seven per year; whilst India and Hong Kong tied for the highest at 15 issues per year apiece (with the US at 13).

Sector-wise, retail experienced the highest number of problems (17 per year), followed by telecommunications (14 per year) and IT & technology (13 per year). Reflecting the stringent performance demands of their sectors, BFSI and oil, gas, energy and utilities experienced the lowest number of issues (nine per year).

Source: Tech Research Asia, 2016

Ouch.

According to the report, a common frustration with network performance is lack of flexibility: “For many organisations, it is a tedious, complicated and expensive process to create truly flexible multi-country network operations.”

As such:

75% of firms noted that more dynamic networks would enable them to more successfully pursue their digital transformation strategies, and almost three-quarters (74%) felt it would strengthen their competitive position, support growth initiatives and create stronger customer engagement programmes.

According to TRA, that’s why SDN falls within the top ten technology investment priorities listed above (albeit barely).

Interestingly, the report advises companies looking at SDN to vet their service provider for SDN capabilities:

If considering SDN (software defined networking), does your provider operate its own network or provide SDN services through an overlay approach on another vendor? Is their approach an open environment or one that relies on proprietary integration? Can networks (local and international), applications, configuration and pricing/bandwidth information be accessed through a single management portal?

 NOTE: The report, Disruption, digital transformation and effective technology strategy, surveyed a total of 1,040 IT and business decision makers across eight countries including Australia, Hong Kong, India, Japan, the Philippines, Singapore, the United Kingdom and the United States.

Likes
Please feel free to share

Be the first to comment

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.