How many great ideas has your enterprise had to delay because your core IT infrastructure wasn’t able to support them? Unless you’ve recently upgraded your core IT (and few have) then it’s likely you’ll hit such a wall eventually.
Think about the nature of these systems. The core infrastructure is the heart of the modern enterprise, driving essential business processes such as billing, order management, inventory, data automation, standardization, business intelligence and more. Certainly, different industries have different needs, but every enterprise needs some or all of these tools.
Technology evolves. Responding to this means most enterprises depend on core infrastructure that has been put together over time in response to changing technologies and business needs. This organic evolution means many enterprises depend on core systems consisting of different solutions from different vendors. Attempting to make sure all these systems work together requires huge resource investments. Deloitte Consulting believes around 80 percent of technology budgets is spent on “keeping the lights on”, while CIOs spend 63 percent of their time trying to keep the core going.
“Beyond running the heart of the business, these assets can form the foundation for growth and new service development—building upon standardized data and automated business processes,” Deloitte explains.
That sounds good but the truth for many enterprises is that existing core systems need to be modernized in order to become solid foundations for such evolutions.
To put the extent to which core systems may be holding enterprise users back in context, a Forrester survey claims 74 percent of software decision makers see updating and or modernizing key legacy applications as being of critical or high priority.
As the need to embrace digital transformation continues to intensify, Deloitte predicts a “core renaissance” will take place as enterprises upgrade their core systems to cope.
Dealing with this renaissance will pose its own problems and it seems for most enterprises the notion of complete systems replacement poses too great an impact on business continuity and budgets. They will continue to combine legacy with modern systems, upgrading elements of their own in-house infrastructure while making more use of cloud-based solutions such as SaaS, IaaS, DaaS and other forms of infrastructure outsourcing, at least where these make sense. A recent McKinsey report saw executives predict that 70 to 75 percent of their applications will be hosted in cloud environments.
Despite the move to outsourcing it seems likely some in-house processes won’t make the cut. “The most potent force in IT cost reduction or elimination is actually turning things off,” says Mark White, CTO of Deloitte Consulting, suggesting CIOs seek solid business arguments to replace some core business systems.
Perhaps one of the biggest arguments in favor of embracing such change comes in the potential of digital transformation to unlock new business opportunity, efficiency and growth.
To realize this it makes sense to invest in integrating core systems in order to release some of that 80 percent of IT budgets currently spent keeping the lights on in favor of investment in innovation and growth. This could be the best argument CIOs can use to justify raising annual infrastructure budgets – the need to bring core systems up to speed in order to support the digital future of business systems.
If you hope to get more from your ICT environments, or simply are in search of a way to improve business agility by optimizing your systems, please explore how Orange Business’ consulting services can sharpen your competitive edge.
Jon Evans is highly experienced technology journalist and editor. He has been writing for a living since 1994. These days you might read his daily regular Computerworld AppleHolic and opinion columns. Jon is also technology editor for men’s interest magazine, Calibre Quarterly, and news editor for MacFormat magazine, which is the biggest UK Mac title. He's really interested in the impact of technology on the creative spark at the heart of the human experience. In 2010 he won an American Society of Business Publication Editors (Azbee) Award for his work at Computerworld.