Digital Transformation – A Cautionary Tale
Very few organizations’ of any size are not being impacted by today’s digital era and the seismic changes being seen in the market place. Entire industries have been disrupted beyond all predictions in the last decade or so. Indeed 88% of the Fortune 500 have dropped off that list in the last 50 years, as those who fail to keep up with the pace of change are being replaced by those who can adapt.
Unsurprisingly, industry studies suggested that digital readiness was a top risk concern for 2019. All the more worrying then perhaps, that as few as 21% of organizations do not have a comprehensive digital strategy. So with still a lot of work to do, what’s the secret?
Tackling Objectives and Challenges
As the saying goes, if you fail to plan, you plan to fail. And for large-scale organizational upheaval, it is especially true. The strategic approach to digital transformation depends heavily on a full understanding of current capabilities, models, processes and the supporting technology and resources which operate them, in addition to a clear view of what the goals and measurable benefits will be.
The concrete outcomes are most commonly classified in terms of lowering costs, accelerating how business is done and inappropriately managing risks to the business from present and future operational environments.
Making fast progress towards these goals is, alas, often hampered by practical barriers that are individually difficult to solve, particularly in the case of the existing technology landscape already in place. Such as vendor lock-in, complex business processes, interdependent apps and data, inefficient delivery processes, technical constraints and skills issues.
Plotting each element in turn, and its relative importance is critical to determining the right strategy.
Making Sense of Today’s Landscape
Business realities are one thing, but the IT underpinnings are an equally critical component. And with the technology landscape forever changing, and only ever growing in complexity, that task is significant. Today, large global enterprise businesses typically run a hybrid environment, a consequence of adopting multiple waves of technological advancements over time
Each individual advancement offered opportunity and progress but eventually results in a highly complex and inefficient technology environment. Most organizations are pursuing digital transformation programs with a view to reduce complexity, create better flexibility and reduce total cost of ownership. So even those with a mainframe at the centre, this is a connected digital age and there will inevitably be requirements and opportunities for a hybrid IT model that covers mainframes, Linux, cloud, desktops and devices.
There is a tremendous value that has been created in business applications and data and there is a lot to be gained in digital transformation by leveraging that value as much as possible, in transforming it with the minimum cost and risk.
Taking the Risk out of Transformation
Large scale projects for ripping and replacing older systems are notoriously risky and unpredictable. Such risks are measured as an average IT project failure rate of 71%, which amounts to a $1.7Tr cost in a single year. These are dreadful numbers and no organization wants to waste that sort of time and money and reputation.
Which is why more and more organizations are turning towards ways in which transformational change is part of an organic, incremental process. Many are finding that a pragmatic, yet strategic approach to digital transformation has the concept of modernization at its heart. Modernization ensures the existing value of applications and data is protected and leveraged, as a platform for innovation, as opposed to alternative rip and replace or re-write approaches.
There has been a realisation from many years of experience in those more radical transformation projects that their success rate is relatively low, that planned costs and timescales typically grow exponentially, and that the risks to successfully continue business during such a transformation are unacceptably high: Modernization offers the antidote to such risky approaches by building on what already works.
The Market Agrees
Modernization is more pragmatic, as it prioritises on protecting the value of what companies already have, exploiting advancements in technology to deploy and integrate applications in new ways and to surface and integrate data in new ways, with minimum change. Creating portability and operational independence for applications and data is becoming recognised as the fastest and most future-proofed path to building a platform for digital transformation, and some reports are showing a rapidly expanding demand. Market influencers such as Gartner and IDC have commented positively on the merits of Modernization, while many of the global systems integrators are industrializing their own IT Modernization practices to support their customers’ transformation programs.
Planning the Journey
Modernization means many things to many organizations, which will be driven by the digital transformation needs. But it will typically need to encompass a range of attributes. Such attributes will include the infrastructure – supporting a Hybrid IT approach; the delivery process – taking into account an evolution towards Enterprise DevOps; as well as considerations around Security; and potentially managing and exploiting the data analytic opportunity on the back of this digital change.
The road to digital transformation can appear daunting, but Modernization offers a pragmatic and managed approach to taking incremental steps, which leverages the skills, investments and business value inherent in IT, offering a springboard for future success. Some of the world’s largest enterprises are building on their competitive advantage built into their current IT systems to embark on their next, digital, chapter.
This post was written by my dear friend Derek Britton from Micro Focus. He is well worth following on Twitter for more insight.
12% of 1955’s Fortune 500 were still on the list in 2014. Source: http://www.aei.org/publication/fortune-500-firms-in-1955-vs-2014-89-are-gone-and-were-all-better-off-because-of-that-dynamic-creative-destruction/
The top risk concern for businesses in 2019 is digital readiness, in comparison to other companies that were “born digital.” Protiviti, 2018. Source: https://www.techrepublic.com/article/digital-readiness-named-top-risk-concern-for-businesses-in-2019/
In 2018, 21% of organizations do not have a comprehensive digital strategy, via ZDNET. Source: https://www.zdnet.com/article/survey-despite-steady-growth-in-digital-transformation-initiatives-companies-face-budget-and-buy-in/
Project success is 29%. Partial or total failure is 71%. Source: https://www.infoq.com/articles/standish-chaos-2015