What Drives Application Transformation?

Typical Drivers

  • Reducing the cost of IT services
  • Mitigating the risk around the ongoing use of underground applications (e.g. shadow IT)
  • Better alignment of IT with business
  • IT support for the introduction of shared business services / cloud / mobility (HUGE impact on existing EA structures and methods)
  • Increased flexibility and maintainability of IT systems
  • Archiving inventory / metrics in a central repository for a “single source of truth”

Is there a need for these drivers?

  • 60% of large companies say they are supporting more software than they need to run
  • 4% of IT decision-makers consider every system they run to be “business-critical”
  • Cost of retiring applications is a leading reason cited for keeping obsolete software in production. Why? The OpEx savings cannot be quantified (even a high-level estimate), resulting in executives vetoing retirement activities due to ‘no business case’

What’s in it for the business?

  • A plan – where to focus and realize cost savings
  • A multi-dimensional, customized analysis of the portfolio to increase understanding
  • Identification of redundant systems that should be decommissioned, saving OpEx this year, next year, and the year after, AND enable an IT capability to keep pace with your ever changing needs
  • Increased understanding of the size / (extreme) complexity of portfolio, therefore easier to ID opportunities to modernize the portfolio and reduce cost, business risk, and increase speed to market by better serving their customers
  • A rationalized portfolio that can be changed quicker in respond to xyz. One that allows discovery of accumulated value over time, and paying more attention to redundancy, complexity, and operational TCO
  • Technical transparency – and its impact on business investment decisions
  • Avoiding additional CapEx for new (but) redundant applications
  • Evaluating IT activities as a business process improvement (who else does IT support besides the business?)
  • Increased agility
  • Knowledge of the Level 0 Operational TCO for each application in the portfolio (you know what each employee costs your company, why not your apps?)
  • An enriched view of the portfolio and its function, business importance / impact for a technical, functional, risk quality point of view
  • Alignment with technology so that strategic and tactical decisions are based on business drivers, not technical constraints

What are the biggest challenges?

  • Getting CXO buy in. Determining, what keeps them up at night?
    • Labor markets versus cheapest market
    • Where to place the infrastructure, enabling it to reach small, volatile, lucrative markets
    • Security of the global network
    • Connecting global employees via social media
    • Employees and information overload versus increased knowledge
    • Security threats
  • Scalability
    • Lack of agility to respond to major market shifts
    • Move their mess to the cloud? NOT
    • Value of standardization
  • Explosion of data – both structured and unstructured
    • Is ‘information’ growing at the same pace? If no, why not? There are solutions. However, what’s the investment compared to the value received?
  • Financial uncertainty
    • Optimization of IT operations is critical while sustaining current service levels and security standards

How to position IT as credible business accelerator (manufacturing example)

  • Global xyz footprint, expansion in emerging markets
  • Supplier involvement including local suppliers
  • Expanding global operations and various segment-specifics for xyz
  • Integrated manufacturing enterprise (e.g. BI, level of granularity, need for ‘real time’, summarized data for reporting / forecasting purposes)
  • Trend of globally dispersed employees / social media platforms
  • P&L impact – Biggest business benefit is in accelerating strategy execution
  • Focus to improve innovation
  • Governance – From a business capability vision, business-led programs that integrate manufacturing IT expertise, CIO still needs to rise to the CTO / CFO playfield – on-time project delivery and high availability systems, project portfolio focused and aligned with the business

See you in the future…

Frank Wood

Executive Transformation Strategist

Frankwood944@yahoo.com

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