In my 14-plus years in corporate IT operations, I remain astounded at the levels of wasteful expenditure in systems, under-utilised software licences, networks, hardware and storage, to name a few.
Reuse, reduce, recycle is an adage that should not only apply to plastic.
According to figures released by market research multinational Gartner, total global IT spend was projected to rise by 6.2% to $3.7 trillion in 2018, indicating a new growth cycle.
The report further stated that enterprise software spending would experience the highest growth, at 11.1%, this year, with the software industry continuing to capitalise on the evolution of digital business.
While we know the global trend of large corporate companies is to spend millions annually on technology, a 2016 study by Genpact Research Institute suggested nearly 70% of what they spend may be misallocated.
The research found that of the $600 billion spent on digital projects, almost $400 billion of what was invested are on projects that fall short of expectations and return on investment.
In fact, much of what companies invest in technology sustains existing, or “legacy” systems, rather than new technology, the report found. From my experience, these figures are no surprise.
My experience is that the organisations that are most adept at embracing IT transformation are those that have a long history of time-tested and measured decisions.
While we are on the subject of studies, one undertaken by 1e.com showed that on average, 37% of all installed software goes unused, which equals a total of $30 billion in wasted IT spend in the US alone.
These figures are disconcerting. However, these scenarios are not too different from that which exists within major local IT departments. Ironically, poor utilisation of IT spend is hindering digital transformation.
The saying that it takes time to turn a tanker applies to IT transformation, but this doesn’t necessarily have to be the case.
Making measurement a priority
My experience is that the organisations that are most adept at embracing IT transformation are those that have a long history of time-tested and measured decisions, that sweat their assets and focus on getting the most out of their investments, and ask the right questions.
For example, if deploying a piece of expensive software, as an IT ops manager or CIO, do you: (a) check that it’s being used, or (b) have a mechanism in place to measure the impact and cost benefit that it brings to the business? If not, you are almost certainly squandering money.
I have always advocated that the fundamental requirement for a solid digitisation strategy is for an effective IT service management (ITSM) framework.
The essence of ITSM is that it provides a foundation or prescriptive framework to assist IT managers and support staff to manage IT service delivery to the business. It is a process guideline. The more mature the ITSM process, the easier it is to manage change and transitions in the IT infrastructure.
IT transformation is no quick fix. An organisation that has years behind it of doing the right things with the right motives and for the right reasons will have the necessary resilience and capacity to shift to an agile organisation.
Solid leadership required
The trend is as much a function of leadership as it is effective implementation. Estimates suggest the average tenure of a CIO globally is just short of four years. However, for many firms it is way shorter than that. The jury is still out as to whether true business transformation can be completed within that time.
My answer is that without the necessary structural frameworks, measurement and service delivery culture in place, it is a categorical NO.
The merits of consistency
There is a general perception within corporate IT departments that in terms of budget, 80% is spent on existing operations, with the balance of 20% on innovations. My experience that most organisations are so engaged in maintaining their legacy systems, that in some cases as little as 5% of the budget gets allocated on innovation.
To address this tendency, these organisations need to implement an agile and flexible engagement framework and process, which will enable them to introduce and test technology solutions that help align the IT infrastructure with the strategy of the business.
This process has the effect of both reinforcing the foundations of the IT infrastructure, while providing the IT team with the tools and time to help the business innovate, often in parallel.
Thereafter, attention can be given to the business strategy and the transformation technology needed to support it.
The result is a lean, cost-conscious and highly effective IT landscape that has the agility to evolve as the business demands.