Separating the haves from the have-nots in IT transformation

• Seven in 10 (71%) of firms agree they will not be competitive without IT transformation
• The majority (95%) of survey respondents are falling behind an elite set of competitors who are accelerating their digital business goals through IT transformation
• More mature organisations are 7X more likely to recognise IT as competitive differentiator and profit centre

Dell EMC has announced the results of a new study* conducted by Enterprise Strategy Group (ESG), which has revealed that a majority of senior IT leaders and decision-making managers of large companies surveyed around the world, including Australia, China and Japan, indicate that their organisations have yet to fully embrace the aspects of IT transformation needed to remain competitive.

Digital transformation may be becoming the driving force behind IT transformation, but the majority of companies are still struggling with both concepts. The ESG 2017 IT Transformation Maturity Curve study commissioned by Dell EMC shows many organisations (95%) are at risk of falling behind a smaller group of industry peers that are transforming their IT infrastructures, processes and delivery methods to accelerate their goals of becoming digital businesses.

Many organisations still measure application cycle times in months, if not years; have siloed infrastructures; and continue to grapple with legacy architectures – all barriers to successful digital transformation.

“These findings mirror how the vast majority of customers are telling us they need to optimise their existing infrastructures to take advantage of digital-age opportunities,” said David Goulden, President of Dell EMC. "However, the research shows that most respondents are falling behind a small and elite set of competitors who have cracked the IT transformation code, and they’re competing more vigorously because of it. As organisations progress in their IT transformation investments, they can overcome the conflict between legacy IT and digital business initiatives to realise their goals, speed time to market and increase competitiveness.”

“As organisations in the Asia Pacific and Japan region look at ways to reinvent their business models to thrive in the digital age, an optimised IT infrastructure that is agile and customer-focused is essential. The findings of this research highlight the importance of organisations’ understanding where they are today in terms of IT transformation maturity. This is a critical first step to achieving their digital transformation goals,” said Paul Henaghan, President, South Asia & Korea, Dell EMC.

The ESG 2017 IT Transformation Maturity Curve study was designed to understand the role that IT transformation plays toward becoming a digital business. ESG employed a research-based, data-driven maturity model to identify different stages of IT transformation progress and determine the degree to which global organisations have achieved those different stages, based on their responses to questions about their organisations’ on-premise IT infrastructure, processes and organisational alignment.

Based on the global survey responses, the 1,000 participating organisations were segmented into the following four IT transformation maturity stages:

Stage 1 – Legacy (12%): falls short on many – if not all – of the dimensions of IT transformation in the ESG study
Stage 2 – Emerging (42%): showing progress in IT transformation but with minimal deployment of modern data centre technologies
Stage 3 – Evolving (41%): clear commitment to IT transformation and a moderate deployment of modern data centre technologies and IT delivery methods
Stage 4 – Transformed (5%): furthest along in IT transformation initiatives

The majority of respondents (71%) agree that IT transformation is essential to ongoing business competitiveness. Of the “transformed” companies, 85% believe their organisations are in a "very strong" or "strong" position to compete and succeed in their market over the next few years contrasted with 43% of the least mature companies.

The “transformed” organisations report the most progress in leveraging IT resources to speed product innovation and time to market; automating manual processes and tasks; and running IT as a profit centre rather than a cost centre. These companies:

· Exceeded revenue targets last year, more than 2X the least mature (96%)

· Are 8X more likely than the least mature organisations to report a highly cooperative relationship between IT and the business

· Made “excellent progress” running IT as a profit centre rather than a cost centre (7X more likely than the least mature)

· Are 7X more likely than the least mature organisations to have IT viewed by the business as a competitive differentiator

· Leverage IT resources to speed product innovation and time to market (6X more likely than the least mature organisations)

According to ESG, the adoption of modern data centre technologies, such as scale-out storage systems and converged/hyperconverged infrastructure, can improve the agility and responsiveness of infrastructure provisioning, IT project delivery and application development. The study found:

• Over half (54%) of all respondents use converged or hyperconverged infrastructure to support applications
• Almost six in 10 (58%) of all respondents have adopted scale-out storage systems in some capacity
• Roughly half of respondents are committed to software-defined architecture as a long-term strategy and have begun to implement, evaluate or plan for software-defined technologies

According to ESG, the adoption of modern IT processes - such as self-service provisioning capabilities, running IT like a public cloud and use of DevOps methodologies - can be an attribute of a successfully transformed company. The study found:

• A quarter (26%) of all respondents have “extensive” or “established” self-service capabilities
• Two-thirds (65%) of all respondents have made “excellent” or “acceptable” progress toward providing end users with the same ability to provision IT resources that they can get from a public cloud provider
• Four in 10 (43%) of respondents claim “extensive” or “good” adoption of formal DevOps principles and best practices

IT transformation is often correlated with a more cooperative and effective relationship between IT and the business, which was validated by the research. The study found:

• A third (36%) of IT organisations and their outcomes are evaluated by the C-suite or board of directors monthly, and 38% are evaluated quarterly
• Nearly four in 10 (39%) have the most senior IT executive reporting directly to the CEO
• Six in 10 (61%) of the least mature organisations indicate their line of business stakeholders view IT as a “stable service provider, but ultimately a cost centre”

John McKnight, VP of Research and Analyst Services, Enterprise Strategy Group noted, “Companies today increasingly rely on technology to grow and improve all aspects of their business. However, ESG’s research found that fully ‘transformed’ IT organisations are admittedly rare at this time. The good news is that there are incremental benefits to be had by making any progress along the maturity curve, which can be achieved by emulating the behaviours of these ‘transformed’ organisations.”

Adam DeMattia, Director of Research, Enterprise Strategy Group said, “Legacy IT is largely unprepared to meet the requirements of the new digital business: application cycle times measured in months, if not years; siloed infrastructure that prohibits organisations from viewing their data holistically; performance bottlenecks that impact end-user experience in a world that demands constant availability and response times; rigid architectures that force organisations to make forklift upgrades as requirements change; and traditional provisioning processes in which IT is often seen as a barrier rather than an enabler for the business. Organisations must resolve this conflict between digital transformation goals and today’s IT reality if the business is to meet its ultimate objectives.”

Anthony Griffiths, Technology Solutions Unit, Forest Fire Management, Victoria, Australia said, “Critical emergency services such as attending to frequent bushfires requires real-time, agile, and resilient platforms. A foundation that has these characteristics is imperative for our business to meet its digital transformation goals. While focused on modernising infrastructure, increasing performance and securing our services; we also spent time reviewing internal processes and organisational relationships to enable the transformation to DevOps. As a result, our government agency is a “digital supermart” of sorts; one that is agile, flexible, innovative, user-oriented, and customer-focused.”

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*The Dell EMC-sponsored research was conducted by Enterprise Strategy Group between December 9, 2016, and January 5, 2017, with a web-based survey of 1,000 senior IT executives, decision-making managers and staff familiar with their organisations’ current and future IT budget and spending plans and involved in their organisations’ infrastructure purchase processes in the US, Brazil, the UK, Germany, France, China, Japan and Australia. The respondents represented a variety of industries and enterprise-class organisations.