IT Transformation Maturity Curve: An APJ Services Viewpoint
Where Are You on the IT Transformation Maturity Curve?
A recently published 2017 IT Transformation Maturity Curve study found that only 5% of IT organizations achieved transformation maturity. There was good news, however, for the remaining 95%. Incremental advances along the curve were shown to deliver measurable gains in agility and cost efficiencies—which, in turn, help accelerate further transformation.
Here in the Asia Pacific and Japan (APJ) region, as in the rest of the world, the promises and perils of digital disruption are driving enterprises to transform their business and IT models.
In APJ, we see that all businesses are embracing Digital Transformation and IT Transformation in a more definitive way. The driving force has been the changing business model. Customers are feeling the need to go fast or face the risk of being left behind. In some of the mature markets, such as Australia, the demand for IT Transformation services began spiking more than a year ago. Over the past year, increasing pressures to transform IT to reduce costs and fuel the innovation necessary to compete in digital markets have rippled across the region.
Dell EMC has already conducted several projects in APJ and helped our customers to realize new agility, resiliency, and cost efficiencies from successful IT Transformation projects. For example:
- E-Konek Pilipinas, an IT service provider that delivers Software as a Service (SaaS) for the Lina Group of Companies in the logistics and transportation industry, partnered with Dell EMC to build an enterprise hybrid cloud and offer SaaS and IaaS (Infrastructure as a Service) self-provisioning. Now users can more quickly and easily deploy and run new applications to meet business demands. And IT is reinvesting its OPEX savings in innovations and strategic development, such as new mobile apps and realtime analytics of field data.
- Yamaha worked with Dell EMC consultants in Japan to consolidate 300 operational systems on a secure private cloud, which enables fast response to business demands from the company’s engineering, product development, support, finance, sales and marketing teams. Redesigned data protection provides daily (vs. monthly) backups to a remote site to maintain access to and availability of critical data and applications.
A recently published Enterprise Strategy Group (ESG) research insights paper, commissioned by Dell EMC, looks at How IT Transformation Maturity Drives IT Agility, Innovation, and Improved Business Outcomes. The study surveyed a thousand global IT managers in enterprises ranging from $250 million to $20 billion in annual revenue and 1,000 – 20,000 employees—with 21% of respondents from Asia (China (10%), Japan (6%), Australia (5%). Among the APJ countries covered in the research, Japan was shown to have the greatest appetite for IT Transformation. Companies in China are picking up the pace. And the focus in Australia and New Zealand is on DevOps and agile application development.
Learning from the 5%
Based on participant responses in categories spanning data center infrastructure, process automation, and business/IT alignment, organizations, the study segments organizations into four maturity stages: Legacy, Emerging, Evolving, and Transformed.
Although the research finds wide-spread recognition that IT transformation is critical to enabling business success in the digital age, only 5% of respondents met the maturity criteria for Transformed IT.
Not surprisingly, these organizations also reported the best results across key performance indicators (KPIs), including: agility and responsiveness, cost efficiency, higher levels of funding for new projects and innovation, higher levels of internal stakeholder satisfaction, improved business outcomes, and optimism about the future.
Fortunately, there was good news for the 95% of organizations that sit elsewhere on the maturity curve: Progress through the maturity stages was extremely consistent with incremental improvements in these KPIs. The resulting gains in agility, cost efficiencies, and business satisfaction also help to accelerate further transformation.
Infrastructure Transformation Is Not Enough
Perhaps the most notable lesson that the 95% can learn from the 5% is this: Transformation is driven from the top.
CEO sponsorship and senior-level innovation and strategy officers, working across the organization, are critical. These leaders embrace the digital economy—and are willing to invest in innovation and take risks to develop a new business model. In one consumer product company, for example, the CEO directed that all new products be able to connect as part of the Internet of Things (IoT). The company’s latest products will enable users to connect with each other in a community to share tips and experiences.
Another important insight to be gained from the 5% is that infrastructure modernization, while necessary, is not sufficient. As the following slide—based on data collected from nearly 30 mature Dell EMC IT Transformation customers—shows, the return on investment from overhauling legacy infrastructure (the green “x86 Estate” segment in the bar graph) yields only 1% of the typical 18-26% savings gained. The bulk of savings comes from reducing personnel (Operating Model Transformation) and software costs (Application Transformation). Operating model transformation across people, process, and technology is necessary to gain the agility digital business demands. And agile software development and DevOps capabilities are necessary to deliver the innovation, time-to-market, and quality of customer experience it takes to compete and win in the digital economy.
Think Like a Start Up
In APJ, as elsewhere, leaders must ‘think digital’ and cultivate a culture of innovation and urgency to ‘go fast’—or risk being left behind.
Competition from start-ups are often the impetus that drive traditional companies to transform. Just as Tesla, Uber, and self-driving initiatives are forcing traditional car makers re-examine their concept of a car, banking is being similarly disrupted by “FinTech” mobile service providers. It was Bill Gates in 1994 who made the provocative statement: “Banking is necessary, banks are not.” More recently, he mused that perhaps consumers in developed nations will someday also benefit from some of the more advanced mobile banking services that people in developing countries use.
While start-ups may not have the baggage of legacy IT to contend with, traditional companies have unique resources they can exploit, such as valuable customer data, supplier relationships, and experience. The important thing is to start—and start now—to move along the IT Transformation Maturity Curve to gain agility and cost efficiency. As companies reduce their ‘technical debt,’ they can shift resources to innovation—and accelerate ongoing transformation.
APJ Vertical Market Trends
In APJ, sectors such as business services and manufacturing are leading the way in IT Transformation, while retail, telecommunications, and banking continue to lag. Traditional telecom and retail, for example, long focused on physical infrastructure and inventory, can be unsure how or where to start to move to a software-defined model of IT. Perhaps because these industries are facing the most imminent disruption from new digital competitors, the prospect of undertaking transformative change becomes even more daunting.
Nevertheless, the drivers and the payback from software-defined IT are compelling. A very large bank, for example, recently completed an IT Transformation initiative that has reduced the time to provision from 40 days to 2 hours, enabled release of a minimally viable product (MVP) within just 3 months, and saved 30% in operational costs.
Disrupt from Within
More than anything, IT Transformation requires the ability to break away from old ways of thinking. While many organizations recognize the need to partner or hire to fill resource and skill gaps, fewer realize the value to be gained from hiring new people with very different mindsets. It’s a strategy we are currently aggressively pursuing at Dell EMC APJ. By hiring people with markedly different experience and perspectives, we hope to inject new ideas—and help disrupt from within!
Where Are You on the Curve?
See where your IT organization falls on the IT Transformation Maturity Curve with an IT Transformation Self-Assessment.