According to McKinsey, disruptive technologies such as the mobile internet, cloud, and the automation of knowledge work have the potential to transform the way people live and work, drive business advantage and economic growth. With billions of consumer devices, industrial machines and even communities about to be connected as never before, the opportunities are huge – and so are the risks of being left behind.
Organizations need to understand how to embrace emerging technologies to bring them new customers or defend their existing bases, but then too many organizations are struggling to maximize the potential.
For example from a Big Data perspective, 60 percent of companies surveyed in APJ will spend at least 10 percent of their IT innovation budget on big data this year. A third of the organizations surveyed also believe strongly that Big Data is the largest competitive differentiator for their organizations. However, the study found that nearly half of these organizations have failed with a big data initiative they had implemented.
Many enterprises are finding themselves burdened with aging and obsolete IT infrastructure and application portfolios which are inflexible and challenging to maintain. Rather than giving them a competitive edge and supporting business growth, they stifle innovation and impede flexibility.
It can be a downward spiral as operating overheads increase fueled by high maintenance and upgrade costs, reduced vendor support and higher software licensing fees. As application capacity, performance and reliability decline, even minor new functionality becomes complex and cost-prohibitive.
Gartner believes “transformation remains a critically important phenomenon across all industries.” The analyst firm says “many industries will face intense challenges in 2014 and beyond, and will have no choice but to radically change their established business models.”
Making the switch to cloud-ready solutions
While the challenge of staying ahead in such a dynamic technology environment may appear daunting, organizations can achieve real transformation in their applications portfolio by leveraging cloud computing.
By providing a platform to standardize and automate the management of key business applications, cloud has the ability to dramatically reduce IT costs, improve operational efficiency and optimize resources.
Importantly, transforming an aging application portfolio by leveraging the cloud is justified through higher performance and the ability to bring innovative new services to market faster, more intelligently and at a lower cost. Such a transformation also forges a closer alignment between technology and the business, enabling organizations to instill customer intimacy, expand market share and drive sales and profits.
However transforming applications correctly requires a significant change in how a company organizes its IT. To gain maximum success from the transformation a carefully thought-out and well-executed approach is vital. A more diverse and dynamic communications environment can be complex and issues of security and privacy must be addressed.
Mapping the road to transformation
A detailed roadmap is a prerequisite for any successful transformation and should document the phases, solutions, benchmarks and expected results.
The goal is to achieve value from migrating to a cloud and mobility-enabled applications environment quickly and efficiently. At the same time the change program must keep costs and risk under control, and it must limit disruption to ongoing operations.
The following transformation model focuses on the key elements of business context, including applications portfolio, technology infrastructure, organizational requirements, governance and financing. There are three key phases:
The first stage is a rigorous assessment of each existing application by subject-matter experts and cloud specialists. They need to address a series of key questions:
- What applications should move to the cloud?
- What platforms are most suitable for the migrated applications?
- How should applications be prepared for the cloud?
- How can they be integrated with other systems?
A well-defined business and technical alignment model should be used to evaluate each application and only those that yield measurable value from running on cloud or mobile infrastructures should be considered for migration.
Applications can be categorized under four strategic domains as part of the modernization program. The roadmap needs to establish whether to:
Re-host – This is the most non-invasive approach as it essentially involves a ‘lift and shift’ of the existing application to a new cloud or mobile infrastructure.
Replace – Applications which are highly customized or outdated may be too difficult or expensive to move to a cloud environment. Replacing them with more advanced technologies will lead to new features and lower long-term costs.
Integrate– Integrating off-premise cloud applications is sometimes viewed as a barrier to cloud adoption but there are strategies to facilitate such a move.
Re-architect – This is the most intrusive option but may be required for outdated applications written in a legacy language. Efficient coding is critical and in some cases refactoring may be necessary to prepare it for a cloud platform.
A strong management approach is needed for a smooth transition which focuses on delivering measurable results while mitigating cost and risk. Particular attention should be given to the management of mobile devices and cloud-based security.
Because cloud computing supports various combinations of deployment models, service types and virtualization, organizations will need to decide between several governance and process models.
Targeting key outcomes
In a complex enterprise environment, a number of critical variables can affect the outcome of an applications modernization initiative. Organizations pursue applications transformation for a number of reasons. Many seek to leverage the power of cloud flexibility and open new methods to source, deliver, and govern highly scalable services. Some want to leverage the capital expenditure savings and operating efficiencies of SaaS. Others may seek cloud or mobile capabilities to enable customer self-service or to extend their brand reach.
Whatever the specific objectives, most large enterprises now seek applications portfolios that are simpler, more flexible, and scalable. Astute managers want applications that better align to their business processes, support their operational goals and budget requirements and help drive innovation and growth.
So how can organizations realize the benefits of a modernized portfolio? By using a phased approach built on a proven assess, modernize, and manage model. Depending on specific requirements, this model uses various hardware and software resources, consulting support, and managed services expertise to plan and execute an applications modernization effort.
Enterprises apply this approach to strike an optimum balance between the cost to achieve and maintain a modernized end state and the value organizations reap from a transformed portfolio.
To ensure optimum results from a modernization effort, organizations should consider the following variables as part of a strategic transformation plan.
- Operational considerations: Using a comprehensive approach that designs a modernized portfolio to meet specific operational realities, enterprises address the full lifecycle of enterprise applications—planning for agility, building for quality, and managing for performance.
- Modernization methodology: Using structured and field-proven methods of an ‘assess, modernize, and manage’ roadmap—combined with the tactics, tools, and processes—companies can create an enterprise-class transformation initiative.
- Transformation framework: Organizations need a step-by-step structure to guide and implement actual modernization activities—a robust transformation framework. This framework would include a formal delivery strategy, enterprise architecture, and detailed planning for service implementation at every stage of the modernization. It should also identify specific tools, methods, processes, and activities, as well as the broader scope, planning, and distribution of transformation-related tasks.
Delivering real benefits
The journey may be complex, but with a carefully planned and executed transformation roadmap it’s possible to retire obsolete systems and regain value from others.
By transforming aging and obsolete application portfolios organizations can fully realize the real benefits of cloud and mobile technologies. This will deliver forward-thinking enterprises with a safer, more cost-effective course towards an agile, cloud and mobile-enabled applications environment.
The outcome is a repositioning of IT as a strategic, solution-oriented business partner to improve productivity, reduce costs, drive innovation and accelerate speed to market.
Bruce Dahlgren is Senior Vice President and General Manager, Enterprise Services Asia Pacific and Japan, HP