Only 5% of Large Companies Prepared for Digital Transformation
April 19, 2017

Pete Goldin
APMdigest

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A majority of senior IT leaders and decision-making managers of large companies surveyed around the world indicate their organizations have yet to fully embrace the aspects of IT Transformation needed to remain competitive, according to a new study conducted by Enterprise Strategy Group (ESG), commissioned by Dell EMC.

While there is a clear imperative for companies to transform their legacy IT, digital transformation is becoming the driving force to making IT Transformation a top priority. However the ESG 2017 IT Transformation Maturity Curve study shows 95% of survey respondents indicate their organizations 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 organizations still measure application cycle times in months, if not years; have siloed infrastructures; and continue to grapple with rigid legacy architectures – all barriers to undertaking a successful digital transformation.

Adam DeMattia, Director of Research, ESG, explained: “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 organizations 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 organizations 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. Organizations must resolve this conflict between Digital Transformation goals and today’s IT reality if the business is to meet its ultimate objectives.”

Based on the global survey responses, the 1,000 participating organizations 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 having minimal deployment of modern data center technologies

■ Stage 3 – Evolving (41%): showing commitment to IT Transformation and having a moderate deployment of modern data center technologies and IT delivery methods

■ Stage 4 – Transformed (5%): furthest along in IT Transformation initiativesy

The majority of respondents (71%) agree that IT Transformation is essential to ongoing business competitiveness. Of the “Transformed” companies, 85% believe their organizations 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” organizations 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 center rather than a cost center.

These companies:

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

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

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

■ Are 7X more likely than the least mature organizations 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 organizations)

John McKnight, VP of Research and Analyst Services, ESG, said: “Companies today increasingly rely on technology to grow and improve all aspects of their business. However, ESG’s research found that fully ‘Transformed’ IT organizations 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 behaviors of these ‘Transformed’ organizations.”

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

The study found:

■ 54% of all respondents use converged or hyper-converged infrastructure to support applications

■ 58% of all respondents have adopted scale-out storage systems in some capacity

■ Roughly 50% of respondents are committed to software-defined 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:

■ 26% of all respondents have “extensive” or “established” self-service capabilities

■ 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

■ 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:

■ 36% of IT organizations and their outcomes are evaluated by the C-suite or board of directors monthly, and 38% are evaluated quarterly

■ 39% have the most senior IT executive reporting directly to the CEO

■ 61% of the least mature organizations indicate their line of business stakeholders view IT as a “stable service provider, but ultimately a cost center”

“These findings mirror how the vast majority of customers are telling us they need to optimize 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 organizations progress in their IT Transformation investments, they can overcome the conflict between legacy IT and digital business initiatives to realize their goals, speed time to market and increase competitiveness.”

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

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