UK Trip Report: Modernization – How the Industry Must Innovate

Micro Focus had the opportunity to attend two fascinating industry events in the UK in late February 2013. The first was the meeting of the Northern Ireland SOCITM public sector IT forum, the second was an IT leadership and innovation forum in Edinburgh, organized by the Chief Wine Officer events group. Both meetings comprised a combination of presentations, discussions and networking.

As the main sponsor for both events, Micro Focus provided the keynote presentation for both meetings. In both cases, the keynote concentrated on the unprecedented levels of change affecting IT organizations today, driven by a combination of economic, operational and technological pressures.

Economic and industry pressure

Our keynote started with a broad snapshot of the economic status for 2013 – specifically one of adverse market conditions, evidenced by the contraction in economic output at the end of 2012, and the February announcement by ratings agency Moody’s to reduce the UK’s score from AAA to AA1[1]. Furthermore, against this backdrop of uncertainty, various vertical industries and sectors face significant challenges in meeting industry compliance and legislation measures as well as managing operations more efficiently. In the wake of further public sector spending cuts and compliance fines, cost pressures remain significant across public and private sectors.

The IT Scorecard

The question then presented is whether IT is coping with the situation today. Which can be examined on two major fronts: first how cost-management is faring, and secondly the efficiency of delivering value to the organization. On both fronts significant challenges remain. From a cost perspective, according to Gartner figures, spending is likely to remain essentially flat or even reduce, depending on the industry; yet figures show IT remains a very high proportion of revenue, especially in financial services (over 7.3%, according to a Deutsche Bank report). Meanwhile statistics show that while most IT staff might think they are doing a reasonable job, barely a quarter their non-IT business counterparts agree, as reported in Information Week[2].

Polarized Pressure

This concern over IT performance is put into sharp relief when one considers the polarization of demands being placed on it.  On one end of the scale sits the unsolved backlog of IT plans and projects, yet to be addressed, despite over 70% of all IT budget going on existing projects[3] – a term often called “IT Debt”[4]. At the other end of a wide spectrum sit the new and exciting possibilities and slew of unprecedented customer demands focused around disruptive technology (mobile, cloud, social media), where such activities are seen as vital for business, but for which appropriate skills, technology and processes are not yet aligned to support.

Smart Innovation

Finding ways to satisfy both ends of the spectrum has all but evaded IT leaders. Their quest is for a smarter way to solve these polar-opposite IT requirements. Studies suggest that the most efficient and low-risk approach to innovation may lie in the process of modernizing existing systems to support new business initiatives. It holds true that building on something that already works is likely to be lower-cost and lower-risk than starting from scratch, and studies from Gartner, the Standish Group[5] and from Micro Focus’ own customers reinforce this, indicating that “Modernization” is more likely to yield a faster delivery time, with greater competitive advantage, than any other approach.

In each event time was given over after the presentation to allow a healthy and insightful discussion to ensue around the topics of innovation and modernization.

Conclusion

We were delighted to spend time talking and listening to a variety of major organizations, as always. What was very clear is that the present situation of economic adversity demands smart, cost-conscious, risk-averse and yet innovative IT decision making. Micro Focus believes it can bridge the gap between IT Debt and Disruptive Technology, such that smart IT decision makers can justifiably look at modernization as their route to innovation.


[1] http://www.businessinsider.com/moodys-strips-the-uk-of-its-aaa-rating-2013-2

[2] http://www.informationweek.com/global-cio/interviews/6-ways-it-still-fails-the-business/240144288

[3] Source: Forrester

[4] Source: Gartner

[5] “Modernization – Clearing a Pathway to Success”, Standish Group

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