Survival of the Fittest: Ensuring IT Is Providing You with an Innovative Edge
June 2, 2008 Paul Hollingsworth
Seemingly it’s the old, old problem of how to have your cake and eat it. Chief information officers are being asked to ensure that IT is continuing to function efficiently, to comply with legislation and regulation, and to be secure against an ever-wider range of threats. They’re also expected to perform the usual upgrades, renewals and maintenance on legacy infrastructures, and to “manage” (as in maintain or reduce) IT budgets. But as if doing all of this were not enough, IT is now required to “innovate” to support businesses that are being fundamentally re-engineered for the new economy.
All of which has far-reaching effects on IT infrastructures, budgets and goals.
It’s important to understand that while the importance of innovation and the inevitability of change has become the mantra of the elite ranks of businessmen worldwide, this is not a fad. In the 1990s, businesses became adept at sales and marketing, branding, rebranding, and growth through merger and acquisition. With the support of the Internet, businesses opened up new global markets and the barriers to setting up a business lowered. This provided a host of new opportunities, but it also introduced a range of new threats–not least that increased numbers of competitors made differentiation harder and premiums for particular products and services more difficult to maintain.
Today, each innovation is scrutinized, copied and the advantage negated that much quicker–thanks to the power of the Internet-supported global market. General Electric’s Jeffrey Immelt, for example, explains that now “constant re-invention is the central necessity . . . we’re all just a moment away from commodity hell.” The ability to respond to change, to continually innovate and to get product to market quickly and reliably are the new hallmarks of business success. Or, in Rupert Murdoch’s words: “big will not beat small anymore. It will be the fast beating the slow.”
IT is a central player in a business’s search for both innovation and differentiation. Its critical role in supporting an organization’s innovation fitness was underlined in a recent survey conducted by Capgemini Consulting. The survey revealed that two-thirds of CIOs believe that IT is critical to business innovation, but only 25 percent feel their IT function is actually driving business innovation. Capgemini’s Eric Monnoyer, BIS global leader, comments that the requirement to balance operation and innovation is “a constant challenge” for CIOs, although the survey indicates that 60 percent of CIOs believe it’s possible to do both.
So why aren’t more IT departments supporting business innovation effectively? Well to some extent we have already answered this question. Many CIOs and IT departments are busy just keeping IT running and measuring performance against vital key performance indicators. Often IT is seen as a cost center that needs to be measured, optimized and controlled, rather than as the powerhouse of business innovation. And CIOs may have little time or budget to innovate, due to the fact that such a large chunk of existing IT budgets, resources and staff are committed simply to keeping legacy infrastructure running. The scale of this problem was revealed in a recent white paper, called The Burden of Legacy, by Erudine‘s Toby Sucharov and Philip Rice, which noted that: “The cost of legacy systems [from industry polls] suggest that as much as 60 to 90 percent of IT budget is used for legacy system operation and maintenance.”
And not only is it expensive to maintain, but the “double whammy” of much legacy infrastructure is that it is no longer aligned to business need and impedes that much-needed innovation.
If you want to re-align your IT to business need you have two main choices: tactically managing the issue (for example, by extending systems or by partial replacement of infrastructure) or strategically redesigning your infrastructure. While the second approach will yield the most benefits in the long run, in practice it’s the first approach that most companies have taken. This is because migrating mission-critical applications and their associated data is risky and difficult, and such projects have a poor record of being delivered on time or to budget. Many enterprises have therefore naturally shied away from attempting such projects, although the compounded effect of using a tactical approach to solve legacy IT problems over a number of years is the unbelievable complexity that is now responsible for sucking IT budgets dry.
This brings us back to the seemingly intractable “chicken or egg” conundrum of innovation versus operation. A solution to this problem is offered by the new generation of application migration technology that is coming to market. So-called “third-generation migration” solutions are very different from preceding generations of migration technology. Notably, they are highly adept at dealing with the thorny problem of business logic held in legacy systems and are flexible enough to enable “business-driven” migrations. CIOs that have employed this technology have achieved business-driven application migration and consolidation projects on time and to budget. They are benefiting both from a lower legacy infrastructure cost and the ability to offer new products and services to their customers–supporting innovation and opening up new revenue streams.
Third-generation migration technology could be the CIO’s best friend–the key to unlocking the budget and resources trapped in legacy systems, by enabling effective, low-risk application migration and consolidation. And, by significantly reducing both the risk and cost of consolidating and renewing legacy infrastructure, it allows more resources and effort to be targeted at innovation.
Paul Hollingsworth is director of product marketing at third-generation migration specialists Celona Technologies, and was previously director of product management and product strategy for the Geneva billing product from Convergys. In the early 1990s, he worked in strategic billing development at Mercury Communications before joining Saville Systems, where he led billing system implementations in Israel and in the United States. He then led Saville’s Interconnect billing product development and delivery teams. Hollingsworth has 25 years in the software industry and apart from telecoms has also worked in real-time manufacturing systems and on airborne radar systems.