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Can CIOs innovate and, at the same time, do more with less? The answer is, Yes.
Paul Hollingsworth,
Director of Product Marketing,
Celona Technologies
Seemingly it’s the old, old problem of how to have your cake and eat it. CIOs are being asked to ensure that IT continues 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 have 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 have become the mantra of the elite ranks of businessmen worldwide, this is not a fad. In the 90’s businesses became adept at sales and marketing, branding, rebranding and growing through mergers and acquisitions. 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 – nevertheless that the increased numbers of competitors has made differentiation harder and maintaining premiums for particular products and services more difficult. Today, each innovation is scrutinized and copied and the advantage negated that much quicker - thanks to the power of the Internet-supported global market. GE’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”. Responding to change, innovating continually and getting products to market quickly and reliably are the new hallmarks of business success. In Rupert Murdoch’s words: “The big will not beat the 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% 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% 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 by Erudine’s Dr Toby Sucharov and Philip Rice who note that: “The cost of legacy systems [from industry polls] suggests that as much as sixty to ninety 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.
Tactical versus strategic
If you want to re-align your IT to business need’s 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. These so-called “third generation” migration solutions are very different from the 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. Take early adopter BT, for example, which wanted to migrate the legacy billing system that supported its Featurenet customers to Convergys's Geneva system, but which also desired a "completely seamless transition" to the new system. It achieved a successful migration in just six months (a full 13 months ahead of schedule). BT Retail has since credited the successful project with creating more than €148 million in new revenues, thanks to its ability to launch innovative new services to Featurenet customers.
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.
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