Monday, April 29, 2013

When IT is Destroying Your Company's Future

A long time ago, before gray hairs appeared on my head, I was an IT manager.  My title was B2B E-Commerce Manager for a computer manufacturer.  I remember sitting in long meetings discussing how successful Dell Computer was with their just in time manufacturing and just in time supply chains.  I also remember our business representatives asking IT if they could develop systems that would allow us to operate in a similar supply chain model and the answers seemed always to be, "NO!"  Our IT systems were not set-up to support a real-time environment.

Of course the business would then say this must change if we are going to be competitive, and the IT would say then give us the budget to change.  Many years after I had moved on, the computer manufacture closed.  This manufacturer had never been able to gain freedom from their business-limiting legacy IT environments.

I was in England and Scotland last week teaching SMAC strategies (social, mobile, analytics and cloud) to large companies.  In a number of these sessions, I heard echoes from my days at the computer manufacturer, "Our current IT systems are not set-up to support those kinds of things."  They were not arguing the need for business and IT transformation, they were simply sharing the reality of their current IT architecture.

When working with companies on enterprise mobile strategies, the ability to support a real-time environment is often crucial to optimizing mobile apps and the ROI.  I have personally worked with many large utility companies that wanted to support real-time mobile solutions for their field services technicians, but the biggest challenges were trying to get their back-end legacy systems to work in a real-time environment.  Some simply couldn't make that change, and they stayed with a batch service ticket model and gave-up the attempt to fully optimize their systems.

I came across this excerpt from the article Four Reasons Your SMAC Initiatives May Underperform, "The cost to support and maintain existing IT systems is eroding companies’ ability to fund new investments in social, mobile, analytics and cloud IT initiatives (SMAC). Out of the $3.8 trillion expected in worldwide IT spending in 2013, NPI estimates there will be $760 billion in unnecessary overspending in non-value creation areas such as maintenance and support, over-subscription, license program misalignment, and sub-optimal contract negotiation and management."

That is a problem.  I have also often read that 80 percent of an IT budget goes to support legacy IT environments, leaving only 20 percent of the IT budget left for strategic initiatives.  If this is true (it was when I worked at the computer manufacturer), then our past may be preventing us from achieving our goals in the future.  In order to break this cycle, often something transformational must happen.  Something beyond the normal iterative improvements.  This takes courage.

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Kevin Benedict, Head Analyst for Social, Mobile, Analytics and Cloud (SMAC) Cognizant
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Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and SMAC analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.