Companies must approach IT modernization as a journey

We’re on the doorstep to important changes in the services market.

I believe we’re on the doorstep of very important changes in IT market conditions. IT groups have experimented with hybrid cloud, agile and DevOps, and businesses have experimented with analytics and increasingly experiment with AI. Companies are confident they can now move some pilot experiments into programs, knowing they will support the weight of business transformation but that programs must be run with an agile rather than waterfall approach. Furthermore, IT and shared services need to modernize so they can respond more effectively and quickly to the business needs for innovation and competitive advantage. However, companies often don’t realize up front that IT modernization in a digital world is very different and more complicated than traditional transformations.

Big IT modernization journeys

Primarily, IT modernization takes the form of several big journeys: hybrid cloud, agile / DevOps, more deeply embedded security, digital end-user compute workspace, for example. Over the next few years, companies will dedicate substantial focus and resources to ensure successful journeys in IT modernization and digital transformation. These journeys require change that cut across technology, people, process, talent and philosophy. Hence, we’re on the doorstep to journeys that will dramatically change the market for how companies deliver IT services.

For instance, there is a clear journey to hybrid cloud. The debate around cloud is over as to whether it will exist or whether companies will use it. It is largely accepted, and there is no longer a question as to whether companies can operate in a production world and secure the cloud. All those experiments and early debates are now receding. Companies also are now convinced that the path is not to one cloud (AWS or Azure) but a hybrid cloud in which companies take advantage of several public clouds, their own private cloud, and potentially attempt to turn their legacy estates into a legacy cloud.

There is emerging conviction around what the hybrid cloud environment will look like, and companies are now embarking on the journey to implement that vision rather than experimenting to understand what that vision should be.

Another journey that is emerging with conviction is the understanding that if IT is to appropriately support the business, it must become much faster and more agile. Hence, there is a growing movement to adopt agile methodology and its cousin DevOps so that IT can dramatically improve its ability to increase its pace of change.

DevOps uses cross-functional teams aligned by business services. The teams are responsible for the entire stack that was delivered in shared services. They are persistent teams, staying with the firm throughout its transformation journey, rather than moving on to other projects. DevOps teams are also located in close proximity with the business teams to enhance collaboration and increase speed. Unlike shared services units, which focus on low costs per function, DevOps focuses on business impact at speed. Consequently, as companies take the DevOps journey, they use dramatically fewer resources to deliver services.

I blogged before about Microsoft’s journey to DevOps in its Azure cloud organization. Its DevOps implementation enabled a dramatic improvement in Microsoft Azure’s pace of innovation. Quality also improved, and the error rate dropped dramatically. The result of the firm’s DevOps journey was offerings more valuable to customers, more user-friendly services and Azure’s ability to capture greater share of the cloud market.

Another journey in IT modernization reimagines the end-user compute workspace environment, sometimes known as the IT service desk area. The end-user compute space yields a high level of dissatisfaction among business users and often is the lens through which the business views IT’s success and value. In a prior blog, I explained three aspects of the end-user compute space in IT that need to change. A fourth IT modernization focus is the journey to a secure world.

Why IT modernizations are more complicated than traditional transformation

One of the major differences in IT modernization is that the amount of change an IT organization undergoes is far greater than before. Consequently, the waterfall approach or the event-driven approach breaks down. Companies must approach IT modernization as agile, iterative journeys. Contrary to many assumptions this phased approach doesn’t slow down achieving the objectives. In a prior blog, I used the analogy of car brakes to explain how the phased-journey works.  

Another difference from today’s IT modernization initiatives compared to traditional transformation is that companies need to spend much more time and value on design. It’s not just an upfront design; it’s an ongoing journey of design. This also involves third-party relationships. The normal large total contract value (TCV) where the parties commit to a scope of work of three to five years now gives way to a much more flexible set of relationships that align well with the DevOps agile methodology.

Furthermore, the focus on transformation used to be on unit cost; but today, the focus is on designing a business model change or service model change.

A complicating factor is that both IT modernization and digital transformation are occurring in some companies at the same time but are driven by different stakeholders towards each other. Modernization is to enable support systems to support the digital transformation, and the digital transformation is to accomplish business goals at speed, which requires modernization.

Commitment to the journeys

Companies are committing to go on these IT modernization journeys and are committing to fund these activities to improve agility and speed so that IT can better serve the business needs and create new competitive advantages.

IT groups now realize that they are too expensive and too slow. Where this situation doesn’t change, IT will be left sidelined with only the legacy operations to administer, and the business will adopt technology independent of IT. IT groups are responding by committing to modernize IT by undertaking these journeys.

As I observe the enormity of IT modernization journeys, I believe the next few years will be dedicated to these journeys with substantial focus and resources committed to ensuring companies travel these journeys successfully.

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