NTT Europe recently completed a study that found 56% of CIOs and Senior IT leaders see complexity of their own Information and Communications Technology (ICT) systems as the biggest barrier to their organization’s enterprise-wide adoption of the cloud. The survey contends that cloud adoption continues to be tactical in nature as a result of the inordinate complexity of existing and legacy ICT platforms.
Completed in April and May of this year in the United Kingdom, the study Growing Pains In The Cloud, 300 CIOs Express Their Views About Barriers To Cloud Adoption (opt in required) was completed by Vanson Bourne and included 300 interviews of CIOs and Senior IT leaders from public and private organizations with 250+ employees.
While the study was completed in the UK, the findings are applicable to enterprises globally looking to use cloud computing to better align business and IT strategies. 59% of CIOs and IT Leaders surveyed say that enabling alignment of business and IT strategies using cloud infrastructure is their number one priority.
Key take-aways from the study include:
- 53% said that launching new services and applications more quickly is a key request they receive from business units. In the transport and logistics sector four fifths (80%) of CIOs confirmed launching new services and applications is their most important business focus.
- 60% of IT leaders are concerned that cloud providers don’t appreciate how complex legacy ICT systems are, and fear migration to the cloud could fail. A common concern of respondents is how vendors tend to oversimplify their cloud solutions despite the inordinate complexity of ICT legacy platforms and systems.
- 46% of the IT leaders polled agree that cloud is a great enabler of ‘bring your own device’ and flexible working, through enabling remote access to data and applications. The challenge is making cloud infrastructure work seamlessly with legacy platforms and applications.
- 68% have had cloud-based systems in place for two years or less. The following graphic shows the distribution of cloud adoption by industry included in the study.
- 77% of CIOs and Senior IT leaders report cloud-based infrastructure is in use today in their enterprises. 87% of CIOs in media and retail, and 84% of CIOs from telecommunications and ICT companies have already implemented a cloud-based infrastructure as well. The following graphic illustrates the use of cloud as part of respondent’s ICT infrastructures.
- 28% of the CIOs surveyed stated their legacy systems were too expensive (or valuable) to abandon altogether. The implication is that CIOs and Senior IT leaders expect cloud platforms to eventually handle the complexity of their core business systems while also meeting compliance requirements internal and external to their organizations.
- The four industries with the highest concentration of legacy ICT systems include Financial Services (30%), Media & Retail (31%), Transport and Logistics (31%) and Public Sector (30%). CIOs in these industries show the highest resistance to cloud adoption in the study. 6% of CIOs said they have no plans to adopt cloud computing.
Bottom line: CIOs are looking for cloud solution providers that recognize just how uniquely complex their businesses are and can address legacy system integration challenges head-on. With 59% saying they have responsibility for aligning business and IT strategies, greater cloud adoption at the enterprise level is inevitable.
From the obvious to the outrageous, enterprise software predictions often span a wide spectrum at the beginning of every year.
In enterprise software in general and ERP specifically, there are many safe harbors to dock predictions in, from broad industry consolidation to Oracle buying more companies. Or the inexorable advances of cloud computing and SaaS platforms in ERP today, which is often cited in enterprise software predictions.
Too often predictions gravitate too much towards theoretical economics, overly-simplified industry dynamics and technologies, leaving out the most critical element: customers as people, not just transactions. So instead of repeating what many other industry analysts, observers and pundits have said, I am predicting only the customer side of ERP advances in the next twelve months.
The following are my predictions for ERP systems and enterprise computing in 2013:
- The accelerating, chaotic pace of change driven by customers will force the majority of Fortune 500 companies to reconsider and refine their ERP and enterprise computing strategies. Social, mobile and cloud computing are combining to provide customers with more acuity and articulation of what their preferences, needs and wants are. The majority of ERP systems installed today aren’t designed for managing the growing variation and pace of change in customer requirements and needs. In the next twelve months this trend will force the majority of Fortune 500 companies to re-evaluate their current ERP systems when it becomes clear their existing enterprise systems are getting in the way of attracting new customers and holding onto existing ones.
- Highest-performing CIOs will rejuvenate monolithic, dated ERP systems and make them agile and customer-focused, while at the same time excelling at change management. There are CIOs who can handle these challenging tasks, and the future belongs to those who can fluidly move between them quickly. In twelve months, a group of CIOs will emerge that are doing this, delivering significant gains to gross margins and profitability in their companies as a result. They’re the emerging class of rock stars in IT and enterprise computing.
- Quality ratings of ERP systems by internal customers will become commonplace, including 360-degree feedback on ERP performance. This is overdue in many companies and it takes a courageous CIO and senior management staff to value feedback on how their ERP systems are performing. In the most courageous companies, within twelve months the results of these internal surveys will be posted on bulletin boards in IT and throughout IT services departments. For some companies this will be first time IT staff members have a clear sense of just what internal customers need, how they are being served, and what needs to be done to improve business performance.
- ERP systems built on a strong foundation of personas, or clear definition of customers and their roles, will overtake those built just on features alone. This is already happening and it will accelerate as featured-based ERP systems prove too difficult to be modified to reflect the fast-changing nature of personas and roles in organizations. The quickest way to determine if a given ERP system launching in the next twelve months will succeed or not is asking what personas it is based on and why.
- Customers push speed and responsiveness from a “nice to have” to a “must have” as advances in mobility platforms and integration make real-time possible. If there is one unifying need across the personas of customers an ERP system serves, it is the need to improve responsiveness and speed. The same holds true within enterprises today as well. It would be fascinating to look at the data latency differences between market leaders versus laggards in the airline industry for example. Customers will push accuracy, speed and precision of response up on the enterprise computing agenda of many companies this year. Speed is the new feature.
- What were once considered ERP-based operations bottlenecks will be shown to be lack of customer insight. Take for example the very rapid product lifecycles in retailing. At first glance slower sales are attributed to not having the right mix of products in stores, which is a classic supply chain problem. Yet customer-driven ERP systems will tell retailers a different story, showing how product selection, even suppliers, are no longer pertinent to their customers’ preferences and needs. More customer-centric ERP systems will help retailers overcome costly and difficult to recover from bottlenecks in their operations.
Bottom line: Enterprises clinging to monolithic, inflexible ERP systems need to re-evaluate how their enterprise computing strategies are serving their customers before their competitors do.
Bottom line: Forward-thinking CTOs and CIOs in governments globally have the potential to drastically reduce process and cost inefficiencies. It remains to be seen if the biggest and costliest impediment of all – which is resistance to change – will be eventually overcome by their efforts.