As a Consultant, I would typically answer with – it depends! Then a typical conversation starts with an expression of personal preferences based on experience, the organization’s history, and ultimately, the in-house know-how and existing partnerships.
However, this is also where the limitation starts. From a Consulting perspective, this state is typically difficult to overcome – showing the other side of the coin to be able to have a more objective view on this subject. Yet, this is the unknown, and it requires openness and courage, as the biggest risk is a black-and-white (biased) approach to a complex topic.
The Never-Ending Question in IT: Which Approach to Take?
As a Consultant, I would typically answer with = it depends! Then a typical conversation starts with an expression of personal preferences based on experience, the organization’s history, and ultimately, the in-house know-how and existing partnerships.
However, this is also where the limitation starts. From a Consulting perspective, this state is typically difficult to overcome = showing the other side of the coin to be able to have a more objective view onto this subject. Yet, this is the unknown and it requires openness and courage, as the biggest risk is a black and white (biased) approach to a complex topic.
So, What’s the Best Way Forward?
Let’s take a pragmatic and (hopefully) rational approach. To explain the viewpoint towards these topics, we must quickly have a look at some common dynamics of an IT environment:
Ever growing IT spend
Our observation when reviewing IT spending on the client side shows that replaced systems are not always retired. During the last roughly five years, companies started to increase IT budgets to make investments into digital transformation. Observing today’s cost structure after the last few months of budgeting in most companies, an IT-savvy person sees a lot of legacy systems still running, essentially costing money.
Out of curiosity, we ask questions, and it turns out that transformation projects in the foreground have been completed, but old systems haven’t been properly decommissioned. There are scenarios, where there are old systems running, where nobody knows what they are actually doing. The IT just knows that the number of tickets is increasing when the system goes offline.
We assume that reality is much worse, as behind closed doors, we often hear that teams were rushed into the next project, with neither time nor funding available to fully complete the projects. There is a huge potential for optimization, as the number of systems does not just occupy infrastructure budget, then is also binding operational capacity.
Responsiveness and demand fulfilment
In practice, we see a correlation between the adaptability and responsiveness of IT units and the tech stack as well as the actual organizational setup. This in essence also means, that with a lack of organizational transformation, meaning the enabling of IT personal and transforming the way things are done.
As a result, the IT unit is limiting itself from leveraging the latest technology. Over time, this is furthermore slowing down the responsiveness and demand fulfilment. It is a reinforcing cycle, which requires IT-Leadership awareness.
Ironically, the software-manufacturers are packing more and more features into their subscriptions to justify the increase of prices. Organizations, who are not leveraging their Software-Investments at full, because the IT-Unit is not able to respond to such improvements, carry another layer of unnecessary spend. Which is another example to support point one – an intangible cost.
Technology lifecycle
Which brings me to the technology lifecycle. It is nothing new to anyone being in the IT industry for some years, that Software-Manufacturers and Cloud-Providers are in a highly competitive environment. Everyone within the economy has the interest in market expansion, securing the install base and being able to react to market dynamics and trends.
Obviously, the entire market figured out, that a subscription- and cloud- based approach is helping to be stickier with the client. This, beside of other tactical and financial arguments, will drive investments for feature enhancements towards cloud-based models. Microsoft, SAP, and similar companies have been demonstrating this for some time. Their strategy is both obvious and controversial. Conversely, VMware is a perfect example of what happens when there is no cloud strategy. Once hyped, now on the radar of all clients. Why? Not just “Cloud” is constantly getting more expensive. Oracle on-prem, VMware and the like are squeezing on-prem lock-in scenarios of their clients, to achieve shareholder expectations in a segment with negative growth rate.
Why does all this matter?
Considering the past, present and future just across these three dimensions, it outlines the complexity of IT strategies. Speaking of Strategy! It opens the questions of what the Company wants to achieve.
Traditionally, good intentions with IT strategies, sand at the operational level. That is the moment when all the stuff must be considered, which no one is motivated to touch… as these are running systems. Next is the ability to transform the teams running those. Ultimately it boils down to the scope of planning, and here especially to the timeline.
Set the right scope
Technology is fast paced. A company today, not able to transform its tech-sack more than once a decade, is just slow. The company is losing on competitiveness, responsiveness and efficiency against those in the market, that can do so. It is relevant to observe the market and be cognizant about the commoditization of IT.
We already saw over the past two decades, how the IT- Industry was created around a few IT-geeks. It was impossible to operate a company network with staff having a business administration background. Today, every higher education is dealing with data, reporting, statistics and even machine learning.
So, the fundamental question is: What should the digital work environment of any company look like to attract talent? It’s not just about employability; it’s also about employer attractiveness. Following this outside-in approach, the IT of tomorrow must provide an environment with workflows and in particular managed data, so the work is not just convenient, then it also helps the company to continuously increase efficiency throughout the lifecycle of an employment.
Consequently, IT must be highly standardized and to be a business enabler. The scope must reside on the services provided to the business, the ability to inject innovation and a safe and governed data foundation.
Set the right timeline
AI is on the C-level agenda. Whether it’s right or wrong, too soon, or still unclear what it means… it is here. We see the market moving, and we see that this technology is here to stay, increasing its importance within computer-based work environments. Where Industrial-Robotics disrupted the productions lines over the past decades, AI is going to disrupt the computer-based production lines over the next decades. It was never so easy to access information and with a strong data foundation it has the power to replace computer jobs at mass.
The wake-up call is here, and many companies are suddenly realizing that the necessary groundwork hasn’t been done yet. Panic? Please don’t! But act!
Map Business objectives to IT-Services
To sharpen the view on what is critical for the company, the IT-Inventory and IT-Operations must be clearly tied to the outcomes, IT must be presented as a service to the business. It is hip to just ignore structure, but the clarity on a high level about the IT-Landscape is equally the base for a proper cost-control in IT. And no, it is not just the server in the own Datacenter, then also the amortization of the building, electricity, cooling, fire prevention, security and all the personal that are busy including mounting, replacement of equipment and cabling. I personally hardly see those cost being properly allocated to the IT-spend, especially cost-centres.
Is Technology part of the Product?
If your scope of work does not involve building tech that is part of the product itself, IT is most likely a supporting function within the company’s value chain. It’s not always black and white, but in most cases, IT is focused on standardized processes to support different departments within the organization. Depending on the business model, the level of complexity may vary significantly, but that doesn’t change the fact that IT is not part of the company’s intellectual property.
So, the importance of IT and the amount of investing reside in:
- Supporting to gain more topline
- Support to reduce cost
- Risk-management to keep the company running
Question I: is it worth the investment to not use tech from off the shelf and how to keep the degree of customization to a sole minimum?
Question II: why is technology not part of the product and IT an enabler for innovation?
Buy commodity
A car manufacturer would not establish an own unit to create the cables in-house. There is someone specialized to produce cables the best possible. Car manufacturers are the best in envisioning the product and then assembling. Why do we think that we can build, operate, secure and maintain the servers best possible? Why would a car manufacturer be the best in running a Datacenter?
Protect the Data, not the devices
Focus on a reliable and integrated data landscape and make use of commodity platforms. Without self-service of users, the race is to be lost against the increasing demand of data and ability to crunch them more autonomously. The pressure of use of data will additionally increase with GenAI adoption in the workplace. A robust authentication infrastructure and governed data security are more relevant to ensuring that only the appropriate users or systems can access the data they are permitted to see.
Did you know?
In more than one business case, we’ve helped companies reduce the operational costs of their legacy DWH by 50%, delivering ROI on re-platforming projects in less than six months.
We break it all down in
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Disclaimer:
Joyful Craftsmen is a consulting and engineering company, and we do have an interest in supplying customers with services. It is important to outline this potential bias upfront to be fully transparent. At the same time, we do not earn money from subscriptions. Consequently, we do not have a specific business interest if a client moves to the cloud or a particular Vendor. Our interest in collaborating with software manufacturers is that we can pass through funding to finance transformational projects. This is to fast-track the return on investment. Ideally; the client has made the vendor decision beforehand. Therefore, we also recommend that our customers have a proper workload inventory to constantly monitor and optimize spending. Compared to the impact in this context, a Data & AI Strategy review is recommended.
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