Digital transformation: Immovable object meets irresistible force

• Blurring line between technology and business is leading to tension
• Avoid being penny-wise and pound foolish when looking at upgrading

 
ENTERPRISE IT stands between an immovable object and an irresistible force.
 
On the one hand, IT departments have to continue managing the legacy systems they currently have. On the other, everyone from employees to the C-suite are demanding that enterprise software and hardware respond like the consumer products they are so used to in their daily lives.
 
Enterprises are quickly reaching the tipping point between digital personal lives and the legacy systems the corporate world inhabits, according to Paul Henaghan (pic above), president of South-East Asia at EMC Corp.
 
“We have this massive drive from the consumer-orientated life that has been so digitised, against the enterprise corporate world and the DNA (deoxyribonucleic acid) that they have built to enable the business,” he says.
 
“The digital world we are living in today is one where there is no difference between technology and the business – they are one and the same,” he adds, speaking to Digital News Asia in Singapore recently.
 
There is tension in the air, and change and complexity are heading for a showdown.
 
“The tension we are feeling is one where change has to happen, and organisations recognise that change has to happen – but they are struggling with the complexity of their existing environments,” says Henaghan.
 
The path behind, the road ahead
 
Organisations have historical infrastructure that does not support the future that the business wants, but with shrinking IT budgets and increasing demands, they appear to be stuck.
 
“What we are finding is that you have to take cost out of your existing infrastructure – you have to take cost out of the way you run technology today,” argues Henaghan.
 
He says that if organisations can reduce the budgets to run their existing environments, that would then free up capital to allow them to invest in newer technologies. Those which do this well, can respond to today’s digital demands.
 
“They are responding to their customers, to the changed world,” quips Henaghan.
 
One example is General Electric, the US old-school powerhouse  that has “built an entire ecosystem of digital capability for its internal and external partners, to actually help drive the digital world of utility,” he says.
 
Companies still hesitate to spend money on upgrading infrastructure and often devise short-term measures to keep costs down.
 
But understanding both the traditional world and the new world of IT is essential for them to reduce cost and still drive new data initiatives, according to Henaghan.
 
Catching change, or caught up by change
 
While data has been touted as the lifeblood of business today, Henaghan goes one further, declaring that algorithms and analytics are what will drive the companies of tomorrow.
 
“If you are not thinking that your business today is based on algorithms, and you’re not thinking about the fact that when you engage it is analytical and real-time, then you’re in trouble and disintermediated,” he says.
 
In the payments space for example, everyone needs what banks can do, but they do not necessarily require banks to do it.
 
“Banks are constrained by a number of things, not least of all their DNA, which is built on systems,” says Henaghan.
 
“What other organisations and startups have done, and PayPal was the first, is that they have taken that capability and leveraged off the card system (American Express, MasterCard, Visa) to build a front-end that is much easier for consumers to use,” he adds.
 
Penny-wise, pound-foolish
 

 
Organisations often adopt short-term measures rather than make painful long-term decisions, and the cloud is often seen as a quick fix, laments Henaghan.
 
“That’s nice and may save you a bit of money in the development area, but at the end of the day, it is not a strategy that would enable the organisation to become digital,” he says.
 
Smart organisations are instead embracing the concept of changing the way they support and run their current infrastructure, because the cost models associated with capital expenditure would otherwise hold them back from driving new initiatives, he argues.
 
Related Stories:
 
Digital transformation not about ROI: Cisco exec
 
Digital transformation and the evolving role of the CIO
 
Digital transformation: Don’t forget the back-end!
 
 
For more technology news and the latest updates, follow us on Twitter, LinkedIn or Like us on Facebook.