New research conducted on behalf of HP reveals that 1 out of every 2 business executives feel their organization is suffering from innovation gridlock. See “HP Research: Breaking the IT Innovation Gridlock,” Coleman Parkes Research Ltd., April 2010.
- Organizations feel blocked from driving new business innovation because the majority of their IT funding is consumed in operating and maintaining the current environment.
- In addition, almost 60 percent of business and technology executives feel that this gridlock is preventing their organizations from keeping up with the competition.
The inability to respond to such a widely recognized problem can be traced to a number of issues.
- Primary among these is economics. With limited budgets IT organizations are fighting to keep the wheels on - and this is where the majority of resources are spent. Spending on new projects is roughly one-third of the IT budget. Two-thirds is devoted to ongoing operations and maintenance. [See Forrester's "A Workable Application Modernization Framework is Job No. 1 Now", Phil Murphy, April 26, 2010).
- A major secondary issue is application portfolio understanding. What do we have, how does it support our critical business processes, and how much is redundant or grossly inefficient? If we decide to eliminate or replace a particular system, what are the ripple effects? Insight into these relations can be hard to come by and difficult to reason about.
- We have all had experience with failed IT projects. The numbers are daunting. Various studies have shown remarkable rates of failure or impairment, with reported success rates as low as 16%. A more moderate report, "IT Myth 5: Most IT projects fail" (August 13, 2004), states that in a study of 13,522 projects in 2003, 34% were an unqualified success, 15% failed, and the rest were "challenged" - which includes cost overruns, time overruns, and incomplete functionality. If we have a working system, even if it seems overly expensive to run or it is lacking in agility, we have an instinctive understanding that the risk of replacement can be sizable.
There are answers for all of these issues.
Improvement in the distribution of resources requires the inauguration of a virtuous cycle, where we identify initial projects with relatively rapid ROI, execute them, and then use the savings to fund further work.
Capturing a model of the portfolio is a crucial element of any long term improvement. As I have noted before, shutting systems off is one rapid road to savings. But without a reasonable model of business / application dependencies, the potential for unexpected consequences often leads to paralysis. HP can help you create these models and roadmaps.
One way to eliminate failure is to take on projects that are similar to ones we have previously completed successfully. This is where the combined experience of our modernization specialists and your application subject matter experts is so important. Having both team members experienced in modernization issues across a wide variety of systems as well as deep application experience significantly reduces the risks of selecting an improper modernization approach or failing to execute the modernization journey.