Jason Miller, Partner, A.T. Kearney
Asolid IT infrastructure can produce huge benefits, including a wealth of opportunities to improve customer service, enhance capabilities, and capture savings. And as digital initiatives and technology have become more prominent, a company’s IT foundation has become more important.
Inferior or outdated technology can saddle a company with high-risk, giving a competitive disadvantage. But an overhaul is no small undertaking as most infrastructures are outsourced in large, complex, high-dollar deals that often run for five to 10 years. Making extensive changes can be a challenging process, and because poor planning can create revenue-blocking outages, any transformation must be well-planned. Many companies decide they can’t stomach the risk. And for some, it may well not be the best idea.
"Staying Updated Continuously Is Challenging And Requires Work But Is Strategically Necessary"
So how do you know if it is worth the risk? Several signs indicate now could be the time to tackle a transformation—and the benefits can be powerful:
Costs are rising. Costs for outsourced services increase for reasons that are hard to pinpoint. A transformation can create visibility into what is being spent and indicate where you could be paying less for the same or better service.
Technology is dated. Some equipment may be near or well beyond its useful life. And when obsolete equipment fails, the replacement parts or technical skills needed to repair it might not be readily available.
Service levels are not competitive. When IT infrastructure operates well no one even notices it. Best-in-class service ensures that infrastructure is always available, responsive, and top quality. With a superior infrastructure, support tickets are resolved faster, and network and system availability is reliable.
Time to market for new services is slow. A transformation offers an opportunity to increase computing power and storage. Servers and other hardware can be provisioned faster, and storage can be adjusted based on demand. A new contract with accelerated refresh cycles can get new technology into users’ hands faster.
Innovation is lacking. Outdated legacy environments require constant attention and can drain valuable staff time on unplanned outages. A refreshed environment shifts the focus from putting out fires to creating innovative tools that will support revenue growth.
Security risks are high. Advanced security tools can identify real-time threats, detect potential data leaks, reduce the spread of viruses, improve security, and reduce unplanned downtime.
Timing is Everything
So when is the ideal time to transform your IT infrastructure? Certain conditions are essential before moving forward:
There is a sound business case with an understanding of key sensitivities. Sometimes, the financial implications of making a change are too big to ignore. But for some companies, the business case is less clear because the gap to achieve market-level service pricing may not be that wide, suggesting that now is not the right time. In addition, knowing how the business case changes as variable inputs change can help determine if an overhaul is too risky.
Senior leadership is motivated to change. Modernizing the environment and creating new ways of working can be difficult. There will be risks and short-term struggles along the way, and overcoming the status quo requires strong leadership both within and outside of IT.
Technology has room to improve. Old contracts might not encourage the right behavior from vendors, especially for keeping the environment up to date. The pace of technology requires rapid refresh cycles. Staying updated continuously is challenging and requires work but is strategically necessary. For example, if technology can improve the link between IT and the business strategy or have positive implications for the business, then it is worth examining vendor contracts.
The vendor is willing to be a strategic partner. IT infrastructure vendors tend to follow their contracts with precision. However, strategic partners go beyond the agreement to help companies find more value. These vendors identify systemic risks before they materialize outages. They test new technologies and share ideas about how to use the infrastructure to improve the business, and they share the financial risk of cost increases and service outages.
There is a culture for change. A successful transformation requires a culture that is motivated to test and learn new technologies. A culture with outcome-driven accountability is more likely to foster rapid transition and reap the benefits of a transformed IT infrastructure.
Across industries, companies are capturing strong financial returns by modernizing IT infrastructure. The importance of a solid foundation for digital and technology-driven capabilities magnifies the impact of the investment. If a review of your environment indicates rising costs, outdated technology, poor service, slow time to market, a lack of innovation, and high security risks, now might be the time to consider transforming your infrastructure.
Founded in 1926, in Chicago, Illinois, A.T. Kearney is a global management consulting firm that focuses on strategic and operational CEO-agenda issues facing businesses, governments and institutions around the globe across diverse fields.