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Technology / The experts’ view: Digital transformation gives companies flexibility

The experts’ view: Digital transformation gives companies flexibility

Digital transformation is about giving your company the flexibility to make choices, not about targeting a specific goal, said Matthew Finnie, of Interoute, opening a Business Reporter breakfast briefing at London's Savoy Hotel.

In that respect, using cloud services is a strong option for any company undergoing digital transformation, he added. The cloud decision is about creating value from your data and finding ways to bring cloud systems together with existing legacy systems that, for one reason or another, cannot yet be moved. The question for many, Mr Finnie said, is how to move the business forward without turning yourself an infrastructure company.

The attendees – who were all senior IT executives from a broad range of industries - agreed that cost and flexibility were the key drivers for moving to the cloud. The shift from a Capex to an Opex model can be appealing, so can the ability to scale demand up at peak times and down at other times.

However, some attendees suggested that the cost argument is misleading: in the short term the cloud can often be more expensive than your existing system and this can be an ongoing problem into the medium term too. One attendee, from a real estate and corporate services firm, said that he has to be able to win the cost argument at board level if a cloud argument is to be successful and this has been a sticking point for his firm.

Another attendee, from the charity sector, argued that comparing cloud with existing systems is the wrong approach because cloud services usually provide far more features than your current technology. Instead, the right comparison is with how much it would cost to build those features yourself.

Holding some companies back from doing more with cloud services is the challenge of integrating with legacy systems. However, as one attendee put it, the opposite challenge is also true: keeping legacy systems up to date with the current rate of change can be expensive and time-consuming.

An attendee from an online retailer said that his firm had adopted a gradual approach to its cloud migration. Each service was migrated one at a time into a new cloud environment.
When the new system was working, the legacy system was shut off. Eventually the company had migrated entirely to the cloud and had done so without any unforeseen problems.

Companies need to strike a balance between the need to innovate and the need to operate, said Mr Finnie. Existing systems might keep operations running well now but, increasingly, innovation requires new solutions and the rest of the organisation isn’t necessarily waiting for IT to catch up.

That has led many businesses to explore the idea of ‘parallel running’ in IT – an approach also known as ‘two-speed’ or ‘bimodal’ IT. This means managing two channels within IT: the first is optimised for predictable areas of the business, while also continuing to transform legacy systems for the new digital world; the other is more experimental and looks for ways to solve problems that are proposed, tested and rolled-out rapidly. These two systems work alongside each other.

One attendee said that the rapid time-to-market for cloud services had encouraged some parts of his organisation to experiment with cloud services on their own. They can very quickly test a new idea, scale it up and turn it into a business using systems available in the cloud. Those who do this are usually oblivious to the security risks involved.

This was a familiar problem for everyone at the briefing and all agreed that simply telling people not to do it will not solve the problem. Instead, the IT department must position itself as a partner to the rest of the business so that they are consulted whenever somebody needs a technical solution in a hurry.

Many more businesses are now defaulting to an ‘open’ attitude to technology and only being ‘closed’ where necessary, said one attendee. For a long time, the opposite was the norm.
Nevertheless, said Mr Finnie, the CIO is not the servant of the business. They are meant to be the person who uses technology to make the business more efficient and they should be able to offer that expertise and make it count.

It is important to keep in mind that technology is only one part of the solution to the problem of digital transformation. One attendee, from a large technology firm, said that he had seen a lot of transformation programs fail to deliver because the plan focused almost entirely on the technology and didn’t give enough consideration to the people and process elements of the plan.

At heart, it is the people who power the business, and leaving them out of the transformation process will usually have negative results.