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How IT Can Cost Businesses More Than They Think
Risk is an inevitable part of business. Organizations of all shapes and sizes therefore usually do everything within their grasp to mitigate it – from taking out insurance through to strict policies which must be adhered to, to reduce the likelihood of a mistake.
However, part of this risk reduction strategy often overlooks digital risk. While firms are finally wising up to cyber risks and taking data protection increasingly seriously, they often fail to identify a ticking time-bomb right in front of their eyes – their IT infrastructure. A possible reason for this is despite the fact IT underpins all organizations, it isn’t viewed as a strategic hub like Finance, Operations or HR are – it’s seen as a cost center.
This is a paradox in itself, as despite this commonly held (yet incorrect) view, IT spending is on the rise, with Gartner predicting it will reach $3.88tn in 2020 – a 3.7% growth, despite the threat of a global economic downturn. This growth is due to the realization of the value of ‘digital’ – be it infrastructure (cloud, big data, analytics, etc.) or emerging technologies such as machine learning or AI – all of which could greatly benefit productivity and performance.
IT is an island
Despite this promise of enhanced performance, be this via digital transformation or more digitally connected operations, it seems IT is still a silo – with fragmented and legacy systems stymieing growth and innovation. A Financial Times1 and Apptio report highlighted this, with only 30% of CFOs and CIOs agreeing on issues including new products and services, allocation of IT investment in new digital strategies, and accountability for technology investment decisions. Finance leaders cited that IT needs to develop greater influencing skills in order to deliver the change their business requires. This included CIOs communicating where IT adds a competitive edge – as without this justification the function is sometimes viewed as less strategic than other just as critical business functions.
Our own research echoed this, with over half of businesses we talked to not sharing IT dashboards beyond the department. In an ideal world, IT system health should be shared across the C-Suite – informing operations – such as customer uptime and how this is influencing sales, dwell time and website analytics. In today’s digitally-orientated world, having online operations working optimally is crucial to success.
CIOs are fighting with one hand tied behind their backs
The problem staring many organizations in the face is that while CIOs will want to demonstrate IT’s value – many are simply not able to. For a start, they are utilizing legacy technology which does not integrate with the IT stack nor enable automation or the implementation of process management. Legacy technology is prevalent in the majority of organizations due to a long history of complex inherited IT infrastructure. Each new CIO or CTO may never fully comprehend or gain a full view into the extent of the different IT systems that are running on the network. To add yet more risk, many of these technologies are outside the control of IT – adding yet more opacity and complexity.
Despite its relatively low profile, in comparison to say, cybersecurity or employee fraud, legacy technology is one of the biggest threats a business faces. This is because it makes IT infrastructure vulnerable – increasing the likelihood of an outage. Just look at how British Airways, TSB and Cloudflare have fared since they have been affected by IT outages – their reputations have been eroded and their balance sheets pilloried. For firms wanting to de-risk their business models, legacy IT would be a sensible place to start.
Businesses not helping themselves
Considering the possible reputational and financial consequences, and the low-risk attitude many organizations adopt, the way to prevent or at least have sight of potential upcoming issues such as an outage is via IT monitoring. However, our research shows that this is not the case. Over half of businesses we researched said they were not monitoring their IT estate under a single pane of glass – with the vast majority, 80%, opting to use 2-5 monitoring tools. With multiple tools comes duplication of effort and complexity – reducing the value yielded due to the time taken to understand the data. This is perhaps why those 51% said they don’t share dashboards with the wider business, as it doesn’t add any value as it’s not showing the complete picture.
Tactical firefighting trumps longterm strategy
Our research also highlighted that organizations are investing in day-to-day infrastructure quick fixes – yet are failing to underpin them with basic necessities – such as effectively monitoring the entire IT stack. Just 22% of the businesses we talked to monitor their whole estate – leaving them exposed and woefully unprepared. There is no single source of truth for digital operations, meaning tracing any incident is impossible. Based on this insight (or lack thereof), it’s not hard to see why IT is viewed as such as cost center – it’s unable to trace the root of problems, thereby preventing a complete resolution.
This disjointed approach also affects innovation. We asked companies about their future roadmaps, and for many, day-today IT firefighting is thwarting any attempts at more strategic, long-term business transformation. Instead, priorities include upgrades to IT security and compliance, monitoring and observability, and use of automation – activities which should already be a baseline competence. This yet again brings to the forefront that firms are lacking the necessary IT infrastructure to implement these more strategic projects, which is setting them back on their transformation journey.
Stepping confidently into the future
In the coming decade, an IT step-change is required. Organizations must banish the reactive approach they are taking and implement baseline, necessary operations such as IT monitoring via a single pane of glass – saving time, money and duplication of effort. For businesses to yield value from IT, they need to take IT seriously, therefore addressing issues such as legacy and doing what it takes to manage it properly.
This means getting the foundations right and implementing an IT monitoring system that provides full system visibility, and can quickly identify problems before they cascade – preventing outages and reputational and financial havoc. This makes IT much more profitable, visible (as data sharing is possible) and frees up the IT workforce to concentrate on more strategic projects which drive business value, meaning IT finally gets its seat at the top table and is finally recognized as the keystone that it is.