As IT departments slash budgets in the midst of a credit crunch, companies are aiming to squeeze all they can out for their current IT systems to ensure they are getting the most bang for their buck.
But how can companies get the most out of IT? Given the huge costs associated with maintaining and supporting traditional legacy systems and the severe constraints such systems pose in the ability to react to strategic change, will this recession prove to be the end of the line for un-integrated, ageing systems?
When new, service-oriented architecture-based (SOA) applications deliver improved corporate information, enable rapid change to respond to new business opportunities and demand far lower support costs, isnt it time to draw a line under legacy applications?
The IT department is under severe pressure as organisations look to shave costs from every aspect of the business. But, at the same time, every organisation needs to be able to respond ever faster to new revenue opportunities and markets a shift in strategy which typically requires IT support and investment in software tailoring at the very least.
The total cost of ownership of the IT infrastructure is coming under ever closer scrutiny as organisations assess whether now is the time to opt for a managed service to reduce in house skills; or whether virtualisation will deliver the required improvements in efficiency and performance at a reduced cost. But even with these moves, which can undoubtedly provide significant financial benefits, too many organisations are constrained by the complexity and design of core operational systems, such as ERP.
Few organisations have the information visibility required to take the tough strategic decisions or confidently change direction from closing call centres to increasing offshore production. Furthermore, once such decisions have been made, it is impossible to carry out the new strategies until slow, expensive changes have been made to the software infrastructure.
As UK business wakes up to the painful challenges that lie ahead for the next few years, it is becoming very clear that IT needs a new modus operandi that is both far less expensive and far more responsive to operational demands.
While it may go against the grain to invest in any new technology today, how many organisations can afford to be inhibited by their current IT infrastructure? The organisations that will withstand this tough economy will be the leanest and fittest and those that are able to react fast to changing market conditions.
And organisations simply cannot make those swift decisions and strategic changes if the business is reliant upon a piecemeal system with multiple, disparate databases hung together with bespoke development. Not only is such an infrastructure hugely costly to maintain but it is impossible to effectively upgrade, leaving organisations with outdated processes and inadequate operational visibility at a time when efficiency and fast response are essential.
The total cost of ownership associated with such infrastructures which are endemic across the UK are significant, and often hidden. Many organisations are shocked to discover an annual IT bill in excess of 500,000 simply to keep the current set up and running in a fairly efficient manner, without any investment in essential technologies such as business intelligence, workflow or shop floor data capture.
So while investing in new software, whilst simultaneously making key workers redundant, may be a very tough decision, the cost benefits associated with dramatically reduced support and maintenance will be significant.
It is also important to note that with leasing or managed service options, much of the cost can be deferred, enabling the organisation to attain critical business benefits without incurring the risk association with major capital expenditure. In addition, managed services offer organisations the ability to flex requirements up and down in line with staff numbers and business development, providing far more operational flexibility than the traditional fixed IT cost base.
But making the most of IT is not just about financing initiatives or clever use of new hardware technology. Far more critical is the software design. New solutions based on SOA are inherently flexible; enabling user-led, rapid development to support business change. Based on a single database, organisations have a central source of information and process, enabling effective exploitation of technologies from workflow to business intelligence to transform operational effectiveness.
From meeting compliance requirements through automated audit trails to real time alerts to drive processes and warn management of potential problems, the right software architecture supports an extraordinary transformation in IT value. The ability to keep up with the pace of business change by adapting business processes also vastly accelerates the time to benefit.
There is no room in todays marketplace for bespoke development the costs are prohibitive and benefits hard to justify. But nor can an organisation afford the old fashioned, packaged software approach requiring costly changes to support business needs or, worse, a lengthy wait for the vendor to include new features in the next upgrade.
In the current market, organisations do need software that can deliver best practice with flexibility to enable specific change and rapid response to business opportunities. By combining SOA based technologies with, critically, the right attitude to leveraging a flexible IT platform, organisations can fundamentally transform the IT cost/benefit model to deliver quantifiable value.
By Don OBrien, Business Systems Consultant at Ardent Solutions.