Current business tailwinds will create IT winners & losers – with little in between

Published 05/06/2018 by Paul Holland, VP of Operations, Advanced

The US business climate is better than it has been for over ten years. Thanks to a combination of corporate tax cuts, economic growth and swelling consumer confidence, businesses have high levels of cash on their balance sheets, soaring stock valuations and are operating with strong economic tailwinds. However, depending on what decisions organizations make in 2018 and 2019, this period of business prosperity has the potential to create big winners and big losers and not much in between. Many companies may be tempted to look at their current economic good fortune as vindication that they are reaping the benefits of previous years of sound management, and now is the time to cash in. These companies risk suffering from a failure of imagination at a critical moment, and although times are good now, this complacency will only store up problems for the future.

The winners of the future will be the organisations that recognise that now is the time for investment, and in particular investment in IT, with a special focus on applications that facilitate digital transformation initiatives. Companies who are using the cash created by current economic events to invest in transforming their businesses to be digital organisations of the future are going to be the big winners for years to come.

Solving the legacy problem once and for all

However, even companies focused on investing in IT to power their digital transformation strategies are often avoiding a critical area of renewal. Most large corporations are still heavily invested in core legacy business applications that are essential to the smooth running of their business but are based on decades-old technology. Although these core applications, and the infrastructure required to run them, often consume a disproportionately high share of a company’s IT budget, most CIOs are willing to bear that large cost because they believe it provides a level of robustness, stability, performance and scalability that can’t be found elsewhere. Given the critical nature of the applications they feel this is a reasonable price to pay.

Increasingly these justifications for the high spends related to legacy applications do not stand up. Too many organisations are running enormous application workloads on modern Cloud-centric architectures for there to be any argument that these types of systems can’t provide the same, or even better, performance and robustness as legacy computing environments.

Furthermore, lack of action in Application Modernisation has now created a brewing perfect storm of issues that will threaten organisations’ ability to maintain these systems for the long-term. The combination of increasing divergence and incompatibility of modern computing technologies and the legacy applications, the massive looming retirement and lack of availability of skilled legacy technicians, and the widening gap of cost of ownership of large legacy computing environments compared to new Cloud solutions will make legacy applications unsustainable for many businesses - or at a minimum put them at a huge competitive disadvantage.

Now, in these times of economic prosperity, companies should move quickly to radically address their legacy systems. The good news is there has never been so many options to modernize and transform legacy applications, move them to the Cloud and address the skills issues. All without exposing your business to undue risk.

Companies that use the favorable economic tailwinds to modernise their legacy computing as part of their overall digital transformation initiatives will be the big winners in the digital economy to come.