IT Modernization: A Must for Digital Transformation

By Cloud and Data Center Transformation
3/23/2020

Increasingly, mid- and large-sized organizations are preparing for, or are in the midst of, a digital transformation. The thing is, you can’t truly undergo a digital transformation without modernizing your IT infrastructure.

Insight’s new “State of IT Modernization 2020” survey results, which are based on an online survey of 200 IT executives at U.S. organizations conducted by IDG Research in December 2019, show that 67% of respondents say IT modernization is essential to enable business transformation initiatives.

The survey defined IT modernization as the transformation of IT platforms (public and/or private cloud, on-premises data centers, and/or edge), operations, processes, and applications, to achieve desired business outcomes.
 

Most organizations (95%) are pursuing a wide range of projects to modernize their operating environments, although only one-third of projects had been completed to date. Among the specific efforts underway:

  • ​Adopting software-defined networking.
  • Shifting applications to the cloud for later modernization.
  • Upgrading/modernizing on-premises application infrastructure (storage, network, compute, etc.). Adopting or expanding managed services to outsource one or more IT functions.
  • Deploying cloud stacks (e.g., Azure Stack, AWS Outposts, Google Cloud Anthos) to enable seamless integration with the public cloud.
  • Modernizing on-premises applications to be cloud ready.
  • Initiating or expanding colocation services for data center consolidation, disaster recovery, continuous availability, or cloud initiatives.
  • Increasing edge computing for databases, data analytics, data farms, artificial intelligence (AI), Internet of Things (IoT), etc.
  • Consolidating data centers into new physical locations.
  • Adopting more open source systems to replace commercial off-the-shelf systems.

Impact of the Cloud

One of the focal points in efforts to modernize IT is shifting cloud strategies. Deploying cloud-native initiatives (cited by half of the respondents) and multicloud approaches leveraging more than one public cloud provider (49%) were the most common cloud strategies organizations used last year.

Most of those surveyed (84%) shifted certain workloads from a public cloud to another type of cloud service or a non-cloud location. This finding shows how complex it is to assess and optimize workload placements.

Some two-thirds of the organizations that have completed initial IT modernization efforts said they switched from an all-private or all-public cloud strategy to a hybrid approach. This shows that many of the organizations are taking a trial-and-error approach in order to find the best cloud migration strategy.

The most common challenge in cloud optimization is managing public cloud security. That was cited by nearly half of the respondents. Other top hurdles include governance, multicloud management, and determining where cloud workloads will be placed.

Nearly 70% of the respondents said their organizations are taking steps to reduce cost overruns for public cloud services, which apparently are quite common. Some of the reported causes of the cost overruns include data egress charges, unplanned cloud adoption, and merger and acquisition activity.

Organizations said they were planning to take a number of steps this year to optimize cloud costs. Among the most common are turning workloads on and off automatically based on seasonality, unpredictable demand, and other usage patterns (cited by 39%); reducing waste by regulating unused/under-utilized instances (38%); introducing more elastic design to size services according to performance requirements (38%); right-sizing workloads and provisioning instances accordingly (38%); implementing additional policies and governance to restrict the types and sizes of cloud services available to users (37%); and taking advantage of enterprise discount plans (36%).

Overcoming Obstacles

Despite the importance of IT modernization and the positive results many companies are seeing from these efforts, modernization of this significance is challenging and not a quick fix. Forty-one percent (41%) of the survey respondents said IT modernization initiatives at their organizations were delayed or abandoned.

The reasons cited for delaying or abandoning the efforts included competing priorities (46%), lack of clear roadmap/strategy (45%), data privacy/security concerns (39%), lack of skills/expertise (38%), lack of budget/investment (30%), unexpected complications or difficulties (30%), poor preparation (29%), and outdated processes/tools (27%).
 

Respondents expect to face a number of IT modernization obstacles in 2020, including the need to:

  • Establish new governance strategies and processes to support IT modernization/cloud.
  • Define and optimize a new IT operating model consisting of centers of data spanning cloud (public, private, hybrid), on-premises data center, edge, etc., to support data and business transformation requirements.
  • Define and execute a strategy for integrating (determining capabilities across/between) the centers of data, such as public, private, and hybrid cloud; on-premises data center; and network edge.
  • Optimize the current cloud environment to manage cloud costs, better utilize cloud service provider capabilities, utilize cloud services in a more native way, etc.
  • Better understand how to modernize existing applications and develop cloud native applications to connect new and old data sources to each other.
  • Assess data/workloads in order to determine the optimal platform (e.g., cloud, on-premises data center, edge) for each one.
  • Recalibrate the cloud strategy to achieve a better cost and/or operational balance between public and private cloud.
  • Determine best practices for data risk management (including modern approaches to data protection, security, and governance).

Reaping the Benefits

Despite these challenges, enterprises need to forge ahead with their modernization efforts. The potential benefits are too compelling. In fact, according to the survey, nearly all organizations that have launched these initiatives have seen measurable improvements in one or more business areas, regardless of where they are in their IT modernization journey.

Among the top improvement areas are quality of service; cost efficiency and savings; availability and uptime; customer experience and satisfaction; innovation and creation of new revenue-generating products and services; ability to extract business value from data; agility and faster time to market; and risk profile.

Those organizations that have made the most progress overall with IT modernization are significantly more likely to cite an ability to extract business value from data. Given how important data has become for all aspects of business, including sales, marketing, customer experience, and innovation, this is something IT and business leaders need to acknowledge.

Given these results about benefits, it’s difficult to make a case against modernizing an IT environment. If enterprises expect to transform themselves, a modernized IT environment and services model are key to achieving intended business outcomes.