The New Economics of IT: making innovation pay for itself

  • Posted on June 28, 2016

New Economics of IT

The average global IT budget is set to grow by approximately 2% over the coming year. It’s the biggest increase in tech spending since 2010 and potentially marks the end of an era of straitened budgets. However, while any IT investment is to be lauded, according to leading analysts 2% is just not enough. And it explains why, when we spoke to 100 IT leaders in organisations across the UK, nearly one in five (19%) said that they cannot afford the cost of the technological innovation required to truly transform their business.

In spite of this, companies still need digital innovation and are tasking their IT departments with it. So much so that 60% of our respondents say they are under more pressure than ever before to deliver digital transformation, despite the lack of budget.

Simply put, IT leaders are being asked to move things forward by implementing strategic innovation, while simultaneously maintaining current systems and processes. It’s a tension between predictability and exploratory work, and one of the root causes is lack of resource.

The solution to this challenge is to free up more time and money for innovation by reducing the cost and complexity of existing processes and systems. Here are just two simple ways in which you can do this.

  1. Automate, Offshore and Consume

The easiest way to release more of your resources for innovation is to ‘lift and shift’ your existing applications and services, to the cloud or a form of managed service. In practice, that could mean consolidating multiple tech platforms, retiring legacy infrastructure or moving some back office systems and processes offshore.

There’s no need to build things internally when you could ‘consume’ them as a service. Or to keep processes in house when they could be automated by an organisation which can handle it on an industrial scale. Offshoring in this way will reduce the footprint, cost and overhead of your internally-managed IT systems. This in turn frees up more of your budget to invest in innovation and accelerate tangible benefits to your business, such as staff training, recruiting new talent and updating the digital workplace.

  1. Take a Modular Approach

The days of securing millions of pounds for a single system or application with thousands of specifications are largely over. It’s not practical and it no longer reflects a world in which the IT function must deliver change to meet business need for less.

A modular approach, in which operational expenditure replaces lump sum capital outlay, is much more attractive to business. As an example let’s consider taking an SaaS application, then adapting it over time using a DevOps delivery model. The costs attached to modifying and innovating the application are therefore built into operational budgets. And with the need for substantial initial financial outlay removed, more budget remains available for future innovation projects.

Enabling innovation is one of the key pillars of Avanade’s New Economics of IT – our approach to delivering predictability for businesses while still enabling the possibility of innovation in a changing IT landscape.

To find out more about the New Economics of IT, click here to sign up for our Point of View paper.

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