The importance of the technology stack can no longer be underestimated. 77 percent of executives believe that their technology architecture is becoming very critical or critical to the overall success of their organization, according to recent research. Moving forward, we can expect continued investment in the latest emerging technologies from businesses which are both small and large in size.
To retool for the digital world of tomorrow, however, businesses must look to overcome the current “innovation fatigue” which many are facing. When Covid-19 swept the globe, organizations were under intense pressure to rapidly install or adapt new technologies to accommodate virtual working, often creating temporary fixes or clunky systems as an interim solution. Whilst these rapid investments were essential in the moment, it’s time to invest in the long-term.
Now, almost twelve months into the crisis and with a significant emphasis on digital transformation, leaders will be asking one question – how can we refresh our technology stack to proactively innovate for the next normal?
Historically, many large enterprises have installed systems to facilitate existing limitations, leaving burdens of technical debt, outdated applications, and workarounds. As businesses look to compete in an increasingly complex and digital world, it’s more important than ever that they review and upgrade legacy core systems to support the agility, innovation, and new ways of working that fuel digital transformation.
In 2021, we will see an increasing number of IT leaders and their C-suite peers launching application rationalization initiatives to cull technical debt to help deliver cost and cash savings, whilst also optimizing performance and efficiencies. By streamlining the portfolio of legacy applications, leaders can orient investment towards strategic platforms that provide maximum value and deliver on transformation initiatives.
A cloud-first approach
The effort to maintain operations during Covid-19 made cloud computing a winner of the past year. As we rushed to lock down, Covid-19 required two rapid business responses: accommodating distributed teams and delivering on-demand scalable resources. Unlike on-premises systems, the cloud allows for this scalability, reliability and distribution across zones and regions, which will continue to be critical as we cope with resurgences and variants of the virus and the new hybrid model of remote and office work.
Through cloud adoption, companies can also achieve significant increases in top-line revenue and profitability. At the same time, a cloud infrastructure offers immediate access to powerful, ready to use solutions for analytics, AI and automation. These technologies allow businesses to generate competitive advantage quickly without the up-front costs and lead times of traditional platforms.
Since the pandemic began, enterprises have put time and effort into immediate survival rather than longer-term growth. This meant cutting costs by delaying programs focused on strategic growth and spending more on tactical projects. However, as we move into the recovery phase of Covid-19, organizations need to translate growth ideas into tangible initiatives.
Moving forward, there must be tight collaboration between business leads and CIOs. With this partnership, senior leaders can take a comprehensive look at initiatives and resources across the organization and ask tough questions about how to improve the portfolio. At the same time, CIOs and their teams will have the right framework and understanding of corporate strategy to make day-to-day technology decisions.
Acceleration of M&A
Bold choices on portfolio-transforming investments, particularly acquisitions and divestments, can help reframe the future of a business and position it for growth beyond the pandemic. Covid-19 locked up the technology M&A market for much of the first half of 2020, when spending dropped to its lowest level in a decade and businesses entered conservative, survival mode.
However, the conditions that facilitated a surge in tech M&A in the latter half of last year are still in place, and growing – a rising stock market, stabilizing IT budgets, and continued digitally enabled living and working. As vaccines roll out and the economy is set to bounce back to pre-Covid levels over the next twelve months, M&A activity is sure to accelerate. We are already seeing non-technology companies being acquired to bring specific IT capabilities in-house, supplementing their existing tech stack and digital talent.
Emerging technologies like 5G and edge computing will find their footing after some delays in 2020, and IoT will play a key role in post-pandemic recovery for economic and social distancing. These innovations, and others, will have a knock-on effect on cyber security strategies. In the new digital world, it is vital for good security practices to become integral to businesses, backed by the right resources and investments.
This is particularly important given cyber criminals have become increasingly more sophisticated over the past year. Malicious actors have used discontinuity of IT operations as an opportunity to attack systems and exploit weaknesses – both human and technological. Strong investment in cybersecurity technology which can proactively monitor the threat vector will be vital for business continuity and subsequent growth. As will open dialogue and training around cybersecurity and fit-for-purpose crisis management plans.
Moving forward, we will see security teams collaborating with leaders to ensure that cyber security decisions support the organization’s strategic goals, and to guarantee that security budgets are delivering a good return.
A digital future
Technology will continue to play a critical role in enabling businesses to compete in an increasingly complex and ever-changing world. Digitalization, automation, artificial intelligence and advanced analytics that have all accelerated as a result of Covid-19, will only become increasingly integral to modern business growth. Many leaders are finding that their organization’s past technology choices are still limiting their strategic options and agility. But in a permanently changed business landscape, there has never been a better time to create a lasting foundation for innovation. Refreshing the technology stack is crucial to drive operational efficiencies at scale and weather future storms.
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Andrew Duncan, Partner and UK CEO, Infosys Consulting