Infrastructure remains one of the most critical enablers of doing business in today’s digital age. But the invisibility of IT from a business is bound to fade. In fact, to compete in today’s digital economy, businesses must squeeze the last mile from their IT spend. At the same time, IT departments are also looking for ways to bring more business value to their enterprise. Yet, tracking the business value of IT investments remains one of the most difficult tasks faced by enterprises. The 2020 pandemic has amplified the nature of this perplexity. Most European enterprises see optimization of IT spends as their top priority – and yet, leaders across industries demonstrate a solid strategic vision that guides their choices, architecture, team organization around key IT functions. How can enterprises then understand and prove the business value of an infrastructure contract in this hyper-competitive era?
The evolution of the business – IT polarity
In a 2012 WEF Global Technology Report, the evolution of the IT infrastructure was mapped along the lines of information and communication technology convergence. Cloud was the buzz phrase, and one of the first general managers of the IBM On Demand offering (which led the ITaaS shift) – Nicholas Carr, spurred a furious internet-wide debate amongst IT analysts in his article titled The Death of IT. Carr argued that IT was no longer a source of competitive advantage for businesses, and organizations that continued to invest would fall behind over time.
Fast-forward to 2020, and businesses are actually losing money – a staggering 2.34m Euros are overspent on software licensing alone, and almost 95% of European enterprises are under pressure to reduce technology-related costs. However, Carr did recommend investing in infrastructure maturing with a view from the lens of business value, and building an outcome-focused base from the word go.
The agile paradigm helped create some degree of synergy between business and IT investments. The (continuing) rally from on-premise to cloud remains a key trend in the evolution of today’s business-IT infrastructure. As companies become more cloud-mature, disruptive technologies such as AI and automation are generating greater RoI on infrastructure costs for enterprises. According to a Mckinsey estimate, half of the activities done by the global workforce, accounting for ~12.3tn Euros of output, could be intelligently automated between 2035-2055. Such disruptive technologies are also rewriting the talent equation across industries, and end-to-end process ownership is driving the in-demand skills for the future.
The business-IT synergy: A moving target
However, the recent accelerated adoption of cloud and disruptive technologies through as-a-service models has not helped enterprises derive proportional value from infrastructure-related investments. An approach that treats IT infrastructure IT investments as an end rather than means is born in a fragmented enterprise with strongly siloed business, and IT functions. Creating a synergy between the business function and the IT teams will be the key to competing in the digital age.
Here are five trends that will define the business value of IT infrastructure moving forward:
- DevSecOps: With the digitization of the global economy, the focus on building security-first infrastructure is driving purchase decisions, industry-leading products and intra-enterprise efficiency. Building security into enterprise IT and products from the get-go will be critical to achieving better speed-to-market, accelerating go-to-market when deploying new infrastructure, and meeting compliance targets at optimal costs.
- E2E ownership: With the shift to the public cloud, rethinking workflows from start to finish will chart the roadmaps for efficient integration of different applications and infrastructure elements, ultimately owned by a single infrastructure team. With granular visibility of IT functions, KPIs, and spend across verticals, end-to-end ownership will be the foundation for future infrastructure teams.
- Outcome-oriented infrastructure: Cloud-native companies have demonstrated excellent resilience during critical disruptions through 2020. Going forward, AIaaS and function-as-a-service (FaaS) models, in conjunction with container-first architectures, will help enterprises squeeze the most out of their IT spend. This will enable a shift to an agile, business-aligned, and outcome-oriented infrastructure.
- Product-based organization: As organizations become more product-centric, the IT teams must also reflect this shift in the scope of the IT infrastructure contract — by effectively translating the business view along with the product into an IT-view. By measuring product-specific business flows within an IT-view, companies can augment top-level decisioning processes with enhanced visibility and pinpoint avenues for improvements.
- User personas: Seamless, omnichannel customer journeys will be enabled by a resilient, integrated, secured, and modular service architecture that is specific for and adapted to the personas in a product-based organization. Such platforms will be inched by their capability to align the right personas along with the right processes and AI capabilities. This will manage unstructured data and mask complexity and automation for subtracting redundancy in day-to-day operations.
- Evolving infrastructure layer: Going forward, the infrastructure layer will become more strongly integrated with end-user experience and business SLAs. For instance, work-enabling platforms will need to look beyond singular functions and bring value for businesses out-of-the-box. Such platforms must be mobile-friendly, platform-agnostic, and deploy zero-trust security paradigms to protect the enterprise infrastructure layer from breaches. As more employees connect through unsecured home networks, cybersecurity must be re-modeled in the infrastructure layer, rather than an add-on to the existing infrastructure.
- An outcome-based financial model: With the evolution of the infrastructure layer, infrastructure contracts are also realigning to outcome-based financial models. This can absorb declines and business shocks through a risk-sharing model.
Aspiring and achieving infrastructural maturity in today’s business ecosystem brings resilience to existing business models and lays the groundwork for future disruptions. In the next decade, new computing paradigms such as fog and edge computing as well as developments in networking will enable today’s IT-mature organizations to build innovative solutions, bringing new value propositions to a network-economy.
To get there fast, companies must undo the walls that divide the IT and business functions, and focus on infrastructure-related investments as opportunities for innovation rather than process-enablers. Moreover, agility and flexibility are not just infrastructure components, but a result of business-aligned, high-productivity workforces within the organizations. Most enterprises in EMEA have already started in this direction by adopting pay-per-use IT costs and public cloud. Achieving a convergent business-IT strategy, however, is a moving target. which calls for a continuous synergy and talent reconfiguration aligned with personas (and their skill sets) that will drive the respective sectors, and a board-level focus. Companies that get it right will emerge with smaller IT teams that do more, with fewer resources. They will build the link between infrastructure and operations, and consequently the vision, product, and value.