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The pandemic accelerated enterprise technology modernization, and now CIOs are facing new challenges.
Repeated and varying degrees of lockdowns across the world forced organizations to prioritize a digital-first approach to capture market share and reinvent the way they operate. In the pre-pandemic world, the flow of interaction was from customer to organization. Now, it is from organization to customer. Direct to customer through digital channels has become the new path of business success. Due to these changing market dynamics, organizations are redefining their digitalization priorities, forcing CIOs and IT leaders to find answers to new problems.
Organizational digitalization strategies were accelerated by three to four years due to the pandemic, according to McKinsey's report "How COVID-19 has pushed companies over the technology tipping point." In fact, respondents are three times likelier now than before the crisis to say that at least 80% of their customer interactions happen digitally.
Here are three key challenges associated with enterprise technology modernization and ways CIOs can address them.
1. Greater need to focus on cybersecurity
The pandemic forced businesses to modernize even faster and with an additional focus on security.
Organizations are looking for ways to provide a better customer experience, achieve operational efficiency and resilience, and they want to do it fast with full scale. Typical modernization initiatives that used to span three to five years are now scheduled for completion in one to two years.
Modernization and security should go hand in hand. While prioritizing faster time to market, CIOs and IT leaders should not ignore security. A cybersecurity breach can destroy customer trust and affect brand value, resulting in revenue loss. For example, in a study with Interbrand, we at Infosys found up to $223 billion of the world's top 100 brands' value could be at risk from a data breach.
For organizations to achieve faster modernization and security controls, organizations can explore the following approaches:
- Agile and DevSecOps to ensure organizations deliver business features to market faster and more securely;
- faster development with low-code/no-code tools; and
- smart automation across the entire application lifecycle.
2. Pressure for modernization without budget increases
Just because CIOs and IT leaders are being asked to deliver modernization, hasn't meant they've gotten additional funding.
Industries like fashion, aviation and discrete manufacturing were more affected by the pandemic. For example, many fashion retailers faced financial pressure as stores closed due to reduced business; the aviation industry was under revenue pressure due to travel bans. Now, CIOs are expected to deliver more without any additional budgets.
Around 80% of CIOs were under pressure to reduce costs due to COVID-19, according to a survey by software company Apptio.
Investment in new application development is 17% of the total IT spend, according to estimates from Gartner.
CIOs need to reduce the cost associated with all non-essential IT expenditures and prioritize the following activities:
- Move to the cloud for operational elasticity and Capex.
- Adopt next-gen technologies and open source to modernize with a reduced budget.
- Automate modernization, which can reduce costs by up to 40% by our estimates.
- Look for self-funded modernization programs.
3. Tech talent shortage
Demand for quality talent is vastly outstripping supply.
Modernization requires high-skilled talent, which was always scarce. Now, as more organizations are modernizing, talent scarcity has become worse. Additionally, performing with a remote and dispersed workforce was new for many organizations at the beginning of the pandemic, and resource management became difficult.
As a result, the general talent shortage is at a 15-year-high, with 69% of employers reporting a difficulty in filling vacancies, according to a report from staffing firm Manpower.
To effectively manage this talent crunch, organizations can follow the following these best practices:
- Continually upskill and reskill with next-gen technologies and a "learn from anywhere" approach.
- Use tool-based reverse engineering for modernization to remove dependency on talent with business knowledge and legacy technologies.
- Create a location-agnostic talent pool with a "talent from anywhere" approach.
- Embrace automation and reusability to reduce manual activities.
- Democratize next-gen IT skills with alternative groups of citizen developers.
The pandemic has forced organizations to reimagine their offerings and strategies, making modernization an imperative. While most organizations accept this as the new normal, their fear of business disruption and challenges associated with time, cost and talent is holding them back. For them to exist, compete and thrive in the highly competitive post-pandemic world, non-disruptive modernization will be the key to success.
About the author
Gautam Khanna is the vice president and global head of the modernization practice at Infosys. The practice incubates new offerings, builds services and consulting IP and spearheads application transformation engagements across verticals and service lines. Gautam has a diverse experience of over 24 years spanning IT services delivery, program management and sales.