Click to learn more about author Raghu Radhakrishnan.
In today’s hyper-competitive global economy, delighting the customer has taken center stage. And it’s easy to see why. Data Management companies that are winning are those that have perfected the customer experience, while those grasping for market share have fallen short in this area. A crucial step for companies can be modernizing legacy IT infrastructure to keep up with increasingly sophisticated technology demands that are required to compete in today’s hyper-competitive market.
A Changing Market Landscape
This renewed focus on the customer owes much to advances in technology, access to which is changing all aspects of business – shaping growth, lowering the barriers to entry to new markets, and enabling the development of new business models and services. The net result is unprecedented levels of disruption and competition, putting new power in the hands of the customer. If customers don’t like the service they receive, they will simply vote with their checkbooks.
Witness the current trailblazers of the new application driven economy – companies like Uber, Airbnb, Netflix and Amazon. They each cater to very different buyers and have different needs, but they have successfully and drastically disrupted markets. And they’ve done so by using technology that puts the customer experience at the heart of their operations. For example, data infrastructure is now better architected to mitigate latency issues, so apps and data are distributed as close to the user base as possible, versus the traditional data center approach, where everything is located in one data zone. This keeps customers happy by ensuring they have fast, reliable access at all times.
But it’s important to note that it’s not just the new players that are constantly transforming their operations to become more customer-centric; more established organizations are re-engineering their business models to better serve the needs of their customers and enable them to consume their services in ways desired.
However, the path to becoming more customer-centric for established businesses is not without its challenges, and legacy technology presents a major stumbling block.
The Legacy Problem
Increasingly, technology and how well it performs is the key determinant of a business’s success or failure, and business leaders have taken note. Take Delta Airlines for example. Following a technical glitch at the airline last August that led to 2,300 flight cancellations, frustrated passengers, and a nosedive in profit forecasts, its CFO, Paul Jacobson, said that it was as much of a “technology company… as an industrial transportation company,” and needed to act as such.
That kind of statement several years ago would have been unheard of, but we’ve seen similar statements made from organizations of all sectors, from finance and manufacturing to retail and charity. Every business is a software business and depends upon technology to succeed, even if some business leaders haven’t quite worked that out yet.
The Delta case is an interesting one and one with which many IT leaders will be able to sympathize. The root cause of the airline’s troubles? Legacy IT – a 22-year-old piece of equipment that caught fire and knocked out its backups system. And while it is an extreme example of the havoc that legacy IT can wreak, CIOs battle with these types of situations on a daily basis.
CIOs across the board are trying to reduce costs while delivering more value and a better experience for their customers, but despite their best intentions, many transformation efforts are being stymied by legacy IT. Research by Forrester found that, on average, IT leaders spent almost three quarters (72 percent) of their budgets simply keeping the lights on, leaving few resources to put toward new initiatives.
Fragmented IT data infrastructures, consisting of a hotchpotch of old mainframes, databases, languages and servers, are all too common, increasingly costly and difficult to maintain, and put the brakes on innovation. How can you focus on the customer experience when most of your time and resources are being spent on keeping your data infrastructure up and running?
Inflexible and burdensome service contracts are a further issue. In uncertain times, it’s important that CIOs have the freedom to react to changing market conditions, flexing services up and down as required. But, increasingly, it’s clear that data services offered by some of the incumbent large IT providers aren’t compatible with the new ways of working, with many organizations forced to pay more for services and licenses they don’t even need.
The Way Forward
In this new customer-centric world, agility and flexibility in how data is delivered is the order of the day, and finding a way to embed these attributes into an organization’s technology should be a priority. With the move toward digital transformation, there is a growing realization that it can only be achieved by accelerating the delivery of data infrastructure and application services. In many cases, that means near total data center refreshes. It is the only way to embrace agile deployment models for rapid time to market and eliminate IT bottlenecks.
What better time to consider not just the hardware lying around the data center – consuming vast amounts of space and power – but also the total cost of ownership in relation to your company’s software applications? And there is no better place to take a forensic look at the total cost of ownership than by starting with your legacy mainframe.