The Tech Deficit: European Enterprises Need Significant Infrastructure Evolution

Tech Deficit

There is growing evidence that a substantial gap has developed between what businesses would like to achieve and what their IT infrastructure can support. Businesses want to strike the right balance between increasing profitability and responding to changing customer needs. The question is, how do you meet daily operational demands and also adapt to future business requirements while restricted by limited resources and static budgets?

Those without an answer are discovering a gap between the services the IT department is capable of supporting and the services which customers are demanding from the business. This ‘gap’ or tech deficit emerges when additional demands are placed on a technology infrastructure supported by static budgets and business approaches.

My company recently commissioned research based on the responses of 852 technology decisions makers throughout Europe to assess how European organisations are supporting their business, and how ready their technology infrastructure is to support future ambitions. The report established the existence of this ‘tech deficit’, how it is affecting the industry and what steps are available for IT decision makers to address the challenges it presents.

Impact Of The Tech Deficit Is Real & Imminent

Enterprises are under constant pressure to balance the needs of their customers against the commercial realities of running a successful business. In the digital economy, businesses are demanding IT to increase pace in enabling new business models and tools, in such areas as analytics and e-commerce. This is essential to respond to customer demands, innovate, and grow profits.

The results of Tech Deficit Report showed that areas where tech deficits were felt to be most prevalent were network performance (40%), infrastructure performance (30%) and mobile access/device flexibility (26%). A quarter (26%) of enterprise organisations surveyed as part of the tech deficit study said that they felt their infrastructure was ready to support future complexities, half (51%) said that the infrastructure currently was not ready, but that there was a plan in place.

However, one in five of IT decision makers across European enterprises said that their infrastructure was not ready and that there was no plan in place to support change.

Different decisions will be needed about the infrastructure foundations, what and how to buy as well as ensuring support for business needs both now and in the future. Cost ranks amongst the most prevalent considerations when addressing the tech deficit. Most IT departments are acutely aware that increasing demands from the business go hand-in-hand with budget and resource constraints.

Cost is cited as having the greatest impact on infrastructure and forcing structural changes (40%) across European organisations. The need to ‘do more with less’ is driving new approaches to corporate IT and the adoption of new strategies.

Cost pressures are helping businesses move to more flexible, service-driven deployment models, such as cloud services. The report shows a marked rise in the adoption of cloud and service-based deployment. Infrastructure-as-a-service, Software-as-as-Service, and data centre colocation are all expected to grow in the next two years, by 52%, 55% and 33% respectively. Conversely on-premise software and hardware deployment will rise just 12%.

This shift from on premise to cloud and service-based IT is part of a significant trend to introduce greater simplicity and flexibility into business models. 63% of enterprise IT decision makers say they see a benefit in having a single supplier to provide a range of different IT service and infrastructure options, and ‘ease of management’ is cited as the number one drive for this consolidation.

Enterprise IT departments are ready to evolve from technology ownership towards more efficient methods of delivering services. So too we expect to see this attitude adopted within the IT organisation itself. IT will increasingly act as a broker or a service provider within its own organisation, providing scalable, on-demand and flexible services to users.

As a consequence vendors will need to adapt to this change and provide the flexibility to support new ways of working and different non-standardised environments. Over three quarters of respondents (76%) see the relationship with service providers as a partnership, not just a supplier relationship. Furthermore, 67% expect them to support the business by driving innovation. The constantly changing role of the CIO will play a significant role in managing this change across the IT organisation, with 67% of respondents stating the CIO role will need to evolve in order to help address technology deficits.

How To Respond

The response to the Tech Deficit has to be more about the way in which investments are made and the relationships which organisations forge with their suppliers and ecosystems. Spend is determined by priorities and budget. Limited budgets suggest CAPEX investments are no longer seen as attractive or sustainable and flexible alternatives with lower cost implications which can also be implemented quickly are now the preferred method of responding to changing business needs.

Own Less. Embrace the Cloud: A move towards a service based delivery model will help businesses become more responsive via IT infrastructure that is capable of adapting to change. Business outcomes change so there is a need for an underlying technology that can also change. Cloud solutions for big data, collaboration and customer relationship management can be a real competitive advantage and this intelligent technology reduces the reliance on rigid hardware- new solutions like remote working and file sharing are enabled by cloud computing. Service based delivery in this new digital economy supports customers expecting quick responses and Cloud services help create a more agile and collaborative workforce.

Be simple. Be flexible: Businesses need flexibility and simplicity. This means flexible commercials along with technology that makes their lives easier. More flexibility should correspond to a reduction in complexity. Businesses everywhere are demanding simplicity: services that are easy to manage and make automation a priority. Simpler, more automated systems and processes allow them to get back to what they do best; ultimately, this is all they really want to do.

Choose the right infrastructure. Choose the right partner: Good underlying infrastructure meets daily operational requirements while creating a platform for continuous IT. Strong infrastructure services can support the delivery of services that are flexible enough to respond to demand and market trends. Acquiring a partner who understands the inherent complexity and intricate relationships across network and infrastructure can make a significant difference. The right partner is not someone who sells things but one willing to create a deep relationship based on shared ideas, business outcomes and mutual understanding. Partners with presence in multiple countries and regions can also bring local expertise to the table and provide crucial guidance on country-specific regulatory and compliance issues.

The Future

The tech deficit won’t go away. More than 8 in 10 IT decision makers believe their infrastructure foundations requires evolution over the next two years to keep up with business demands. A measured response is required. One which best delivers on business outcomes and results in an underlying infrastructure which is simplified, flexible and responsive. Those who act now by making strong decisions around infrastructure solutions which are aligned to business outcomes will avoid the negative impact of the deficit. They will address customer requirements and be equipped to support new business models and approaches as part of the digital economy.

Steve Hughes

Steve Hughes joined COLT in 2008 as part of the launch team for its cloud service platform. Responsible for defining the new services portfolio and requirements, he has worked closely with customers throughout Europe in bringing the service to market. During his career, Steve has been involved in the launch of over 15 new products in the managed services, enterprise integration and business software development areas. He has set up his own on-line business which he successfully sold to BT; was Head of Messaging and Transaction Services at BT; and grew several business software start-ups in the fields of payments, supply chain and situation management. Steve has a BSc. in Electronics from the University of Salford, and an Open Business School MBA.