Enterprise IT Growth &
Digital Transformation
Trends 2018/19

Navigating and Leveraging IT in the Digital Disruption Era: Cloud, Digital Transformation and Enterprise Applications

In an age of digital disruption, the conversation in enterprise business has turned to Digital Transformation. Enterprise organisations face increasing pressure to change the way they do business. Today’s consumers, stakeholders and citizens prefer online interaction, and companies are developing rich digital offerings to engage them. Digitising the enterprise also enables enterprises to gain competitive advantage, improve time to market and ensure their offerings are best in class. IT is an increasingly crucial area of focus to align to business strategy to retain and increase market position.

Enterprise Digital Transformation strategies can help companies gain a competitive edge through leveraging Enterprise Cloud and Digital.

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Our Customer Demographic

We surveyed our customers across multiple industries in the UK and Ireland including:

In Version 1’s Enterprise IT Growth and Digital Transformation Trends, we examine the top IT priorities of enterprise organisations in the UK and Ireland over the next 24 months including:

  • IT Investment Priorities for Enterprise Organisations
  • Cloud as an Enabler for Digital Transformation Success
  • Cloud Adoption in Enterprise Transformation
  • Skills Shortages affecting Digital Transformation

IT Investment Priorities for 2019

Respondents were asked whether they planned to spend more or less in the following areas of their IT operations in the next 24 months:

60%
Cloud Spend increase
Enterprise Applications Spend Static
50%
Digital Spend increase

Respondents were asked to rank their top IT priorities over the next 24 months:

IT Priorities
Rank
Data, security and information risk management 1st
Delivering digital transformation 2nd
Maintaining availability and performance of IT systems 3rd
Cloud Strategy & migration of enterprise workloads to Cloud 4th
Delivering improved data & analysis 5th

Digital Transformation
Leading the Charge

Agile & DevOps - on the up.

In this report, we refer to organisations using Agile & DevOps in:

  • 0-20% of their projects as ‘Triallers’,
  • 21-50% of their projects as ‘Adopters’,
  • 51-100% of their projects as ‘Practitioners’.

Respondents were asked what percentage of their projects use Agile & DevOps principles.

29%
Triallers

46% of respondents are
Triallers today

17% of respondents will be
Triallers in 24 months

12%
Adopters

13% of respondents are
Adopters today

25% of respondents will be
Adopters in 24 months

21%
Practitioners

34% of respondents are
Practitioners today

55% of respondents will be
Practitioners in 24 months

Delivering Digital Transformation and Cloud Strategy &
Migration of Enterprise Workloads both ranked in the top 5 IT
priorities for the next 24 months.

Strategic Priorities Join the Mainstay Concerns in the Top 5

With spend increases reported in both Cloud and Digital, it stands to reason that Delivering Digital Transformation and Cloud Strategy & Migration of Enterprise Workloads both ranked in the top 5 IT priorities alongside the mainstay priorities such as Data, Security and Information Risk Management and Maintaining Availability and Performance of IT Systems.

There is no doubt that Agile & DevOps are on the up; with a clear trend toward adoption in our customer base. The overall rise in adoption correlates with an expected 29% decrease in ‘Triallers’ as this group matures in their Agile & DevOps journey. Adopters will grow by 12% and Practitioners by 21% in the next 24 months; with 55% of respondents using Agile & DevOps principles in over half of their projects in 2 years’ time. We see this trend toward Agile & DevOps adoption fundamentally underpinning Enterprise Cloud and Digital transformation success.

The transformation approach to Cloud, involving the internal adoption of new approaches such as DevOps, Agile, Automation and Continuous Optimisation fundamentally changes an organisation’s approach to IT development, operations and their respective processes. There are often cultural and organisational issues to resolve with a Cloud strategy as it can bring a lot of change to certain organisations and certain business units. Cloud services deliver managed functionality; therefore, fewer technical roles are required, but that does not mean a reduction in roles overall as new roles also emerge. Skills requirements change with the Cloud - but not all skills. Understanding the components of Cloud you are implementing impacts how the skills and expertise of your team will change. There is certainly a case for winning hearts and minds and understanding what the opportunities are in those new environments. While it is no mean feat, with careful planning across multiple departments and processes coupled with strong communication throughout the journey, it offers those organisations successful in adopting this approach several benefits in terms of gaining competitive advantage and reacting swiftly to change in the Digital era.

It allows organisations to scale infrastructure as needed to support changing business requirements, priorities, new services, new market entry, etc, while reducing the risk of wasted IT investment that inhibited past investments in new digital services.

A sound Cloud Strategy with multiple stakeholder viewpoints across the organisation is quickly becoming a fundamental stepping stone to gain a return on your investment in Digital.

Cloud Adoption in Enterprise Transformation

As mentioned earlier in this report, 60% of respondents will increase their Cloud spend in the next 24 months. Cloud spend is on the rise with a corresponding 34% decrease in On-Premise workloads. Today 46% of respondents run the majority of workloads On-Premise. In 24 months however, only 12% of these respondents will run this proportion of workloads on-premise.

Private Cloud spend has remained static, which we would attribute to the advancements in Cloud security. When Cloud was in it’s infancy, cautious enterprise organisations driven by security concerns would choose to host workloads in Private Cloud. Today however, enterprises can place trust in Cloud security and are increasingly adopting Hybrid and Public Cloud. This is reflected by the 34% of respondents planning to run the majority of workloads in Public Cloud and 29% growth in the number of respondents running the majority of workloads in Hybrid Cloud.

Respondents were asked which percentage of workloads they would run On-Premise and in Public, Private and Hybrid Cloud in the next 24 months.

34%

Public Cloud

Significant increase in number
of respondents running
workloads in Public Cloud

29%

Hybrid Cloud

Another significant increase for
respondents running
workloads in Hybrid Cloud

Private Cloud

The percentage of respondents
that will run workloads in Private Cloud to remain static

34%

On-Premise

Corresponding decrease in
respondents that will run
workloads On-Premise

Public Cloud
Spending Trends

In terms of what organisations will be running in the Public Cloud, there is an equal spread of applications moving into the Cloud.

If you are currently planning your approach to migrating enterprise applications to the Public Cloud, there is no substitute in Public Cloud around planning and phasing. Doing things incrementally is a very safe approach. Version 1 often recommends that customers start with a pilot for the Cloud; migrating an application that is not business critical first and then working through applications of increasing importance incrementally. This incremental approach poses a lower risk to day-to-day activities, and crucially, a minimised risk to commercial disruption due to mission-critical systems experiencing downtime.

The equal spread of applications that respondents will run in Cloud is as follows:

Application
% of Respondents
CRM
28%
Transactional & Back office
26%
Data Warehousing & Reporting
26%
Collaboration & Productivity
26%
Custom / Bespoke Solutions
21%
Application
% of Respondents
Enterprise Applications
18%
Resourcing & Talent Management
13%
Other
12%
Vertical / Industry Specific Solutions
10%

Architecting the Digital Enterprise

Many enterprise organisations expect to increase investment in Digital Transformation and Enterprise Cloud, but as our research highlights, there is an ongoing skills challenge for enterprises to overcome.

Respondents were asked to share the areas where they are suffering a skills shortage.

Skill Area
% of Respondents
Architecture Roles (Technical, Solution & Enterprise Architecture)
67%
Data & Analytics
31%
Business Analysis
23%
Skill Area
% of Respondents
Enterprise Cloud
21%
Agile & DevOps
21%
Digital
19%

Enterprise organisations expect to increase investment in Digital and Enterprise Cloud, but as our research highlights, there is an ongoing skills challenge for enterprises to overcome to maximise return on these investments. Enterprise Architecture is undergoing significant change, driven by the continuously evolving demands of Digital Transformation. The ongoing demand Version 1 is witnessing from customers for Architectural expertise was echoed in this research. Overwhelmingly, 67% of enterprise organisations surveyed ranked Architecture roles (Technical, Solution and Enterprise Architects) as their top skills shortage. Architecture roles are undoubtedly the back-bone of Digital Transformation and this shortage was closely followed by five areas of expertise that would be considered closely interwoven with Digital Transformation; Data & Analytics, Business Analysis, Cloud, Agile & DevOps and Digital. This presents an ongoing skills challenge that must be addressed for organisations to succeed in transforming digitally. Based on these findings, we would expect Digital Transformation to drive the talent attraction needs of enterprise organisations for the foreseeable.

What should businesses be mindful of as they plan for Digital Transformation?

A surprising response from our respondents was around the investment in Enterprise Resource Planning (ERP), that spend in this area would remain static. This is startling as many enterprise organisations are facing a predicament in terms of innovating and entering the Digital world due to their current ERP systems. Whether an organisation implements a new ERP system, or automates and digitises elements of their ERP, the new intelligent systems and automation capabilities of ERP are an opportunity for the business to optimise their resources, automate manual tasks, improve business processes significantly, and lower costs.

As businesses plan for Digital Transformation, they should be mindful of any inefficient systems and practices that may hinder them, focusing on more agile and automated approaches.

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