European Businesses’ Ageing Technology is Leading Barrier to Digital Transformation
- In 57 percent of businesses surveyed, technology is struggling to keep up with the demands of digitalization
- The next three years will see a doubling of cloud implementations while robotic process automation and multiple Oracle and SAP applications will be actively deployed in 2017
- Few businesses have yet to take advantage of fully integrated productivity and collaboration tools
, commissioned by Fujitsu to identify trends in business application services across several European countries, focused on key technology challenges that businesses are facing as they undertake digital transformations: future trends and strategies in terms of investing in SAP and Oracle software, how to transform legacy technology infrastructure and how to optimize productivity.
The high level of unpreparedness identified is underlined by the fact that while digital transformation presents many opportunities for businesses, it has not yet become the highest priority on the business agenda. Fujitsu and PAC found that just over 10 percent of enterprises regard themselves as leaders in digital transformation and only 17 percent consider digital to be a matter of life and death for their businesses. A further 42 percent believe that although it will have an impact, other challenges such as economic concerns are taking precedence.
Ravi Krishnamoorthi, SVP & Head of Business Consulting, Digital & Application Services at Fujitsu EMEIA, comments: “It is surprising to see how few businesses are currently fully reaping the benefits of digital transformation, but encouraging to learn that the next 12 to 36 months are going to see a great deal of progress. We expect enterprises increasingly to move workloads and applications to the cloud and to take significant steps to improve not only their business agility but also the effectiveness of their IT budgets. In the meantime, many organizations will try to struggle on by running critical processes on software developed decades ago, which is starting to crack up under the pressure.”
Nick Mayes, Research Director at PAC, adds: “The challenge facing most large organizations is that they were not designed for the digital age. Many have made great strides, but they continue to face competition from new market entrants that are digital natives. To compete effectively, enterprises are overhauling their technology infrastructure, from the back end to enterprise applications and productivity tools, but they are faced with overwhelming choice and a great deal of confusing change among vendors’ portfolios. And it’s not just about deploying the right infrastructure to meet a business’ digital needs; many enterprises are starting to find that unless employees are on board, even the best-thought-out strategies will fail.”
Technology and cultural issues top the list of factors holding digital transformation back – primarily enterprises’ aging technology and infrastructure, the difficulty of integrating digital into legacy systems and the challenges associated with driving cultural change within their own IT organizations. According to respondents, legacy applications in particular are considered to be a burden, with the negative effect they have on a business’ agility the leading concern, followed by their drain on the technology budget that could be put to better use supporting innovation.
However, the survey did confirm significant change to come over the next three years. Currently, only 20 percent of respondents have migrated more than half their applications to cloud-based delivery; however, this number is likely to more than double in the next 36 months. Active implementation of robotic process automation is likely to increase in 2017, deployed to heighten the reliability, speed and focus of external and internal processes.
SAP S/4HANA represents the most significant innovation of SAP’s core business suite in a generation. Going far beyond a new release of the tried-and-tested ERP running on the SAP HANA® platform, SAP has fundamentally changed how the core system operates. As the next-generation suite, almost all existing SAP customers surveyed expect these platforms to continue to play an important role in supporting their digital agendas. The survey predicts 2017 to be a landmark year for adoption of SAP S/4HANA, with close to 40 percent of respondents planning to start a project in the next 12 months to improve existing processes and reduce ongoing running costs. SAP S/4HANA delivers value across lines of business, unlocking productivity and enabling new business models for the digital age. Companies can explore the value of SAP S/4HANA at www.s4value.com.
Oracle Cloud Applications
As businesses across all sectors are turning to cloud-based applications to achieve greater agility, they need to be able to rely on a software architecture to support their transformations. Those surveyed who currently deploy Oracle applications also overwhelmingly consider these applications to be crucial in terms of enabling their organizations’ digital strategies. Twenty-one percent have already deployed Oracle applications and almost double that number expects to start a project in the next 12 months. Oracle cloud applications received a further ringing endorsement, as none of those questioned are planning to switch to an alternative cloud provider. Deployment is not without its difficulties however - almost half of respondents cited the lack of internal skills and expertise as the biggest implementation challenge.
The recent focus of enterprise digital transformations has been on overhauling technology. However, if a business does not have the appropriate structure or culture to meet the evolving needs of the market, then any gains made with technology alone will be short-lived. Most interviewees understand this. However, currently only six percent have deployed fully integrated productivity and collaboration tools and have a workforce that effectively exploits the technology. For the majority, harnessing the full potential of the tools is still work in progress. When they do roll out new productivity tools in the future, respondents are planning to prioritize their deployment among customer-facing teams, which will help ensure that their digital transformations remain focused on the needs of their customers.
Notes to editors
¹ The survey was conducted by PAC in November 2016, through interviews with 500 respondents in Finland, Germany, Spain, Sweden, UAE, and the UK and Ireland. Half the respondents are responsible for business functions, and 50 percent have IT responsibilities within enterprises with more than 500 employees. Those surveyed represent a wide range of business sectors including manufacturing, retail, services, healthcare, banking and automotive. The findings will be shared in a series of free of charge webinars hosted by Fujitsu and PAC. The report is also available at https://www.slideshare.net/secret/a8B9iiUjHC06O4
Founded in 1976, Pierre Audoin Consultants (PAC) is part of CXP Group, the leading independent European research and consulting firm for the software, IT services and digital transformation industry. CXP Group offers its customers comprehensive support services for the evaluation, selection and optimization of their software solutions and for the evaluation and selection of IT services providers, and accompanies them in optimizing their sourcing and investment strategies. As such, CXP Group supports ICT decision makers in their digital transformation journey.
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Date: 24 January, 2017