Only 13% of application transformation initiatives have delivered the intended objectives, which makes the market ripe for service providers to deliver much-needed expertise, talent and technology
Application transformation initiatives by enterprises witnessed a steep growth rate of 64% last year, as enterprises sought to achieve competitive advantage by transforming their core applications, according to new research from Everest Group. Unfortunately, only 13% of all transformation efforts delivered the intended consequences.
Application transformation refers to the migration and/or adaption of an existing application to a modern environment designed to significantly increase the value delivered in terms of functionality or experience, or both.
Business stakeholders led 56% of the transformation initiatives in 2019 as they sought faster time-to-value, new revenue streams, enhanced user experience, faster insights and scalability for growth. This represents a significant shift from 2018, when the majority (62%) of transformation initiatives were driven by CIOs with core IT objectives of technology standardization, process simplification, increase in automation, efficiency, cost optimization and architecture unification. Alignment of business and IT objectives is an essential component of successful application modernization initiatives.
“The good news is that enterprises are increasingly viewing digital transformation as table stakes, and they are investing in application modernization, specifically, to deliver competitive differentiation and other key business outcomes,” said Yugal Joshi, vice president at Everest Group. “In fact, more than 80% of the application transformation initiatives are directed to transform core applications supporting the business. Unfortunately, too few of these initiatives are achieving the desired outcome. Enterprises particularly struggle with understanding their legacy systems, aligning business and IT objectives, and transforming their human resources to derive full benefits from the modernization effort.”
Everest Group explores the findings and the implications for service providers in the application transformation market in its recently published report, “Application Transformation – Business Pioneering the Agenda.” The report examines enterprise demand themes and consumption patterns and provides an easy-to-follow playbook to help enterprises begin their transformation journeys.
“Another important shift we’re seeing in the application transformation market is that the majority (55%) of enterprises are budgeting for transformation projects in their annual spends,” added Nitish Mittal, vice president at Everest Group. “The corresponding shift to long-term deals rather than small pilot projects is a move in the right direction, because enterprises need a longer-term, well-planned approach to application transformation in order to realize their desired business objectives.”
In the report, Everest Group identifies eight crucial steps in a well-planned approach to application transformation:
1. Need identification – Clearly identify the business requirement and objectives.
2. Landscape assessment – Undergo a value-chain assessment to identify processes and applications that require transformation.
3. Transformational roadmap – Develop a strategic roadmap identifying key steps, stepwise goals, and the investment required.
4. Measurable outcome – Develop a set of metrics across the funnel to improve the accountability of business outcomes.
5. Self-funding model – Invest the benefits realized at each step to fund the successive transformation stages.
6. Team structure – Promote a culture of innovation and shared responsibility through integrated teams.
7. Talent – Build a learning ecosystem, enabling the workforce to evolve with technology and industry.
8. Change management – Ensure enterprise-wide mandate of technology adoption with collaboration of the IT team.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at https://www.everestgrp.com/.