Despite benefits, firms drag their feet on IT modernisation

Global IT organisations have been slow to modernise key applications, including customer resource management (CRM), enterprise resource planning (ERP) and human resources (HR) systems, a study commissioned by Rackspace Technology and AWS shows.

Coleman Parkers Research did a survey between April 27 and May 25, 2023. It covered 1,420 IT decision-makers across the Americas, Europe, Asia, and the Middle East, including 420 respondents from the Asia-Pacific region and Japan (APJ).

The study suggests that failure to modernise key apps and data will limit organisations’ ability to deploy and benefit from cutting-edge technologies such as artificial intelligence (AI).

Among respondents in APJ, 78% agree they will not benefit from AI if they fail to modernise legacy apps and data. 

Although survey respondents identify increased security (58%), improved efficiency (53%), and followed by cost (47%) as the leading motivators of modernisation and ERP, CRM, and Business Intelligence systems as the apps that most need upgrading, firms are still dragging their feet on updating legacy infrastructure. 

Of legacy infrastructure that has not yet been modernised, only 22% of workloads are considered noncritical, but 24%2 of legacy infrastructure has “not yet been assessed.”

“It is telling that even well into their cloud journey, the three most critical apps organisations say they need to upgrade are truly at the heart of the business because they are at once the most important things to modernise and the most challenging,” said Jeff DeVerter, chief technology evangelist at Rackspace. 

“At the same time, it is encouraging to see leaders understand that app modernisation is key to getting the most out of cutting-edge technologies,” said DeVerter. “It could be that the prospect of losing out on AI will motivate organisations to finally get off the sidelines when it comes to modernisation of core systems.”

Hemanta Banerjee, VP of public cloud data services at Rackspace, said that while most APJ companies recognise the need to modernise their legacy apps and data to benefit from the innovations and benefits from AI, they cite limited resources and a culture that is resistant to change as two of the main reasons why they have not modernised their apps and data. 

The survey also points to gaps in the leadership of modernisation efforts. Only 24% of those polled say they deploy cross-functional teams as part of modernisation, while just 42% use tech vendors and only 29% deploy external consultants. 

Overwhelmingly, modernisation initiatives are led by IT departments (69%) and executive leadership/C-suite (45%).

When respondents were asked to identify the top expected outcomes of modernising, increased efficiency led the way (31%), followed by cost savings (28%) and the ability to adopt more advanced technologies like AI  (27%). 

Respondents also noted modernisation has resulted in better data management, integration, quality, and lowered data costs.

The most critical apps and data to modernise are CRM (89%),  enterprise (87%),business intelligence (74%), HR (73%) data analytics (54%), governance and security (46%) and data integration (41%).

However, many APJ organisations still face unforeseen challenges to modernisation, including limited resources (27%), cultures resistant to change (20%), integration challenges (17%), lack of senior buy-in (10%), lack of a clear roadmap (9%) and communication between stakeholders (8%).

If organisations fail to modernise legacy apps and data systems, respondents believe it will result in in integration challenges (32%)increased costs (30%), lack of innovation (26%) poor security (25%), and the probability to miss out on the ability to adopt advanced technologies (23%).