But before we consider why ‘taking the top down’ might be an appropriate response to such stormy conditions, let’s first consider the nature of the storm that is upon us.

The first of the factors Gartner refers to is ‘total cost of ownership’ – the sheer amount that organisations are spending on simply maintaining and operating the systems and equipment they need to do business.  Most analysts are in agreement that between 70% and 80% of IT budgets are typically invested in this area – freeing up very little for the innovation demanded by the business.  In 2008, this is only going to get worse.  The economic waves already reaching out across the globe from the US sub-prime lending crisis (or “credit crunch”) threaten to push IT budgets down again, just when they’re starting to recover.  Financial institutions, and countries whose economies are heavily reliant on them, will understandably be hardest hit.  How fast, and how deeply penetrating the impact will be, remains to be seen – but the unsettling effects are already upon us, bringing with it the magnifying glass of financial scrutiny.

Add to this, the second of our factors, skills availability, and we start to see some compound effect already. 

It is widely acknowledged that IT skills are in demand, and in many countries such a lack of skills is being cited as a threat to future productivity and prosperity.  In the UK, for example, the number of applicants to IT related degrees fell by nearly 30% between 2002 and 2006, with demand for IT skills increasing over the same period.  One area of particular concern, which Gartner highlights, is the availability of technical staff to support core applications, such as those written in COBOL.  The so-called ‘baby boomers’, the generation responsible for bringing enterprise IT to the business, are starting to retire and take not only the technical skills with them, but some of their vital Business-to-IT interface capabilities, acquired over many years of solving real business issues. 

This is not an overnight phenomenon, of course, and arguably we are still firmly rooted in the foothills of the skills gap bell-curve.  But, nonetheless, started it has, and the simple economics of supply and demand are already at work; pay scales are climbing for sought-after skills, and it is all too easy to see the challenging impact this places on IT’s ability to drive down those ‘lights on’ costs. 

A third factor is the ‘burning platform’ phenomenon, where vendor support policy is placing external pressure on organisations to upgrade their hardware or software.  Again, this is not a new scenario, nor indeed one reaching tipping point in 2008. But, instead, it is the relentless drumbeat of technology driving change in IT infrastructure.  IBM’s removal of support for OS/390 in 2004 and Microsoft’s decision over VB6 in 2005 are just two high-profile examples that prompted many companies to review their platform strategy. And they are by no means alone. The list of proprietary mainframe hardware platforms, in particular, has brought a stream of migration activity as companies consolidate to IBM zSeries or migrate to Windows, UNIX or Linux environments.

The fourth and potentially most far-reaching factor is ‘agility’ – the perennial need for speed and flexibility in support of growth. IT’s ability to respond effectively to a business community hungry for innovation is reaching breaking point. A world of application mashups and other Web 2.0 technologies is emerging; as consumers we are practically force-fed a diet of innovation and technology-driven improvement. We have come to expect it, and its relative absence in the commercial sector is conspicuous. This is bringing a renewed interest in user-centric development from the business, an interest that is underpinned by the availability of end-user drag and drop tools. Unchecked, this will bring a repeat of the late 80s growth in application silos and information islands created by departmental initiatives.

IT must respond, and respond strategically. IT modernisation is one such response. It is not new, but has never perhaps been so deserving of such high priority in the eyes of the CIO, nor requiring such a fresh outlook. Gartner is not alone in challenging organisations to adopt a new approach to IT modernisation; a continual process for updating and evolving our enterprise applications and infrastructure, rather than the episodic approach so typically taken in the past. 

None of the issues raised above is insurmountable or terminal. But this is only true if IT faces up to them, and adopts a balanced approach where short-term goals sit comfortably within a context of longer-term strategic planning.

It is not the purpose of this article to consider the solutions to each of the issues raised above; Gartner, for one, is devoting an entire research theme to this in 2008. With reference to the title, however, it is my objective to raise an awareness of where organisations should start in their efforts.

Take the top down. Not an obvious response if one conjures up images of fast cars and open roads. However, that image is not for today. Today’s ‘top down’ approach refers to two things: firstly, the need for corporate sponsorship; without it, any holistic approach to IT modernisation will crash and burn on the rocks of short-term-ism. Secondly, assess what you have, from the top down.  Understand where the costs and value reside within your application portfolio by adopting a fact-based, high level audit of your assets. From this, you will develop a view of what to keep, where to invest, where to divest. Your core applications are your business. Understand them. Understand what the business thinks of them. And as you uncover the gold, dig deeper, build your next layer of insight and implement the strategies for realising its full potential.

And maybe then it will be a time for those images of fast cars and open roads, and dark skies receding in the rear-view mirror…

Julian Dobbins
Director of Analyst Relations
Micro Focus