Many organisations find digital transformation came with a price.
There’s a new consequence arising from the rapid response to the onset of the pandemic. As many are now discovering, the “quick and dirty” implementations that made getting through Covid-19 lockdowns possible now carry an added cost.
The incredible rate at which businesses either switched to digital services and remote working for the first time, or boosted their capabilities to better serve customers, employees and stakeholders during and since the pandemic, has been well canvassed.
Yet along with that transformation has come an all-too-common side-effect – tech debt. A new IDC report commissioned by Microsoft reveals that tech debt accumulated during the pandemic is something that will affect 50 per cent of CIOs through 2023.
Tech debt arises when speed of delivery is prioritised over optimal architecture or coding, resulting in a higher number of patches and workarounds in a business’s existing tech stack. When systems aren’t properly integrated, or cloud consumption isn’t optimised, the result is inefficiencies, higher costs and often, frustration. Every new go-live has the potential to add to this, if it relies on a mix of outdated infrastructure and piecemeal architecture.
Called Public Cloud Services Opportunities and Dividends to the Australian and New Zealand Economies, the IDC report highlights that spending on public cloud services is ramping up, expected to almost double across Australia and New Zealand by 2026.
Over the next five years, public cloud adoption will result in the creation of 596,000 jobs in Australia and 134,000 in New Zealand – not only across cloud suppliers but also organisations who adopt it, as a result of greater innovation and the growth of new products and services.
The challenge for businesses is to be brave and make the call about addressing systems that aren’t future-proof now, fixing the foundations before they accumulate further tech debt.
Understandably, many organisations will hesitate to undo investment already made, especially in the current economic environment. Likewise, many will wish to avoid introducing system-wide change and disruption when things are working reasonably well – the old “if it ain’t broke” scenario.
However, as the report observes, a short-term period of disruption is preferable to seeing business and digital transformation grind to a halt as further change and expansion become impossible.
I’m reminded of a long-ago government meeting about a major department’s critical software platform. When the Minister doubted the cost of upgrading was justified, someone pointed out: “Look at it this way, Minister. The system is like a 747 crossing the Pacific, and it’s running on one engine...”
As the Minister very quickly appreciated, without the crucial infrastructure, you’ve got nothing to run your organisation on – and the impact on your reputation could also be fatal.
Businesses currently using old, on-premises architecture have incurred a different kind of tech debt, increasing their risk of ownership as systems reach end of service, security becomes less robust and infrastructure requires more and more maintenance and resource, creating productivity costs.
They’re not only spending more money and time than they need to in the short term, in the longer term they risk losing a great deal more if system vulnerabilities are exploited by cybercriminals. Microsoft blocked more than 70 billion email and identity threats in 2021 alone. The threat is all too real; once customer data is lost, it’s very hard to rebuild trust.
Reducing costs
Microsoft CEO Satya Nadella has called technology a deflationary force, as it has the power to reduce costs through greater productivity and efficiency, as well as stimulating growth through enhanced innovation. However, it’s important to have the right technology and approach to enable this, considering the role that the cloud can play.
Using the cloud in a methodical way can significantly reduce costs. A shared responsibility model, such as that provided by the public cloud, means businesses don’t have to manage the whole stack. That can help address some of the challenges created by ongoing skills shortages, reducing the burden on in-house IT teams and freeing them up for innovation rather than simply keeping infrastructure and systems running.
An Infrastructure as a Service or Software as a Service model also spreads the costs (and the benefits of constant investment in security and capabilities) across the whole global ecosystem – and helpfully, it also shifts the cost from capex to opex budgets.
Some Chief Financial Officers may have noticed cloud bills blowing out as a result of hasty migrations. The right IT partner can help monitor and address the immediate consumption issues, while creating a well-architected framework to ensure that, longer-term, systems and people are working in sync and only consuming the resources they need. As well as building resilience, this can massively improve an organisation’s sustainability, something customers and partners are now demanding.
Today’s hyperscale public cloud has the power to drastically reduce organisations’ carbon footprints. A study called The Carbon Benefits of Cloud Computing developed in partnership with WSP showed that the Microsoft Cloud is between 22-93 per cent more energy-efficient than traditional enterprise data centers (depending on the specific comparison being made). When taking into account our renewable energy purchases, the Microsoft Cloud is between 72-98 per cent more carbon-efficient.
Finally, organisations need to consider the role that skilling and a culture change can play in reducing tech debt. Introducing new systems that your people aren’t equipped to take advantage of often sees them stick to old ways of working.
Before any new system is implemented, get support to educate your teams on what it can do for them and their customers to create excitement. There are also (often free) training programmes to enable your people to make the most of cloud technologies.
When it comes to addressing tech debt, while every position carries a cost, the key question to ask is which one gives the greatest benefit, vs the greatest risk?
The IDC report shows the cloud has already changed how IT is architected and operated. Early choices made on platforms, resource management and operational workflows can create long-term obligations that potentially limit agility and growth opportunity.
On the other hand, a little short-term pain to get these right will soon pay huge dividends to your teams, your customers, and your bottom line.