Business Transformation

IDG Survey Reveals: When it Comes to Modernization Budgets, IT Is Firmly in Control

Challenges are inevitable, priorities will evolve, and goals become more complex as firms proceed down the path of application modernization to generate new business value, according to a recent IDG Research study commissioned by VMware.

VMware, IDG survey findings: IT controls modernization budget
Different business objectives motivate modernization depending on where a company is in the modernization journey.

Another significant finding: Businesses in the planning or early stage of modernization tend to have very different immediate priorities than businesses further into their journey. No matter where companies find themselves today, one thing remains constant. IT departments are driving the bus. 

Nearly two-thirds of respondents answered that IT owns all or most of the modernization budget.  

The report reveals just how IT is investing this budget, and various insights to help guide your modernization.  

Cloud is a critical factor: Early-stage modernizers must learn from others

One-third of respondents indicated they have yet to begin the modernization process. These companies’ infrastructures are just 32% cloud-based, compared to 42% for their more mature peers. Bridging this gap is perhaps the greatest challenge for early-stage modernizers. 

Many respondents in this group expressed uncertainty and confusion about cloud strategies, with a lack of clarity about how to move forward. They have outdated infrastructure or processes divided into silos. These companies might begin with a new perspective on cloud, based on the success seen at other companies.  

For a long time, there was an all-or-nothing approach to cloud migration, when in fact a more flexible approach is needed. CIOs should look at their cloud strategies as “right-sizing” exercises. Spend time meeting with various stakeholders within your organization to understand the best path forward. Keep in mind that approaches, such as a multi-cloud strategy, will involve many additional variables that must be considered during the planning process. 

If you have yet to get 100% buy-in from the rest of your organization, another major priority is establishing your case for application modernization. In the case of cloud migration, survey findings showed that even companies in the later stages of their modernization process still maintained 58% of their infrastructure on-premises.  

If you are early on in your modernization journey, you can study how other firms have handled this process. Learning how other companies tackle an often complex and unwieldy process is an opportunity to gain an advantage. These insights, along with this report’s findings, will enable any technology leader to be more strategic and flexible in their management roles.  

Later-stage modernizers must focus on people 

According to the study, firms that are much further along their application modernization journey are focused on hard payoffs like increasing speed, agility and beefing up security. They also deeply understand that modernization leads to increased business resiliency.  

Findings revealed that firms early in the process of modernization tend to focus a majority of their energy on upgrading infrastructure, implementing disaster recovery and unifying management. Modernization tactics can range from basic replatforming or rehosting to full-scale replacement of legacy systems. These are cost-intensive projects that gobbled up to 38% of the overall IT budget. This trend tended to downshift over time, decreasing to 28% of the budget for late-stage companies.  

Once these initial heavy lifts are completed, leadership can then pivot to other priorities, such as increasing automation of new and established processes, enhancing security protocols, and utilizing managed services. 

Additionally, new pain points arise as a modernization process matures. A majority (55%) of later-stage respondents said their most pressing challenge is enhancing their workforce and hiring employees with the appropriate skills and expertise. Compliance, as well as concerns about other data and privacy processes, were also significant concerns for these leaders.  

Application modernization efforts require new skills and expertise
Skills and expertise are the most pressing needs for organizations that have implemented technology to support IT through modernizations.

Later-stage modernizers likely have established a technology foundation and process for completing their missions. Leaders at these organizations can benefit from a focus on the people needed to take their firms across the finish line. Having the appropriate expertise in house will empower companies to be more agile and flexible in their approach to modernization.  

IT investments must be purposeful 

IT is leading the way. Whether your organization is just beginning its journey or nearing the end, the key is flexibility. Flexible infrastructures allow early-stage companies to select a workload more easily for migration. Flexibility for later-stage firms offers the ability to run workloads anywhere, enabling true business agility. Your task, as an IT leader, is to encourage purposeful IT investments that espouse a long-term view and a flexible foundation. 

Whether your organization is just starting the modernization process or has already invested significant time and resources into modernizing, the findings in this study offer compelling insights that can help you achieve success on your own journey. Uncover additional information by downloading the “Application Modernization Initiatives Garner a Growing Share of IT Budget” survey results: