Why It’s So Important to Measure the Economic Impact of IT Transformation

By Jennifer Cooke, Research Director, IDC

When an organization starts taking steps to transform IT, its goals are ambitious: improve the efficiency and effectiveness of IT and become more agile to support the innovation needs of the business. Most organizations understand that there are processes to overhaul and infrastructure to refresh and realign to achieve this transformation. What is less understood – and can have a big impact on the overall success of these endeavors – is the ability to see and measure the economic impact of IT transformation, or what we call ITX.

Before and After

As in a personal health transformation, a set of “before” and “after” pictures is an essential tool for assessing progress – and these pictures often serve as the inspiration for continued good habits. In a similar fashion, IT organizations will increasingly rely on intelligent infrastructure to provide real-time insights into consumption, health, location, and performance.

Understanding the impact of specific IT services

Overcoming internal barriers to change and improving processes is where many organizations struggle. A recent IDC study* uncovered that 46% of organizations were limited in investing in on-premises datacenters due to their company’s cloud-first focus. The notion that public cloud is automatically faster, better, and cheaper is a common misconception. What’s missing is that most enterprises do not have the tools and processes in place to make educated assumptions regarding cost and performance to really discern which IT service option is truly faster, better, or cheaper. For this reason, it’s critical to be able to understand and measure all IT options to make the best business decisions regarding IT resources. More than ever before, IT leadership needs to drive new thinking when it comes to the consumption of IT resources within existing datacenters, facilities operated by service providers, and all edge datacenters. Mastering this shift will lead to more coordination across organizational domains and increase the IT organization’s power to drive change.

Another recent IDC study involved in-depth interviews with companies that had already undergone significant IT transformation initiatives. The study’s purpose was to learn about their experiences and assess the economic impact. A significant finding related to technical debt. Organizations discovered that this lingering debt was consuming 32% of the total IT budget, limiting any innovation. Uncovering areas of improvement while having the ability to showcase the positive impact of ITX is a powerful agent and can help build the business case for change.

Technical debt is the hidden cost of legacy IT that provides little to no value to the business; aka the cost of not transforming.

Moving the lever

Study participants also reported 23% lower IT infrastructure costs and 35% more efficient IT operations, including security and software development. Their ability to “move the lever” on the speed to deploy new workloads while reducing costs fosters greater alignment to business priorities, which in turn establish IT as a credible and trusted advisor to the business. Just like an effective set of “before” and “after” photos – ITX can also motivate future investments in IT.

*IDC MaturityScape Benchmark Study: Smarter Datacenter Facilities, November 2017

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Content sponsored by Dell EMC & Intel