According to the 2019 State of Enterprise Software study undertaken by analyst firm IBRS and commissioned by Australian-listed ICT services company TechnologyOne, the IT team/function now sits behind finance, human resources, customer service and operations, when it comes to IT budget spend.
And the study also revealed 68% of organisations plan to spend a considerable amount on overhauling their ageing enterprise solutions in 2019-2020 to take advantage of new technologies.
According to TechnologyOne chief executive Ed Chung, “The industry has reached a tipping point as we enter the cloud maturity era, and organisations are no longer comfortable to wait for legacy software vendors to ‘catch up’ to new technologies.
“If outdated technology or resistant-to-change IT teams are standing in the way of a department’s digital transformation aspirations, they will go around them.
“Gone are the days when IT could take months, possibly years to gather requirements, plan, select and implement enterprise software, and then expect immediate uptake and employee satisfaction.”
Dr Joe Sweeney, principal analyst at IBRS, said ease-of-use was the common theme among executives' view of an ideal enterprise solution.
“Ease doesn’t just refer to the interface, but rather the entire experience of working with the software, the ability of the solution to solve immediate problems and automate industry-specific processes.”
The three-month study, undertaken from October to December 2018, captured both qualitative and quantitative data and examined the impact of cloud infrastructure services and software-as-a-service on 261 Australian and New Zealand senior executives’ attitudes, expectations and plans for enterprise software.
The five key findings were:
1. The pendulum swing away from ICT leading technology procurement
One of the most significant findings of this study is that cloud-delivered enterprise solutions are breaking down the traditional dynamic between business and ICT. ICT must stop being solely focused on operational system uptime and instead focus more on improvement and innovation. If they don’t, business units will work around them. The clearest evidence of change is this study indicating that ICT now sits behind Finance, Human Resources, Customer Service and Operations, when it comes to ICT budget spend. Marketing came in at sixth place after ICT, followed by Sales.
2. Integration is becoming an unseen pitfall of business-led IT
While SaaS has enabled business units to easily acquire and run enterprise-grade business solutions that are specific to their needs, the ease of acquisition and deployment also means that many organisations are now creating silos of information and processes. As such, integration is proving to be a challenge for the growing number of organisations where business units have procured cloud-based applications with only superficial ICT involvement.
3. A tidal wave of new enterprise software solution spend is expected in 2019
Many organisations have held back enterprise solution upgrades or replacements, either adopting a ‘wait and see’ approach to cloud, or delaying until their existing vendors catch up with technology.
4. SaaS is improving satisfaction with change management and allowing businesses to innovate faster
Over 40% of executives reported that encouraging staff adoption of enterprise solutions remains a major challenge, while a further 45% indicate it remains a minor challenge. In short, 85% of organisations struggle to enhance staff uptake of new processes demanded by enterprise solutions. Interestingly, organisations with a preference for SaaS reported significantly fewer challenges with getting people to adopt cloud services. In-depth interviews indicate that this is because once organisations eliminate technical infrastructure concerns, their attention turns to finding new ways to work and compete.
5. Cloud myths that just won’t die – security, cost and integration
Despite Australia being a world leader in enterprise cloud adoption, this study unexpectedly revealed that some market segments remain in the grip of cloud myths. While most (80%) of interviewees across all industry sectors believed their organisations’ executives had a passable or higher level of understanding about cloud services, the organisations that stated a preference for on-premise services rated ‘security’ as the primary reason for not moving to cloud services. Other reasons cited for avoiding cloud deployment of enterprise software were utilising existing IT infrastructure, and integration with existing or legacy on-premises software.
The IBRS research also found that most businesses agree they can’t wait any longer; 2019-20 is set to be the year for enterprise software upgrades and replacements.
However, IBRS says the research also revealed that upgrade and replacement plans vary greatly between different industries:
- Utilities, Water, Ports & Airports: A staggering 92% are planning to replace ageing or buy new enterprise solutions within the next two years, though they have the lowest ratio of projects already underway among all industries (just 13%).
- Aged care, disabilities and social services: These organisations are undergoing significant structural change due to recent legislation and a competitive market model. About 74% of organisations in this category will replace or adopt entirely new enterprise solutions in 2019. A further 11% are upgrading existing solutions. This represents a tidal wave of change for organisations in this industry sector in 2019.
- Education: Nearly three-quarters (72%) of educational institutions (higher education, vocational training, colleges) are planning to replace or adopt new enterprise solutions in 2019. 31% of educational institutions are also upgrading existing solutions.
- Local government: About 58% of councils are looking to upgrade existing enterprise solutions this year, with nearly half looking to procure entirely new solutions. Local government executives saw cloud services as being essential for the delivery of greater citizen engagement.
- State and Federal Government: State and Federal Government agencies have a greater proportion of up-to-date enterprise solutions, compared to their local government counterparts. As a result, they have a lower, though still significant, investment profile for 2019 with approximately 31% of State and Federal Government organisations are planning to adopt new enterprise solutions, while a further 33% will be upgrading existing solutions.
- Financial services: A majority of financial institutions interviewed report that their enterprise solutions are up-to-date so are not planning significant upgrades or replacements in the coming year.
- Property and Infrastructure: Property and infrastructure organisations are least willing to adopt cloud delivery and have comparatively lacklustre plans for upgrading or procuring new enterprise solutions.