New research by Rackspace Technology conducted in association with AWS, finds that global IT organizations have been slow to modernize key applications, including customer resource management (CRM), enterprise resource planning (ERP) and human resources (HR) systems. Moreover, the study suggests that failure to modernize key apps and data will limit organizations’ ability to deploy and benefit from cutting-edge technologies such as artificial intelligence (AI).
According to the survey of 1,420 global IT leaders across industries, 75% of Indian respondents agree they will not benefit from AI if they fail to modernize legacy apps and data. Although survey respondents identify increased security (64%), improved efficiency (54%), and increased agility/flexibility (42%), followed by cost (44%) as the leading motivators of modernization – and ERP, CRM, and HR as the apps that most need upgrading – local organizations are still dragging their feet on updating legacy infrastructure. Of legacy infrastructure that has not yet been modernized, only 25.72 % of workloads are considered noncritical, but 24.09 % of legacy infrastructure has “not yet been assessed.”
“Many organizations, even in advanced stages of their cloud journey, recognize that the three vital apps requiring upgrades are central to their core business, said Sandeep Bhargava SVP, Global Services and Solutions, Public Cloud Business Unit, Rackspace Technology “These apps are both crucial and demanding, posing challenges. The realization by leaders is promising, as app modernization empowers them to leverage emerging technologies. The specter of AI’s potential benefits has compelled organizations to shed inertia and prioritize modernizing their core systems to avoid missing out on opportunities”, he continues.
Who Is Leading Modernization?
The survey also points to gaps in the leadership of modernization efforts. Only 30% of local respondents say they deploy cross-functional teams as part of modernization, while only 48% use tech vendors and only 33% deploy external consultants. Overwhelmingly, modernization initiatives are led by IT departments (68%) and executive leadership/C-suite (46%).
The Benefits & Challenges of Modernization
When survey respondents were asked to identify the top expected outcomes of modernizing, efficiency led the way (54%), followed by the ability to adopt more advanced technologies (e.g. AI) (40%), and greater speed and agility (42%). Respondents also noted modernization has resulted in better data management, integration, quality, and lowered data costs.
The most critical apps and data to modernize are CRM (57%), enterprise (43%), bespoke apps (26%), HR (50%), business intelligence (35%), data storage (58%), data analytics (59%), governance and security (49%) and data integration (49%).
However, globally organizations still face unforeseen challenges to modernization, including limited resources (28%), a culture that is resistant to change (46%), integration challenges (43%), lack of senior buy-in (41%), lack of a clear roadmap (9%) and communication between stakeholders (8%).
If organizations fail to modernize legacy apps and data systems, respondents believe it will result in increased costs (32%), integration challenges (30%), lack of innovation (29%), the probability to miss out on the ability to adopt advanced technologies (28%) and decreased efficiency (26%), lack of innovation (26%) and poor security (23%).
Survey Methodology
Commissioned by Rackspace Technology and AWS, Coleman Parkers Research was surveyed between April 27, 2023, through May 25, 2023. The survey is based on the responses of 1,420 IT decision-makers across manufacturing, digital native/technology, financial services, retail, government/public sector, and healthcare sectors in the Americas, Europe, Asia, and the Middle East. There are 120 respondents in Singapore.
