It’s time to eliminate your IT dinosaurs and Jurassic processes

James Rogers
VP Global Revenue | March 20, 2020

This is a vital moment for businesses large and small. As we find ourselves grappling with a harsh global reality, the time is now to bring together people and utilize the right tools to continue moving the business forward.

Unbelievably organisations aren’t just facing challenges from the inability to read & write emails from home, nor utilize widely accepted video conferencing mediums such as Zoom, Hangouts among others. The biggest challenge stems from within!

Now is the time to push the pedal on innovation and revenue model fortification efforts. You cannot maintain your strategies and existing resources in hopes of riding the tide. You need to eliminate that which is holding you back from being agile and innovative. Chances are it’s your set-in-their-way IT team.

Today, the single biggest barrier to adoption of new age enterprise tech is an IT team's incessant desire for custom coded programs.

How often have you heard your IT managers and administrators tell you that a new tool, regardless of its capability to transform your day-to-day business and impact top line growth, is not feasible due to implementation challenges that range from integrations with legacy systems and data security? Have you also been told that it’s perhaps better to simply ‘build the tool internally’ than invest in something that’s commercial and off-the-shelf? If yes, then you are working with tech dinosaurs trying to justify their own existence. Period.

As industries become more dynamic, complex and heavily technology-driven, legacy processes and IT models do not cut it. “Build only” mentality rarely accommodates disruptive trends and, during particularly tumultuous times, lengthens your effective response time significantly. None of this is desirable. If your goals are ambitious and the times are fast-changing and challenging, you cannot hope to build solutions from scratch every single time. In fact, it is down right ridiculous to choose to build a solution when something tried-and-tested is available commercially and works to your agenda. Why are you willing waiting 6-18 months to deliver a halfway capable solution (that very likely won’t deliver on time) when you could be up and running in weeks?

When growth is halted by [IT] hesitation

Allow me to share our typical experience with S&Ps in Southeast Asia – a hotbed of hyper-growth and super-app leadership.

While seemingly tech-forward, many traditionally large enterprises here, across sectors like FSI, Insurance, and Telco, display restraint when it comes to showing SaaS leadership. At Perx, having worked with large scale enterprises all over Southeast Asia, we have realized that by and large, companies are holding back when it comes to SaaS adoption not because of the apprehensions of top management but because of the middle layer traditional IT (through which most department heads must go through) that continues to be anchored to the idea of on-premise, hosting solutions and internal archaic regulations.

It is easy to assume that mid-level IT exists only to ensure the status quo – day-to-day operations, work on business continuity and contribute to incremental change efforts. When in fact, they are critical change leaders and change drivers, especially in large setups.

When tasked with the challenge of driving digitalization efforts of scale, mid-layer IT, speaking anecdotally, often shows an aversion to integrating commercially available, battle-tested solutions and an acute preference, almost instinctive at times, for building tools internally and deploying on-premise.

We encounter these hesitations almost on a daily basis, even from companies who claim to be ‘SaaS’ savvy. They cite red herrings like security and poor server utilization as the reason for why they’d rather build than buy. And this is most typically at the recommendation of their IT hubris.

We get it.

Writing the big cheques for a new system is a big deal and must be done with due diligence but is the same due diligence given to what your existing set up is costing the business from moving forward?

Before even treading on that path, there needs to be a recognition of the fact that new-age innovative SaaS tools can add tremendous value to the company and fast. One of the things I always caution large enterprises about is that if they’re not adopting innovation and using innovative tools now to upgrade the way they do their business, it is guaranteed that another company, possibly a competition or a disruptive upstart, will take the lead in adopting new-age tech to capture markets quickly and eat into their revenues faster than their ability to play catch-up. This is just how it works today (and why Perx only works with challengers and innovators vs. traditional industry giants). Do you really think you are too big to fail? Haven’t we all learnt our lessons by now?

Sadly the IT hubris continues to play by the convention. This arm of the company, I have come to understand, is the most risk-averse entity in any company, when in fact it is possibly the only department that can take calculated risks for moving a company forward by advising on and investing in product trials and controlled experimentations of scale. Instead, when tasked with making an IT purchase, hardware is almost always at the top of the wishlist. Existing software renewals, server upgrades, storage and more such take another big portion of the budget. Little of whatever remains is then assigned to buying new projects, technology, and tools. And if it comes down to it, there’s that inherent bias towards investing in building in-house capabilities.

Building creates equity, but it’s not fast nor cheap

Somewhere between being enterprises that stored important business information on paper to computer systems, we welcomed the age of computing and IT. And with the emergence of SaaS, we ushered in the age of IT productivity.

Today, nearly 80% of all businesses in the world rely on some kind of SaaS stack to run their day-to-day functions and operations. And two of the biggest reasons for the widespread adoption of SaaS is the ease of service delivery and cost-effectiveness. Time and again it has been proven that good SaaS can quickly transform an organization’s systems to future state and help them achieve more in a short period of time. Yet, it seems organizations – typically large, conservative setups – even in this day and age find SaaS threatening.

We often hear from conservative companies that a new-age technology like AI is an indulgent risk. Alongside, a belief that runs deep-rooted is that traditional companies cannot (and perhaps should not) solve a problem – especially an old one – with a tech that is either too new or too complex. Then, there’s also a prevalent notion that SaaS is, by and large, costly no matter the area you are applying it to in addition to being insecure, unstable, difficult to customize and time-consuming to integrate. Which is why they’d rather prefer to build, not buy.

Yes. Rewards for getting it right are high, but the pitfalls of failure can drag these companies down far and deep. At this point in most conversations, we also ask these companies and their IT teams to consider the following:

If a time-tested, commercially available solution can be modified to fit specific needs and deployed easily, why build?

It’s a known fact that only about 34% of IT projects finish on time and run 45% over budget on an average, delivering nearly 56% less value than what set out to achieve. Keeping aside what’s lost in terms of productivity and motivations, the objective cost of a failed project is too high and therefore too risky.

Furthermore, when building from scratch, large companies often ignore not only the high cost of actual development and tool maintenance but also the opportunity cost of such efforts.

When dealing with the global, fast-changing, mobile markets, companies today need to be ready at all times for whatever the world throws at them. Imagine having to build a stable, functional martech tool in time to respond to a market disruptor? With the average CMO contract being 18 months, large cos cannot afford to deliberate internally on on-premise vs. SaaS or build vs. buy. Keep in mind that disruption often occurs around the edges and far from the line of sight. And consumer industries – retail, banking, insurance, utilities – are almost always more rife for disruption than any other. As mobile becomes more and more prevalent, consumer companies will want to quickly invest in new dimensions of scale and sophisticated strategies for growth, revenue and customer engagement. In these conditions, inaction will cause organizations across these sectors to become obsolete – as many as 75% of laggard S&Ps therein – within the next 10 years flat!

Current level of disruption VS Susceptibility of future disruption

Source: Accenture Research: Industry movements on current disruption and susceptibility to future disruption, 2011-2018

All of this points to a simple fact: Unless a large organization can get-to-market fast and effectively so, building a tool is almost always going to cost them and in more ways than imaginable.

Most build versus buy conversations ask that you arrive at an estimate of all costs and capabilities. But the issue is not about where the averages favor, but the possibility of their unpredictable market situations and a company's readiness to tackle it.SaaS and getting to a state of viability fast

Imagine if a company could simply pick a battle-tested tool, one that could be implemented fast and gives them the confidence in its ability to live up to staunch SLAs for performance and stability. Imagine having the ability to roll out the capability fast and in-time to tackle a new market reality, whichever way the wind blows.

This is what good SaaS does. Period.

SaaS creates a level playing field between a disruptor and an incumbent.

SaaS allows companies to add transformational value to their customers fast.

SaaS allows companies to respond to market changes in a timely and cost-effective manner.

When SaaS aligns with the digital transformation strategies and systems of an organization, it can become a source of extraordinary competitive advantage.

When aligned with digital transformation strategies and systems of an organization, especially in the face of disruption, SaaS ought to be a frontrunner in IT budget spend efforts. As per a Deloitte report, higher-maturity organizations are 3x more likely than lower-maturity organizations to report net profit margins and annual revenue growth by investing in digital initiatives this year.

As a SaaS platform leading the way in aiding digital transformation efforts, we want to champion IT departments and help them succeed, rather than focus on their shortcomings. Here, we understand as do our clients that the customer needs to be owned by the business, and not IT. Marketing and CX roles, for that matter, are in place to put experience and the centricity of the customer FIRST. This is not something that is lost on our customers, frankly, when they leave IT to have the last conversations. They understand that only if the business stands to truly benefit and reep the rewards of a new tech will they have any chance of getting the much needed and well guarded sign off of IT. The onus is then on the IT teams to take the decision on much the same lines, instead of trying to adhere to conventions and playing under known biases.

It’s time to ask: Is your IT team taking heed or are they keeping your digital transformation as tomorrow’s plan when it should have been yesterday’s execution?

——-

Over the past 90 days, we’ve been monitoring the digital revenues our large B2C clients have generated with the Perx Customer Engagement & Loyalty Platform. Even in this time when uncertainty and doubt fill the minds of the uninitiated, there has been a 50% increase in revenue and steady trajectory of MAU (Monthly Active Users) for our existing clients.

When the dust settles and a new economic reality is upon us, where will your business stand?

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