Legacy Applications Are Hindering Digital Transformation Initiatives

A 2nd Watch survey found that 80% of enterprises continue to run at least one-quarter of their business workloads and applications on-premises, mitigating transformation benefits such as lowered TCO, better agility and fewer risks.

2nd Watch, the global cloud services company, announces the results of a survey on enterprise cloud migration and business application modernization. A key takeaway from the survey, which included responses from 100 business and technology executives in companies with at least 1,000 employees, was that the vast majority of companies (80%) are still running workloads and applications on-premises and it’s hindering their digital transformation initiatives. Meanwhile, one-third (33%) of respondents said their biggest challenge in modernizing legacy applications is a lack of skills or expertise, while about a quarter struggle most with lack of budget and investment (26%) or outdated processes and tools (25%).

Organizations are being driven to digitize their business models and are “lifting and shifting” their legacy applications to the cloud as a result. But this isn’t enough. Simply moving to the cloud doesn’t provide companies with the highly sought-after benefits of lowering their total cost of ownership, increasing agility, and decreasing risks. Applications need to be modernized and optimized for the cloud as well. 2nd Watch’s survey sought to understand where they see the application migration and modernization industry heading, what they prioritize, and how they will focus on application modernization to ensure a digital-first strategy that accelerates digital transformation. The results, which 2nd Watch published here, showed some surprising trends:

Legacy applications are hindering digital transformation, and many executives continue to run workloads and applications on-premises

• More than three-quarters (79%) of respondents affirm that legacy applications are hindering their organization’s digital transformation initiatives.
• 80% of respondents continue to run at least one-quarter of their business workloads and applications on-premises, with 52% running more than half of their workloads and applications on-premises.

Cloud migration is driven by reducing technical debt, and most are using more than one cloud

• Reducing technical debt is ranked the number one driver for cloud migration, followed by reducing time to market / product agility and reducing costs.
• However, this ranking varies slightly by respondent title. C-suite respondents are most driven by reducing costs, and VPs are most driven by reducing time to market. Digital transformation is among the top-ranked drivers for directors.
• Respondents are moving or have already moved a wide variety of workloads to the cloud. The most common are Databases, CRM and ERP applications, websites and web apps, and BI/data warehouse/data analytics tools.

Modernizing legacy applications is critical, but lack of skills, limited budget, and outdated tools create challenges

• 91% of respondents agree or strongly agree that application modernization plays a critical role in their organization’s adaptability to rapidly changing business conditions.
• Reducing technical debt was the main driver for application modernization, followed by reducing time to market and reducing costs.
• C-suite and VP respondents ranked reducing time to market higher than reducing technical debt. Digital transformation initiatives remain one of the top drivers for directors.

Modernization will continue in 2022 and focus on cost savings, customer satisfaction, and innovation

• Only 11% of respondents have made significant progress, and almost all (99%) have not met all their initial modernization objectives.
• Modernization objectives are not all focused on the same areas of improvement. 23% of respondents say cost efficiency and savings are most important, while 22% focus on customer experience and satisfaction, and 19% on innovation and creating new revenue-generating products and services.
• Most (41%) plan to spend 21-30% of their organization’s IT budget on modernization in 2022. About a quarter (27%) plan to spend 11-20% of the budget on modernization.

“The data mirrors what we’re hearing from our customers, which is that digital transformation is a top priority and most companies still have a long way to go in terms of migrating their workloads and applications to the cloud,” said Chris Whaley, EVP of Cloud Solutions and Sales at 2nd Watch. “As companies continue this journey, their biggest challenge will be finding people with the advanced cloud skills to help them. Partners with the requisite experience and resources will continue to be crucial to this process.”

Source: 2nd Watch media announcement