New Research Looks at the High Cost of Outdated Enterprise Technology

By Sonja Keerl, President, MACH Alliance

Investing in enterprise architecture and technologies that make businesses more digitally advanced is on the rise. And it’s not a trend. It’s what separates those companies that are future-proof from those that are not.

Amid the ongoing pandemic, companies have sped up their digital transformation journeys, in part, to keep up with ever-evolving customer demands. Yet, according to new research conducted by the MACH Alliance in partnership with leading UK strategic insights firm, Mel Research, less than half of global IT leaders are satisfied with their ability to deliver customer experience improvements at speed. The ‘Enterprise MACHified’ 2022 study polled senior level technology decision makers (CIOs/CTOs, VP/SVP, Senior Manager) in the U.S., U.K. and Germany.

MACH technology, which stands for Microservices, API-first, Cloud-native SaaS, Headless, currently accounts for less than half of front and back-office architectures with the largest companies being the most advanced, according to the research. However, over the last year, the study found a roughly 20% increase in companies that have moved away from a monolithic stack to a best-of-breed, more flexible approach. This is a big step - a leap, even - in the right direction for businesses readying themselves for a sustainable and fruitful future.

The rise of composable

The ability to meet customers where they are is one driving factor behind the rise of composable IT architecture and headless commerce for businesses from retail to healthcare. In fact, technologies that empower organizations to be more digitally flexible and future proof are seeing huge investment money flowing in.

MACH Alliance's vendor members alone have accumulated over $2.5 billion in funding, bringing the estimated valuation of the vendor category to nearly $20 billion. And some of the larger companies that champion this type of best-of-breed architectural approach, like BigCommerce (NASDAQ:BIGC), a commerce platform with over 60,000 merchants, are proof that openness, flexibility and ease-of-use are competitive differentiators. Organizations that find themselves stuck in a tangle of rigid, outdated legacy technology simply cannot move fast enough to be able to scale.

Forrester’s Joe Cicman explained it best during a webinar he did with MACH Alliance last fall in which he said, “Customer journeys are not linear. And customers ⁠— not you, nor your platform⁠ ⁠— are in charge.”

Technology leaders must fully understand a customer’s connections across three dimensions, as Cicman explained: Devices, platforms, and channels and map their portfolio of experiences so that they’re present where customers are. Great customer experience leads to business growth, and it can only be achieved when businesses have technical autonomy to meet and exceed buyer expectations. If new features, functionality and CX offerings cannot be released at speed, buyers will go elsewhere.

The burden of upgrades

The MACH Alliance research also found that, on average, IT teams are spending 39% of their time delivering upgrades, with 28% saying more than half of their IT team time is dedicated to this. That represents a huge portion of time that could be focused on innovation and delivering customer experience improvements.

When we weighed the difference to this question between the current year and last year’s research report, which asked the same question, we found that little has changed when it comes to time and budget spent on upgrades. On average, companies are spending almost 40% of their IT budget on upgrades. This year’s survey found the average to be 37% versus last year’s 39% — not a notable difference and a figure that’s still tough to swallow.

With over half of IT decision makers expressing that they want completely cloud-driven infrastructures in the future (53%), upgrade costs should — hopefully — diminish over time. This would get considerable budget back into the hands of IT and innovation teams to develop new CX offerings and ways to advance the business. Upgrades continue to distract IT teams from innovating, with two fifths of respondents stating they carry out maintenance or upgrades every three weeks, and almost three quarters of those take more than a month, with 25% taking more than three months.

Better IT as a c-level area of strategic focus

With IT budgets forecast to grow faster this year than they have in a decade, IT leaders and the c-suite overall should prioritize investment in technologies that will future-proof and digitally advance their business as the commercial environment remains uncertain. This is ultimately an overall business initiative, not just an IT effort.

Technology should be a facilitator of innovation, not an inhibitor of it. If you feel like the latter is the case with your business, it’s time to make some changes.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.