When asked what the top business priority was, the majority of respondents in financial services (38 percent), healthcare (24 percent) and retail (28 percent) named innovation with new products/services, while their counterparts in the public sector cited cost-cutting (31 percent). However, when asked what the top IT priority was, cost reduction ranked highest across the board in all vertical sectors.
Of respondents across the vertical sectors, 32 percent cited cost reduction as the top priority while only 9 percent cited allocating additional budget for innovation. These results demonstrate a disconnect between what the IT department believes it should be doing, and where their resources are actually being applied.
At the same time an overwhelming majority of the respondents in all sectors – 58 percent – named application modernization as the best way to achieve their cost-cutting goals. Application modernization beat out other options such as reducing workforce (17 percent), rip and replace projects (16 percent), and rewriting applications in a more modern language (10 percent). In addition to reducing IT costs, application modernization was cited as a leading driver of innovation. 63 percent of respondents reported that application modernization has enabled them to support innovation and future growth.
“Despite the mainstream message that we’re recovering from the global recession, according to this research, IT departments are still laser-focused on cost savings and cost avoidance through applications modernization,” said Stuart McGill, Chief Technical Officer, Micro Focus. “CIOs and IT professionals are being asked to do two things at once: cut even more costs and innovate to meet customer demands. They should remember that the savings they make by migrating their mainframe applications to more modern architectures can actually be reinvested into new projects, so they can in fact achieve both aims at the same time.”
The survey revealed several additional data points on how companies in the different vertical sectors and regions are modernizing their applications, their benefits and ROI:
- When asked what benefits they’ve realized with application modernization, 70 percent of respondents cited reduced operating costs, 63 percent cited support for IT systems for future growth, 60 percent cited increased speed / reaction time and 55 percent cited an increase in flexibility / agility.
- At 38 percent, the US spends a larger percentage of its IT budget on modernization than Germany (36 percent) or the UK (28 percent).
- 61 percent of respondents are currently using a mainframe as a core element of their infrastructure. 75 percent of US respondents are operating on the mainframe, as opposed to 67 percent in Germany and only 46 percent in the UK.
- 52 percent of respondents had already invested in cloud computing or will do so in the next year, while 29 percent of organizations saying they had no plans to do so in the future.
- The healthcare industry is leading the way in cloud computing, with 24% of respondents having already invested in the cloud.
- 64 percent of respondents, including 71 percent of US companies, are migrating their core applications to Windows environments, versus 20 percent migrating to Unix / Linux environments.
