How Digital is Changing Application Management Services

Applications are at the heart of digital transformation. The growth of cloud computing and the rapid adoption of As-a-Service solutions are changing the way enterprises deliver products and services to their customers. Because of the increased appeal of Software-as-a-Service (SaaS) offerings, especially in the service of core enterprise applications, money spent in shadow IT across industries is increasing more than 60 percent a year. Meanwhile, IT spending in applications is growing at 6-8 percent compounded annually.

At the same time, agile and DevOps methodologies are reinventing the way development and operations teams design and deliver these applications. And new practices like design thinking and Kanban are clashing headlong with the way enterprises have traditionally maintained their legacy application portfolios—workloads that are still firmly entrenched in the process descriptions and service-level agreements of fixed-price contracts.

These multiple layers of simultaneous change are prompting those in charge of enterprise applications to redefine how they consider their budgets and how they make sourcing decisions. In essence, they must expand their objectives from local optimization to lifecycle management—and prepare their team to be able to take a business idea all the way from inception to product retirement.

This means internal IT will have to give up developing software and module testing and move into the role of technology and services broker. It also means the future of application management will need to include these Top 5 rules of engagement:

1. Translate business needs into business opportunities. This requires IT to shift from a close understanding of technology to a close understanding of the business so it knows how to create solutions with the right technology and partnerships. Application managers need to be proactive. The onus is on you and your team to investigate new technologies and trends and define the specific business opportunities they make possible for your organization.

2. Design solutions with partners. The days of “buy-vs-build” decisions are over. Today, the decision is more complex: buy vs. build vs. re-use vs. subscribe vs. partner. By doing what is right for an enterprise, IT should now play the role of a technology-savvy business solution architect. If both buyers and sellers of IT services consider this change in core competence an opportunity, the end result likely will be more advantageous for all involved. Taking into account whether you are in proof-of-concept mode or in scale-the-working-solution mode will determine how you partner.

3. Select and broker components. It’s true the existing SaaS solutions on the market may not fully cover all your requirements, but this does not mean you must start building the solution from the ground up. We’ve graduated from having to use system integrator (SI) providers for large-scale SI projects. The boundaries between “service” and “product” are blurring, and this brings multiple IT providers into play: those that provide components as services and those that add know-how and competence to their services so they become products. Enterprises must carefully consider how they can leverage various types of IT vendors and solutions in the marketplace to build and modernize their application landscape.

4. Create an initial solution. Don’t guess what the market needs—test it. DevOps and continuous delivery now allow you to build quick solutions and test them with real people. Instead of simply testing whether the software works, test whether it is what the market needs. Speed in deployment allows you to try two variants of the same feature with the market and keep the one that works best. Concentrate on creating the Minimum Viable Product (MVP), the version of the product that allows you to collect the maximum amount of learning about customers with the least amount of effort.

5. Release a solution iteratively, then review, refine and enhance. Once you have the MVP, focus on the speed of adoption before you put efforts into large-scale stability. The success rate of an application depends on how fast you can incorporate features the user community appreciates and needs, whether internal or external. Iterative releases of the solution will ensure continuous traction with the user community and increase its adoption. Make sure you have an architecture runway to prepare the way for high availability and stability.

I discuss the future of application management and what it means for the enterprise architecture in a recent ISG Smartalk™, How Digital is Changing the World of Application Management Services. Click here for the replay.

About the author

Prashant works with enterprises to shape their operating models for a digital journey and brings 20 years of expertise in all aspects of applications and platforms, from designing transformations through the whole sourcing lifecycle. Prashant’s experience spans a range of industries, including Financial Services, Telecom and Media, Automotive and Utilities, and a range of geographies, including Europe, the Americas and India. Recently, he helped a Fortune 100 automotive giant consolidate its next-generation sourcing for applications, executing digital transformations right up to application management. He has also structured and run a digital transformation strategy and multi-project execution for a large logistics firm in the Nordics and set up a captive offshoring unit for agile product development in India for one of the world’s largest publicly-listed European entertainment companies.