Asset-intensive sectors primed for change

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by Brian Devlin, Industry Director, TechnologyOne

Why asset-intensive sectors have been slow to upgrade enterprise capability and how they will benefit.

While sitting further behind other industry sectors when it comes to uptake of new technologies, a staggering 80 per cent of Australasian utilities, water, ports and airports organisations surveyed intend to replace or adopt new enterprise solutions within the next two years, according to a recent study from IBRS, titled The State of Enterprise Software.

Study participants included senior technology and C-Level executives across industry sectors who provided insight into attitudes, expectations and plans for enterprise software.

Organisations from asset intensive sectors recorded one of the highest levels of short-term future intent to replace their enterprise solutions, yet have the lowest ratio of inflight projects (13 per cent) when compared with other participating industries.

These sectors are complex, highly-specialised, asset and/or project-rich environments, with organisations that have been more focused on asset and operational investment rather than new IT investment.

Further, many deferred on IT investment decisions as they adopted a ‘wait and see’ approach to cloud delivered solutions, or are waiting for existing solution providers to deliver functional parity with cloud-based versions of their offerings.

When asked to nominate the preferred enterprise solution delivery method, almost half (44 per cent) of the participating members of this sector identified an on-premise solution as the optimum.

Two factors underlie this trend:

  1. Asset-intensive businesses have a stronger requirement for capital expenditure than other study participant sectors, meaning enterprise solution delivery is based at least in part on accounting treatments, rather than on technology alone
  1. A preference for on-premise was found to be linked to perceived security concerns, suggesting that at least some market segments remain in the thrall of cloud myths, despite participants self-assigning a high level of cloud understanding to their organisation.

When asked to rate satisfaction with their current enterprise solution, 56 per cent of respondents signalled dissatisfaction, the highest level of any industry sector surveyed. This suggests the sector is, in fact, primed for an alternative to on-premise solutions, provided cloud myths can be allayed.

Cloud myths abound

The study uncovered that any preference for on-premise solutions was strongly linked to avoidance of the cloud, however it was based on at least one or more of the following erroneous beliefs; 1) a perceived security risk; 2) cloud infrastructure is more expensive and; 3) cloud services are inherently hard to integrate.

These three myths are just that—myths:

1. Most organisations simply cannot compete with cloud service providers when it comes to budget and capacity to manage complex cybersecurity. The Australian Federal Government and large enterprises’ adoption of cloud-first strategies and subsequent aggressive migration to cloud-delivered enterprise services illustrates the ‘thinness’ of the security excuse.

2. The State of Enterprise Software study has revealed that organisations moving to cloud services enjoy multiple benefits including; freeing up IT resources, reduced on-premise infrastructure investment and lower operating costs.

3. Cloud services are not more difficult to integrate when compared with on-premise solutions. Integrating with cloud systems, and particularly, Software as a Service (SaaS) solutions, has become a much simpler proposition, as most SaaS vendors will provide a list of integration options that have been tested and verified as scalable, robust and secure.

Pent up demand

The initial investment deferment by asset-intensive sectors could be regarded as organisations having ‘missed the cloud maturity wave’.

However, the pent-up demand for the 2020-21 period suggests that these organisations may be about to leapfrog other industries with innovations in asset lifecycle, portfolio and project management and customer service delivery.

By implementing cloud-based solutions now, these organisations can benefit from many new innovations and standards in cloud-delivered software that didn’t exist five, or even two years ago; including improved reliability, availability and scalability – with guaranteed service levels of greater than 99.5 per cent, and stringent privacy and security accreditations, such as IRAP and SOC3.

Hear an in-depth analysis of The State of Enterprise Software research from IBRS researcher and author of the report, Dr Joe Sweeney, at TechnologyOne’s Showcase events in Brisbane, Sydney and Melbourne this month.

Register for this free event to uncover the impact of these findings on the utilities and infrastructure sector.

This partner content is brought to you by TechnologyOne. For more information, visit https://www.technologyonecorp.com/.

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