Technology investments really do pay off; so does DevOps

Latest CA survey links enhanced application development to revenue and business growth.

A few years back, Nick Carr and others predicted information technology would become so commonplace that it would cease to be a competitive differentiator.

Data Center at CERN 2 -photo courtesy of CERN Press Office
Photo: CERN Press Office

Well, it doesn't seem to have happened yet. A new survey finds that enterprises that dive into technology investments tend to come out ahead in the end. Furthermore, those enterprises that embrace DevOps are proving to be a step ahead of the competition.

These are the takeaways of a study of 1,450 executives, commissioned by CA Technologies, which finds that technology-driven enterprises who are investing in new innovation and development capabilities are growing revenue at more than twice the rate of those not-so-technology inclined.

The survey data also indicates that enterprises are backing away from IT outsourcing, and bringing more software development back in-house. Over a four-year period, the percent of software development done in-house will have increased 11 percentage points, from 33 to 44 percent. This maps to another industry survey by Computer Economics that also finds a reduction in IT outsourcing.

As the survey's authors put it: "Bringing more software development back in-house is a recognition that these skills need to be a core part of enterprises’ DNA, but sometimes the pressure to expand your application footprint means you can’t grow skills organically fast enough. When this becomes an issue, enterprises are turning to software acquisitions as a way to get the talent and technology they need."

A surprisingly high level of software acquisitions -- presumably meaning buying a software developer or the rights to code -- point to the evolution of businesses of all types to software companies. Fifty-two percent report that they have either made a software acquisition or plan to in the next 12 months. Only 19 percent say they have no plans to do so.

It's not clear how cloud factors in this equation. One school of thought would suggest companies would be less intimately involved with application development, since they may be using cloud services. However, it's also likely that many enterprises -- from outside the software industry -- are becoming cloud service providers themselves.

The CA study's authors created two buckets for comparison: "Leaders," who are 24 percent of the total, versus "Laggards," who comprise 16 percent. Leaders are defined as those who are highly/very effective at responding to the challenges of today's economy; have delivered four or more customer-facing applications in the last year; and have already made at least one software acquisition or will in the next 12 months.

The laggards, on the other hand, are not at all/slightly/moderately effective at responding to the economy; have developed three or fewer customer-facing applications in the last year; and have not made a software acquisition and have no plans in the next year.

Leaders were twice as likely than laggards to report business revenue growth over the past year -- 35 percent, versus 17 percent of laggards.

The different lies in attitudes toward software and application development. In fact, the study found that over 50 percent of companies surveyed either have made, or will make in the next year, an acquisition specifically to add talent and strengthen their development capabilities. In addition, almost half (49 percent) of the leaders have adopted DevOps methodologies and technologies to speed application delivery, versus only six percent of the laggards.

In addition, the survey shows, leaders are far more likely to use external metrics  (such as revenue and customer experience) to measure DevOps success—58 percent of the Leaders versus only 26 percent of the laggards. "DevOps needs to become a best practice in your organization if you are to succeed in this new application-driven economy," the CA report states.

The survey also shows leaders manage IT as a business and report better overall IT performance -- they're  far more likely to frequently use software tools to manage IT as a business – 43 percent use them to share KPIs with the business (versus six percent of laggards).  In addition, 50 percent to evaluate shifts in IT investments (versus 12 percent of the Laggards) and 53 percent to evaluate whether IT is achieving their KPIs (versus 20 percent of Laggards).

As a result, 42 percent of line of business executives in Leader organizations report being “completely satisfied” with IT’s ability to understand business needs  -- versus only six percent of laggards.

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