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Why your technology stack must be aligned with your company's growth strategy

To optimize and better make use of software application investments, companies can perform an application rationalization audit.
Written by Vala Afshar, Contributing Writer on
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Composability will be a core pillar of business strategy. By 2023, organizations that have adopted a composable approach will outpace competition by 80% in the speed of new feature implementation, this according to research that identified the seven digital business transformation trends for 2023 and beyond. 

The driver for composable architectures is based on organizations investing in total experience strategies. In order to drive innovation, these organizations must attract the right people, which is becoming increasingly difficult in this scarce talent landscape. 

Research reveals that many senior IT leaders are now measured on employee experience (46%), which is almost as high as those measured against customer experience (48%).

In 2023, an increasing number of leading organizations will look at total experience (TX) as a means of improving the journeys of both customers and employees, particularly in the areas where they intersect. 

This strategy will create superior shared experiences and drive additional business value by reusing existing technology investments that are foundational to key customer and employee experience initiatives. 

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By 2026, Gartner predicts that 60% of large enterprises will use TX to transform their business models to achieve "world-class customer and employee advocacy levels." By 2024, organizations providing a total experience will outperform competitors by 25% in satisfaction metrics for both CX and EX.

Research shows that in order to deliver a high total experience, improved collaborative processes are needed between IT and business teams. IT is no longer just a technology enabler; IT now solves business-critical problems, tackles major business objectives, and helps develop competitive advantages with technology. This shift requires IT and business teams to work in closer collaboration for strategic objectives. However, 98% of IT leaders said that working processes between IT and business teams could be improved.

The data needed to create seamless digital experiences often resides across multiple systems. The average organization now uses 976 different applications, but many of these systems are poorly connected. The same research shows that the resulting data silos are a barrier to creating integrated user experiences for 90% of organizations. 

A main driver of improving the total experience will be your company's technology stack. Process improvements are a key priority for IT leaders. These process improvements begin with understanding the tools available to deliver the highest outcome with the optimal amount of time and dollar investments. Forty-six percent of senior IT leaders say making process improvements is a major priority for their organization over the next 12 months -- with many reporting that their existing processes are hindering progress. This push to improved processes is particularly prevalent in the communications, media, and technology (CMT) industry (60%), as well as the public sector (52%).

Businesses are scrutinizing costs now more than ever, and often the largest cost a company incurs is via its technology stack. With headcount ever-changing and an evolving customer base, companies often allow employees to adopt new technology in a decentralized fashion. This can solve their immediate pain, but often doesn't fit in with the overall strategy and ultimately leads to ballooning (and redundant) tech spend. A quick way to identify these costs is through an application rationalization audit.

This audit can include multiple departments, and will positively impact the bottom line from both a cost and efficiency perspective if you know how and where to look for overlapping systems and technologies. It will even make your organization more secure. 2022 CIO research shows that IT is leaning in to existing investments, rather than buying new technology -- most IT leaders (72%) prefer to update or upgrade existing solutions wherever possible, rather than replacing them. With growing economic headwinds, many organizations are looking to extract further value from their existing infrastructure instead of making investments in brand-new technology.

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Below is a three-point plan on how you can execute this type of audit quickly and efficiently in the new year, but first let's define what app rationalization is from ChatGPT:

Business application rationalization is the process of evaluating the use and value of business applications within an organization, with the goal of optimizing the use of these applications to support the business. This can involve identifying and eliminating unnecessary or underused applications, consolidating or standardizing on certain applications, and ensuring that the remaining applications are used effectively and efficiently to support the business. The goal of business application rationalization is to improve the overall efficiency and effectiveness of the organization by reducing complexity and eliminating redundant or unnecessary systems.

1. Start with your critical systems

Going into this exercise can seem overwhelming at first, which is why I recommend breaking this into three components -- Critical Systems, Mid Tier, and the Excess. Start with the foundational systems that your business relies on day to day. Have a decent understanding of what is integrated and why, and make these systems your audit foundation.

Once you have a list of three or four systems (it can be more depending on the complexity of your business), talk to different departments to see which apps they use, why, and what functionality they provide. Most likely there will be some overlap between critical systems and the tools they use on a weekly basis.

Finally, audit the Excess -- the small purchases that different departments and employees have made over the years that often stop getting used because they either cannot integrate, or have become outdated/obsolete after another tool was purchased to take its place. The full list of these can be tricky to track down, so lean on your IT team to assist.

2. Know your contract terms

For most Mid-market and SMB companies it's simple enough to track vendor contracts in a spreadsheet. Taking a look at the overall list, seeing dates the contracts run through, and the total cost of each contract can give you a quick snapshot of your Total Cost of Ownership (TCO).

Once you have a general grasp on TCO, it's time to list out functionality and to identify what problem each tool is solving. And once you have a framework of which tool is doing what, you can call in your critical tech partners for additional guidance and support.

3. Contact your critical and strategic technology partners

It's no surprise that most major technology companies are constantly enhancing their products, developing new features, and adding on functionality by acquiring other companies. Why does this matter? Because as a busy executive, you probably don't realize just how many features you have in your current subscriptions (especially the critical ones), and oftentimes businesses are overpaying for duplicative technologies.

Setting up a simple contract review with your strategic partners can often uncover features you didn't know you had, allowing you to shed tools (and cost) that perform the same function. This often leads to lower TCO and increased employee efficiency as it reduces the "swivel chair" effect (juggling multiple tools to retrieve customer cases, data, insights, etc).

Conclusion

IT is now measured by productivity, cost reduction, and experiences. Roughly half of all senior IT leaders are now evaluated on employee productivity (52%), cost reduction and optimization (50%), and customer (48%) and employee experience (46%). This varies between industries; for financial services and insurance, for example, 62% of senior IT leaders are measured on employee productivity. IT is also burdened with project backlogs. Three-quarters (74%) of respondents say project backlogs are preventing them from working on strategic initiatives. To overcome these challenges, organizations need to leverage APIs, automation, and low/no-cost tools to create connected customer and employee experiences.

There are no IT projects, there are only business projects. What applications are helping your company achieve its business outcomes? What business projects need more investments, and which ones can do with less? To better understand the business needs and desired outcomes, one must consider an application rationalization audit, mapping applications to project requirements, so that you can identify wasted spend and energies. This process is a team sport and it can be done efficiently. 

Taking the time to audit your tech stack does not have to take up hours on end. If you follow this framework, and empower the heads of your business units to compile a list of tech they use on a day-to-day basis, you can have a good understanding of all apps in use within a few days. An app audit is a great way to start the new year to declutter, gain a better understanding of your tech stack, and streamline both savings and efficiency

This article was co-authored by Brian Ferrara, senior account executive for high technology at Salesforce

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