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CEOs and CIOs face a dilemma. They understand the need for digital transformation and the investment it requires, but they also have to deliver value to their existing client base and for their stakeholders.

They know they have to fundamentally transform their organisation and its infrastructure but this must be done without disrupting existing services and sources of profit.

They challenge they face – of laying the infrastructure foundations for the digital future while sweating their current assets, was the subject of a major Europe-wide research study by IDG Connect for global enterprise communications giant Level 3.

There is a clear recognition of the disruptive power of digital. Some 60 percent of respondents said current IT investment is focussed on digital transformation initiatives designed to deliver future growth and business expansion, rather than on simply maintaining existing applications and services.

Business and technology leaders have a difficult balancing act to perform between maintaining existing systems, developing new ones and devising strategies to move from old to new platforms. This is not just a question of technology, though technology is the enabler of digital transformation. It is a question of both business and service delivery models.

In a sign of how difficult it is for mature organisations to carry out the sort of transformational changes that digital requires, the survey found that lower total cost of ownership was the number one driver of transformation efforts, with greater product and service innovation coming second. The list of top digital transformation drivers further illustrates the balancing act required by business and technology leaders:

  • Reduce the cost of IT service delivery by optimising legacy infrastructure (57 percent).
  • Support greater product and service innovation (51 percent)
  • Improve customer experience and interaction (50 percent)
  • Address globalisation requirements (47 percent)
  • Streamline supply chain (39 percent)
  • Meet government industry compliance guidelines and regulations (36 percent)

The focus on cost was the number one driver across all geographies and all sizes of business, but the headline figure signifies something more than any good organisation’s constant drive to improve efficiency, says Andrew Edison, SVP Sales EMEA at Level 3.

According to Edison, “Digital transformation requires simplifying your current environment and embracing cloud and microservices. It requires taking Agile and DevOps approaches out of your dev environment and applying them to integrated business and tech management teams to speed the creation of new products and services. “

Cloud is the well-established mechanism to accelerate this process and the IDC-Level 3 survey found private cloud is outstripping the use of public cloud. Those surveyed reported on average that more of their organisations IT services and applications are currently hosted in private cloud (54 percent). They expected this to rise to 63 percent in two years’ time.

These figures reflect the practical limits organisations face in moving applications and services to the public cloud – the need to sweat existing data centre and software assets, questions of security and compliance to say nothing of keeping control of business critical intellectual property.

The predicted growth of private cloud though, also reflects the reality of the emerging digital economy, with market leaders building new partnerships and alliances, to create new products and shorten innovation cycles.

They are also developing new platforms for new industries. Examples of this are the emergence of smart cities and connected cars, where leading players in sectors as diverse vehicle manufacture, government, civil engineering, insurance, media and entertainment are creating new industries on platforms that can only exist in the cloud.

The direction of travel is plain, says Edison. “The need for speed, agility and flexibility will only grow,” he says, “That means adopting a hybrid infrastructure and moving towards standardised, industrialised applications, processes and services to run the organisation efficiently and free up resources for innovation. “

Digital leaders are already changing their business models to match the new technology-driven opportunities they see. In addition to more external partnering, they are changing internal structures from traditional functional silos to one where smaller, mixed teams of sales, marketing, service, product development, production, and technology staff are co-located and focussed on delivering for a single customer segment.

To meet this need Level 3, like other service providers, is offering strategies which optimise existing datacentres and infrastructure and allow the adoption of cloud offerings, such as enterprises security as a service and infrastructure as a service.

“We think this approach, where the network becomes the platform for both digital innovation and driving down day-to-day operational cost, can give enterprises the tools to face the future with confidence,” says Edison.

As organisations face the task of rapidly making the best use of Big Data, mobility, Internet of Things, social network platforms, the ability to seamlessly connect people, places, partners, applications and devices has never been more important. Ultimately it will define an organisation’s ability to maintain and grow not just its customer base but also its long-term prospects.

For more discussion on this subject and more information on Level 3 Communications, one of the world’s leading communications and services providers, follow this link

IDG Connect surveyed executives, CIOs, CTOs, CDOs, CISOs, and managers in in organisations from 25,000+ to 500+ employees, with multiple offices worldwide and based in the UK, France, Netherlands, Belgium and Germany