Inability to Innovate is Stifling Competitiveness in a Time of Economic Volatility
Key Finding From MACH Alliance Annual Survey of Global IT Decision Makers
- Legacy is still holding companies back, with one in five companies spending over half their IT budget on upgrades
87% of those who have increased MACH are more responsive and ahead of the competition
US leadership lacks understanding of MACH benefits despite the biggest legacy debt
MACH Alliance, the group of independent tech companies dedicated to advocating for open, best-of-breed technology ecosystems, today released the results of its third-annual Enterprise MACHified research, conducted by independent research firm MEL Research in December and January.
The study surveyed 500 tech leaders from Australia, France, Germany, UK and the US to understand how MACH investment has accelerated over the past 12 months and what impact that is having on organizations’ ability to thrive in a difficult economy. The output shows the urgency to innovate in order to stay ahead in a rapidly changing business environment, with MACH (Microservices, API-first, Cloud-native SaaS, Headless) as a means to respond to economic volatility.
MACH-advanced companies move faster
Four in five decision makers state that volatility in the economy has impacted their organizations’ attitude toward MACH. This has been one of the key drivers behind 85 percent of organizations increasing the percentage of their MACH infrastructure in the past 12 months. Those companies cite increased ability to respond to changes in the market faster, to build and implement new functionality quicker and reduced costs. They’re also more likely to say their infrastructure is keeping up with customer demands and that they’re ahead of the competition than those with lower MACH adoption rates.
US is catching up with Europe
A lack of board/leadership support is more likely to be a barrier to MACH adoption in the US than the overall sample (32% versus 27%). This could signal that MACH is facing a perception challenge in the US among non-IT professionals, indicating the need for education and awareness to highlight the value and benefits it can provide. At the same time, US organizations which believe they are significantly ahead of their competition are more likely to have significantly increased the proportion of their infrastructure which is MACH (47 percent), than those who haven’t (26 percent).
While the survey shows a decline in the proportion of budgets that are being spent on technology upgrades since 2022 in the UK and Germany (from 39 percent to 32 percent in the UK, and from 36 percent to 31 percent in Germany), this has increased in the US (from 37 percent to 41 percent). Companies in the US also report the largest proportion of legacy tech. With 41 percent of organizations’ IT ecosystems still being legacy on average, there is a clear need for tools which can enable them to improve the ability to upgrade infrastructures at speed.
Time and money spent on upgrades is an expensive ongoing problem
The research found that not much has changed from a year ago when it comes to the time and money being spent on upgrade projects. Upgrading is evidently a burden which organizations are struggling to solve with over a quarter running more than 20 projects each year. One in five are spending over half of their IT budget on upgrades, and the same number say upgrades are taking up over half of IT teams’ time. In 2021, respondents said 40 percent of their teams’ time was spent delivering front-office upgrades, indicating that the impact of operating with outdated tech is snowballing. Gartner has forecast that global enterprises will spend about USD $856 billion on software in 2023. If a quarter of that was spent on upgrades, that would represent more than $200 billion that could be spent on innovation and improvement of digital experiences.
Investment is increasingly moving from front- to back-end
The research found front-end solutions are still receiving the most focus for investment, however, this is changing year-over-year. While 54 percent prioritized front-end investment in the 2022 report, just 39 percent stated this in 2023. In countries interviewed in both the 2022 and 2023 reports, the proportion who believe their front-office infrastructure is ahead of the competition has fallen from 75 percent to 68 percent. Organizations with 25,000 or more employees have the lowest level of adoption of MACH in their front-end infrastructure and take a more long term view on making MACH investments.
“The data tells us that too many companies are stuck keeping the upgrade wheel turning. If you add the cost of time and business stand still, the absolute cost is much higher,” said Casper Rasmussen, MACH Alliance President. “At the same time, fewer companies see themselves as agile early adopters, and fewer also see themselves as being ahead of the competition compared to our research a year ago.
“The pace of transformation is relentless but the cost of not innovating is much higher. While transitioning to MACH is no small undertaking, continuing the status quo is an ongoing, big undertaking, especially for larger organizations, which needs addressing. We’re not going to wipe legacy out of the picture overnight. However, those moving toward MACH are better equipped to mitigate future obstacles.”
What’s ahead and methodology
The research was executed by independent market research leader MEL Research. Respondent titles included CIO, CTO, Vice President, Senior Vice President and Senior Manager. All represent organizations with at least 5,000 employees and have a revenue of at least $500 million annually.