Published on the 16/02/2016 | Written by Newsdesk
One of the single biggest barriers to digital strategy is the impact of capital depreciation and multi-year licensing contracts…
That’s according to Fronde CTO James Valentine, who noted that nimble start-ups are using the cloud, mobile, social media, the Internet of Things, and analytics to create new ways to take market share from incumbents. Fighting back, apparently, depends on taking a similar tack. “Traditional businesses must invest in digital transformation programs both to adapt to the threat and to capitalise on the growth opportunities these new technologies can present,” he said.
Valentine added that “Unfortunately for established businesses, they often rely on legacy systems that are neither easy nor cheap to replace. Compared with start-ups, [which] are not locked into any technology, this weakens traditional businesses.”
According to Fronde, standard procurement practices include multi-year software licensing agreements and capital investment; the company said these agreements cannot usually be changed if the company experiences operational or strategic business changes, locking the organisation into potentially high residual costs.
“Companies who let themselves be locked in to on-premise equipment or software licensing agreements will find it difficult to accelerate digital transformation initiatives, which in turn makes it difficult to compete in the current marketplace,” said Valentine.
