MACH Alliance has published the results of its third-annual Enterprise MACHified research, conducted by independent research firm MEL Research. The study undertaken in December and January surveyed 500 tech leaders from Australia, France, Germany, UK and the US.
The research sought to understand how MACH investment has accelerated over the past 12 months. Furthermore, understand what impact that is having on organisations’ ability to thrive in a difficult economy. The report shows the urgency to innovate 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 organisations’ attitude toward MACH. This has been one of the key drivers behind 85% of organisations increasing the percentage of their MACH infrastructure in the past 12 months.
Those companies suggest an increased ability to respond to changes in the market faster to build and implement new functionality quicker and reduced costs. They are also more likely to say their infrastructure is keeping up with customer demands. As a result, 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.
The report suggests the need for education and awareness to highlight the value and benefits it can provide. At the same time, US organisations 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%), than those that haven’t (26%).
The research shows a decline in the proportion of budgets being spent on technology upgrades since 2022 in the UK and Germany. (From 39% to 32%in the UK, and from 36% to 31% in Germany). This has increased in the US (from 37% to 41%). Companies in the US also report the largest proportion of legacy tech. 41% of organisations’ IT ecosystems are still being legacy on average. The report suggests a clear need for tools which enables them to improve the ability to upgrade infrastructures at speed.
Upgrades an expensive problem
The research found that not much has changed from a year ago in the time and money spent on upgrades. Upgrading is a burden that organisations are struggling to solve, with over a quarter running more than 20 projects each year.
One in five spend over half of their IT budget on upgrades. The same number say upgrades are taking up over half of IT teams’ time. In 2021, respondents said 40% of their teams’ time was spent delivering front-office upgrades. This indicates 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, this represents more than $200 billion that could be spent on innovation and improvement of digital experiences.
Investment moving from front-to back-end
The report found front-end solutions are still receiving the most focus for investment. However, this is changing year-over-year. While 54% prioritised front-end investment in the 2022 report, just 39% 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% to 68%. Organisations with 25,000 or more employees have the lowest level of adoption of MACH in their front-end infrastructure. These organisations take a more long-term view on making MACH investments.
Casper Rasmussen, MACH Alliance President said, “The data tells us that 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. At the same time, fewer companies see themselves as agile early adopters. 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. However, continuing the status quo is an ongoing, big undertaking, especially for larger organisations, which needs addressing. We are not going to wipe legacy out of the picture overnight. Nonetheless, those moving toward MACH are better equipped to mitigate future obstacles.”
The research was undertaken by independent market research leader MEL Research. Respondent titles included CIO, CTO, Vice President, Senior Vice President and Senior Manager. All represent organisations with at least 5,000 employees and have a revenue of at least $500 million annually.
Enterprise Times: What this means for business.
Apologies, but this report is only stating the obvious. Yes – in today’s competitive marketplace, organisations face numerous external challenges which require them to understand and meet demands. However, internal upgrades to IT infrastructure are lengthy and difficult to implement.
Organisations tend to focus on front-end upgrades. Although some enterprises are prioritising the back-end, and this is where many of the gains are clearly evidenced. It is surprising to learn that legacy is still holding companies back. As a result, one in five companies spends over half their IT budget on upgrades.
One of the key areas the report fails to address is the freedom and flexibility that MACH technology can provide enterprises. Businesses are interested in composable architecture. The movement is away from having one monolithic black box that ticks all the requirements in the features and functionality list.
Increasingly enterprises are employing an ecosystem of several vendors that focus on specific parts of the digital experience. Microservices, best of breed that connects them together to give enterprises the ability to fulfil the business digital strategy. This should have been further explored in the research.