How Technology Architecture Can Help You Grow Revenue (2020 VMware Blog Post)
How do top-performing organizations grow revenue two times faster than the rest? The secret lies with successful technology adoption, and it all starts with the foundational architecture – as this great piece of research from Accenture demonstrates.
In research called Full Value. Full Stop.: How to scale innovation and achieve full value with Future Systems highlights the idea that organizations that take a strategic view of their technology investments tend to outperform organizations that are more haphazard in their approach to technology, growing revenue at a higher percentage than their peers.
In the study, all companies were scored on how well they adopted a broad set of established and emerging technologies. As well as looking at the technologies they had invested in, the study crucially explored how widely these technologies had been adopted across the organization.
It also looked at how successfully companies had changed their culture. How far had they progressed in terms of creating a mindset to think strategically about technology and to adopt technology in a holistic manner that had a broad, company-wide impact? Once all companies were scored, the results were correlated with their financial performance.
Top-tier companies grow revenue much faster than laggards
So how much better did organizations fare by taking a more strategic approach to technology adoption? Accenture compared the top 10% (top tier) of companies to the bottom 25% (laggards) and came up with a startling finding. Top-tier companies were able to achieve a revenue growth rate that was double that of the laggards.
Like most things involving money, a compounding effect has a huge impact when you add in the dimension of time. So, for the period between 2015 to 2018, the two times difference in growth translates to top-tier companies achieving 15% more in cumulative revenues over laggards.
What a difference a few more years makes. Once you extend the time horizon to include the years through 2022, the top-tier companies achieve a whopping 46% more revenue. While revenue isn’t profit, we know that a huge component of any public company’s stock price is the expectation around revenue growth.
Think and act like the best companies
The study goes on to give some very sound advice on how top-tier companies think and act. It also explores how companies not in the top tier can become more like these leading companies. For instance, in a section titled “Think Like The Top 10%” they offer the following advice:
- Leaders invest more in innovation.
- Leaders don’t just adopt technology, they create systems.
- Leaders scale technology innovation across the enterprise.
- Leaders understand that Future Systems must be boundaryless, adaptable, radically human.
In a second section titled “Act Like The Top 10%” they offer this guidance:
- Adopt technologies that make the organization fast and flexible.
- Get grounded in cloud computing.
- Recognize data as being both an asset and a liability.
- Manage technology investments well – across the enterprise.
- Find creative ways to nurture talent.
To dig into each of these statements more deeply download the report.
Technology architecture is the biggest impediment
The study also highlights the top four technology-related barriers that companies must overcome if they hope to move into the top tier, including:
- Technology adoption – Mastering new technology frontiers at speed and scale
- Architecture flexibility – Building a flexible, uniform, and scalable architecture capable of responding to market demands
- Systems of trust – Safeguarding trust in systems with constantly evolving approaches to security and data
- Organizational transaction Costs – Reducing interaction impediments, both organizational and technology
The study indicates that of these four, architecture is the most vexing impediment. A quote from the research captures the sentiment: “Across the world, companies cite architecture flexibility as the biggest of four barriers to innovating at scale.”
This totally makes sense to me. Architecture is foundational. It’s hard to make progress on the other three elements if you have the wrong architecture.
If you haven’t yet read Architecting Your Multi-Cloud Environment, then this eBook is a great start in getting your architecture right. It walks you through how VMware can help you achieve the best architecture to accelerate application modernization initiatives across a multi-cloud landscape. While you may choose to take a different approach to architecture, the eBook will help you think more deeply about the capabilities your company needs.
Remember, once you have the right architecture in place, you’ll be in a better position to leverage technology more strategically – which in turn will help you accelerate revenue and meet every other object in your business.
This article is quoted by the post in VMware Blog
BY DAVID JASSO