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White Paper

Operational Chaos Threatens Long Term Business Strategy

Digital network matric moving in a organic wave
Digital network matric moving in a organic wave

We spoke to 1,500 IT decision makers across the globe in our annual Reality Check to understand their organizational challenges. What we found is chaos. (Operational Chaos, to be exact.) Companies continue to invest in new tech, but the resulting technology and process challenges are threatening business efficiency.

Uncertainty. Most organizations have experienced it in the last few years. Unsure of where their business is headed, what’s the right strategy, or which technology tools are going to help them get there.

As unsettling as uncertainty is, it’s not the scary part of the story. Business leaders are most likely kept up at night by the specter of chaos that uncertainty brings to their door.

Chaos can creep into day-to-day operations in many ways, and once it starts to take hold, it begins to cloud processes, decisions and more. Technology chaos can interfere with the efficiency of day-to-day operations as well as long term strategy and is caused by rising technical debt and legacy systems eroding resources. Process chaos, on the other hand, hampers the execution of services and transactions for both customers and employees, caused by the continuous rise of shadow IT and a lack of transparency in processes.

Yet, valuable lessons lie amidst the Operational Chaos and uncertainty: modernized ways of working and whole company strategies that clear the pathway to success.

Some Global Context:
GDP growth is predicted to be modest in the next year or so, around 2.5% in US and 0.8% in Europe. This is similar to 2024, but below 10-year pre-pandemic levels and not what many businesses would be hoping for.

Supply chains can become even more unpredictable if geo-politics – including new tariffs – are unstable. The international passage of goods and materials will be further pressured by the 2026 EU Climate regulations.

One of the stronger regulation pushes in recent memory is demanding greater responsibility around data, technology and risk management. On top of that, there’s a pressure not to ‘fall behind’ on new technologies, such as AI.

Many challenges are looming ‘outside’…but what about ‘inside’? What are individual businesses being challenged with?

The Roots of Operational Chaos

Operational chaos is a problem for 70% of businesses. That number is down from 76% this time last year, showing some are getting to grips with it, but a lot of companies still face a significant challenge.

But why? One reason is technical debt. It’s still rising for nearly two thirds of organizations. So as time goes on, systems and processes are getting less efficient unless dedicated time and resources are spent to go back and update them. Investments in clearing tech debt are vital, but they certainly don’t help to create a focus on new strategy.

The pace with which technology evolves also puts a strain on skills and resources. 84% say tech infrastructure has grown substantially in the last few years, with 77% saying it’s making it difficult to be agile and/or productive.

As the world keeps pushing ‘innovation’, organizations need more room to breathe.

Why is this a problem?
Frantically keeping up with change, complexity and retroactive maintenance impacts core functions. Decision making is slower in 75% of organizations. When chaos clouds processes and slows decisions, new product/service launches (80%) and customer service (78%), in particular, are negatively affected.

Our research found that governance is affecting more organizations this year (70%) compared to last year (65%). The regulatory burden is set to ratchet up yet again, which should push businesses to try and clear some of their operational chaos.

Why is it happening?
It’s one thing to recognize that the pace of change is causing problems, but it’s hardly an addressable challenge. What’s happening ‘on-the-ground’ that’s making this chaos worse?

Like most things, it’s an accumulation of many factors, which in isolation may seem slight, but the sum total is problematic.

Expertise is needed to address operational chaos, and 43% of organizations lack it. There’s often a lag between new tech launching and people learning how to use it. At the other end of the spectrum there’s also a problem with generational change. Recruitment and training are two processes that can be further modernized to help address the challenge of rising operational chaos.

Cost cutting is a common response to many external/global trends. That’s nothing new, of course. But the pressure to remove costs from operations often triggers the elimination of key technology or other tools. One third of businesses (33%) say they’re seeing more operational chaos emerging as they are forced to ‘do without’.

Shadow IT is inevitable when cost cutting starts, and is a problem for 73% of organizations. Individual employees want to get their jobs done as efficiently as possible…if they can’t get the right tools, right now from IT, they’ll do it themselves. Why wait days for a ticket to be answered when Google delivers the solution within seconds?!

More functions operating outside the purview of IT elevates risk, especially with Generative AI. There’s something out there for everyone, but not corporate approved. And guess what? There’s an under-estimation of how extensive this phenomenon has become: 37% of business don’t believe Shadow AI exists in their organization, but 50% of knowledge workers admit to using it.

Operational Chaos: What's the Solution

79% of organizations agree that operational chaos hits them on both a technology and a process level. The solution must also have two parts: modernized technology and intelligent processes.

Modernized Technology

Modern technology and new technology are not the same thing. Some systems have been in place for 50 years and are still the best tools for the job, because they have been effectively modernized. Legacy technology, on the other hand, is anything that has not been modernized and has consequently become a burden.

Most companies (77%) say that legacy systems contribute to operational chaos. One reason is that there’s a challenge in integrating new technology with older systems, which nearly half of organizations (43%) can’t overcome.

Integration is one issue, but so is workload. Some processes that rely on compute power from core systems are not complex in their nature, but the volume of requests, data or both are overloading core systems in more than two thirds (69%) of businesses. One in three of these instances (33%) sees modern workloads becoming so overwhelming that they’re unsustainable.

Integration, workload, and even generation change management (a weakness for 25% of businesses) are all impacting the chaos caused by technology. They’re also impacting the cost of operating core systems, which is getting out of control for two thirds (67%) of businesses.

What do you do when your core tech isn’t working as you’d like, it’s too expensive, the business wants you to implement the latest trend and you’re working in a cloud of chaos?

The pressure to modernize makes the chaos worse for 74% of businesses, but it’s important not to make knee-jerk reactions. Quick decisions – such as adopting new technologies without legacy modernization – exacerbate the issue (so say 81%), therefore a considered approach is needed.

Identify any outcomes that can be improved by increasing the workload capacity of core systems. Ask whether the function is broken, or just overwhelmed? If you can find more capacity at the right cost, there’s no need to rip everything out and start again.

Then look at high-cost processes and try to figure out if the costs can be reduced with a reconfiguration of the tech behind them. Cloud migration, for instance, is expensive, risky and potentially just as costly in the long run. The majority of businesses (72%) believe both migration and repatriation contribute to their operational chaos. Could any smaller scale changes be made that lower costs, for example processing in a different format to widen the market of tools capable of the task?

Modernizing core systems needs to be done in a way that’s fit-for-purpose. Some processes or capabilities might be better in the cloud, but some won’t. Explore ways of managing workloads differently to ease the pressure on capacity and costs.

Intelligent Processes

No organization can function without processes. However, the majority of companies (73%) are seeing increased operational chaos because their processes are too opaque. Nearly half (43%) know that they have duplicated processes…and in a world lacking transparency, who can say how many have duplication and don’t know it!

If people within your organization don’t know what they’re supposed to be doing because processes are too complicated (32%) or it’s simply not clear (31%), operational chaos will grow. And as it grows, it makes it harder and harder to pinpoint where inefficiencies are coming from.

This is complicated further for those organizations (32%) where new technologies don’t come with a clear implementation plan, so employees are having to figure things out themselves. This leads to more users going their own way (31%), which causes increased conflicts between business and IT departments (37%). All of this makes operational chaos surrounding key processes worse.

To make matters worse, AI and automation tools are elevating operational chaos for 73%, rather than being the savior. In all, 74% cite either process, operational or cost efficiency as a weakness.

So where do you turn when you can’t get a clear picture of what’s actually happening in your business, employees don’t know what the ‘right way’ looks like and efficiency is slipping away from you? Overwhelmingly, better process intelligence is the answer, say 82% of businesses.

There’s a cycle of process intelligence: introduce more transparent processes, to get better data, to get better insights, to improve processes and get better data…and so on. Knowing what’s really happening in your organization is vital, but it can also be eye opening.

You have to start somewhere, so pick a business-critical process and run a thorough evaluation. Identify how much deviation there is from the standard operating guidelines, whether it’s harmful or not and then determine how to fix it (if you need to).

Once you have processes laid out more clearly, you can empower the employees than run them in a different way, for example by putting more information at their fingertips with AI support. When things are clear, accessible and understandable, individual employees feel less pressured and chaotic. And when they feel empowered to operate effectively within the parameters of standard processes, the business gets better insights as well as better compliance. This virtuous cycle of process intelligence creates intelligent processes.

Operational Chaos: Clearing the Picture

Operational chaos will never cease to exist. There will always be something new or unexpected. However, lifting the fog on core technology and processes can help the majority of the infrastructure run smoothly. In this environment, the technology and process experts can focus on the 20% of tasks that are unexpected, or by definition chaotic. We can’t eradicate chaos…but we can find a way to be more comfortable with where it is at all times and how to make your business operate successfully.
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