Traditional resource-extensive growth practices are no longer viable in global economies, as advances in digital technologies are ushering in new and more sustainable growth strategies and enhancing organisational productivity. Ireland is currently two steps behind. Since I extended my role from managing director of Digital Realty Ireland to include the United Kingdom in 2023, the disparity between the regions in terms of their paths to leading digital services or embracing new technologies is alarming. Irish enterprises face a pivotal choice: evolve or fail.
It is perplexing that there appears to be a lack of innovation and drive within the Irish economy, despite frequent headlines celebrating Ireland’s high rankings on economic leaderboards. The International Monetary Fund in December predicted a ‘soft landing’ for the Irish economy in 2024, but where are we landing from? We hadn’t exactly reached dizzying heights before various macro-challenges damaged the economy, and we risk falling further behind other regions that aren’t exactly flourishing. The truth may lie in the fact that the Irish economy has an over reliance on foreign direct investment and multi-nationals distort economic figures. But when you look under the hood of the IT landscape of organisations who are headquartered on the island of Ireland, it is clear that these organisations are lagging behind the rest of Europe.
While we all had great hopes around the Government’s ambition to make Ireland “a digital leader at the heart of European and global digital developments”, we’re seeing little return or commitment to digital transformation projects.
A recent study conducted by Amárach Research on behalf of Digital Realty and Hewlett Packard Enterprise (HPE) found that Irish organisations are much slower to embrace hybrid IT to achieve digital transformation success compared to organisations who are headquartered outside of Ireland (44 per cent versus 66 per cent respectively). Hybrid IT refers to an approach organisations combine on-premises IT infrastructure, private cloud, and public cloud services to create a flexible, scalable, and cost-effective IT ecosystem, which can adapt to changing business needs.
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My belief is that many Irish organisations still believe that IT is just a cost centre, not an innovation and growth driver. Many of them are yet to shift their thinking to seeing the IT department as an enabler - an enabler that allows them to truly embrace digitalisation, extend their reach, be more cost efficient and ultimately win more business.
The exponential surge in data volume in Irish organisations during the past couple of years is a driving the urgent need for organisations to overhaul their IT infrastructure and connectivity solutions. Getting the foundations in place is paramount for every enterprise, irrespective of size, scale or ambitions. Indeed, data lies at the heart of modern business operations, facilitating communication, gauging performance, understanding customer behaviour, and informing strategic decisions. However, the exponential growth in data volume – a 43 per cent rise in the volume stored by Irish organisations since our inaugural report with HPE in 2022, is exacerbating costs pressures for businesses. The quantity of data being gathered, processed, and stored will only continue to grow so Irish organisations must seize control of this.
For many, understanding how to begin the move to a hybrid IT environment can be daunting. Our research shows that many Irish organisations are relying on outside vendor support to support them. Organisations headquartered inside Ireland are more likely to rely on the support of managed service providers (MSPs) compared to those respondents who work for organisations outside of Ireland (43 per cent versus 24 per cent). The main reason for this, in my opinion, is that these smaller domestic organisations lack the skills and know-how to achieve the IT transformations required. The majority of MSPs rely on colocation facilities to provide the data centre environment required to manage the IT needs of their end customers. These MSPs are best placed to provide the security, networking skills, workload management, connectivity and scalability required by domestic Irish organisations, at a time where the industry in this country is suffering a skills shortage.
Ultimately, Ireland is making small inroads to achieve the optimum hybrid IT approach compared to other nations. Much work remains to be done to explore the potential opportunities of AI and tackle the barriers to adoption if we are to compete with international challengers and meet end-user demands. However, legacy infrastructure challenges are compounded by the current data centre moratorium, which is slowing down the ability to deploy new infrastructure that can meet the needs of AI and other emerging technologies.
Limiting the growth of data centres puts future direct investment from overseas at risk, something that could otherwise be used to help tackle Irish organisations’ lack of available budget for implementing and innovating in AI. However, if organisations can adapt to the evolving IT landscape, leverage hybrid IT models, address data management challenges, work with the right vendors, and invest in skills development, Ireland can chart a course towards a more resilient and prosperous future in the digital age. If not, Ireland is at risk of being left even further behind.
To download the 2024 research report in full, click here.