Blog post #1: Start with why

“Finding WHY is a process of discovery, not invention.”

A modernization can be motivated by multiple reasons. You need to clearly answer the question “Why do we need to modernize?” in order to address the host of factors (internal, organizational, human, technical, legal, business…) that may impact your decision. According to our experience, there are four main reasons can lead customers to contract the modernization of their legacy systems:

  • They must modernize their legacy system because these are obsolete (it may be for security reasons, compatibility with other systems, regulation frameworks, etc.). In that case, they have no alternative to modernization, they only have to choose the best solution for them.
  • They want to take a competitive advantage towards competition or because they do not want to lose market share to their competitors. In that situation, modernization is also an obvious choice with the guiding decision-making parameters being budget and calendar.
  • They want to remove all technical barriers to business development and growth. In case of new acquisition, mergers (M&A) or new markets penetration, getting rid of technical debt is important to accelerate strategic roadmaps and gain agility.
  • The other main reason is related to operational expenditures (OPEX), that the organization may want to reduce. These costs can be reduced up to 70% when using a public Cloud. If the company’s business lends itself to the cloud, the modernization will be a logical option for the management team.

In the following sections, we will discuss how to approach these four modernization categories providing details on how to approach them. Because a modernization is never motivated by just one single reason will discuss them not as separate items but holistically since if you are going to invest in a modernization you should take advantage of as many of the benefits as possible. For example, if initially the project goal is to reduce the OPEX cost, taking competitive advantages towards the competition can also become another complimentary goal.

Business Development and Growth

With the fast-paced expansion of the digital economy, software is not only recognized as an efficiency tool (time/cost savings, productivity, and better service delivery) but more broadly as a business growth enabler in providing new products and services (i.e. Software-Based companies vs. Software-Driven companies). For example, banks have been using large bespoke software applications since the sixties, however the first customer-oriented applications (with limited features) only came in the late nineties. As a matter of fact, Software-Based companies have accumulated significant legacy applications portfolios (most of them relying on aging and/or obsolete programming languages and running on proprietary and expensive mainframes or iSeries).

From another perspective, rapid changes in business require agile software and information systems with proven adaptation capabilities. The digital world requires an ever-increasing demand for reactivity: IT systems must leverage the momentum of the business instead of, as it has often happened in the past, being a source of inertia. Markets are experiencing an increasingly disrupting period where new pure players are competing with established companies. They are creating new efficient business models leveraging new technological paradigms. Airbnb (Hotel), N26 (Banking), Amazon (Retail), Netflix (Entertainment) are the most famous. Such “pure play” companies leverage free and open source technologies and reliable Cloud infrastructure to efficiently allocate resources, minimizing cost and maximizing performance while offering a far better user experience.

Lack of legacy-tech-savvy

The majority of people who developed and sustained such large enterprise applications have either retired or are about to in the next few years. It would not be a big issue if we had energetic ‘ICT millennials’ lining up to replace the aging ‘ICT boomers’. Unfortunately, Universities do not teach legacy technologies (e.g. COBOL, RPG, PowerBuilder, Natural/ADABAS, CA IDEAL, Delphi, etc.) - and if they did, students would not want to learn them. Legacy applications owners are facing a severe skill shortage. This is increasing resource costs and is severely impacting the ability to support these core applications. According to Forester, “Enterprises have lost an average 23 percent of specialized mainframe staff in the last five years and 63 percent of those positions have not been filled.” For example, the Social Security Administration was forced to rehire retired employees to maintain its mainframe system. The loss of skilled mainframe staff, and the failure to subsequently fill these positions, pose significant threats to application quality, security, velocity and efficiency.

Standard-less and documentation-less

Most of these business-critical applications have been developed over decades. They have been maintained by a succession of development teams and practices. Unfortunately, this long history of maintenance has meant that such applications suffer from a lack of up-to-date documentation. If there is any documentation it is often old and out of date. This lack of accurate documentation creates a real problem for anyone trying to enhance or maintain the applications.

Rigid, monolith and silo-based

Regulation frameworks and laws are constantly evolving (especially regarding the use and storage of the customers/users personal information). For example, in Europe any customer can ask to have access to his data and allow third parties to use it. This means, the company which has this data (e.g. bank, insurance, etc.) is not the owner of this data and has the legal obligation to be able to provide it when requested. However, in legacy systems data is often scattered, diluted and stored in different format without any consolidation which makes their exploitation too complicated or even impossible. If your systems are not designed as APIs that can be exposed as true services that foster data accessibility, integration, reporting and analytics, you will struggle to be fully compliant with the regulations from one side and provide added-value services to your customers on the other side.

The same aforementioned constraints (i.e. building an API-based information system) can be also driven not by regulatory frameworks but by your own business development. For instance, in the case of mergers, new acquisitions and new markets penetration, a most common requirement is when two or more applications have to work together, in a process of interoperability. It is a matter of knowing how, it means extracting and interpreting current business rules in today’s complex cross organizational business environment

OK but never forget!

Your legacy is an asset to your effectiveness, not a liability. Your accumulated know-how and business rules are embedded in your source code. Ultimately your goal is to leverage this asset by efficiently modernizing the technical layers that will empower your business agility, decrease your IT costs, accelerate your digital transformation, etc. You must get rid of any technical debt stopping you from reaching your goals.

All businesses should turn to digital tools to overcome common business obstacles. These tools help them be competitive in today’s landscape. The strategic adoption of these innovative tools helps grow the business. But it also minimizes the impact of growing pains That all companies go through. And all face the prevailing trends that can affect their respective businesses.

In the next blog post, we will point out the non-technical aspects of modernization projects that be dealt with.

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