Blog post #3: KPIs to be reached
“If you do not know where you’re going, you’ll get lost on the way.”
“If you do not know where you’re going, you’ll get lost on the way.”
In the first blog post of this series, we started by describing the importance of clear identification
of the modernization motivations and described most of them. We have also defined a simple workflow to respect before diving into the technical aspects.
If you have other goals than what we described or want to share with us your feedback or experience, we will be happy to hear from you.
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In this third blog post, we will highlight the difference between the project metrics and the KPIs to be reached thanks the project.
A modernization project has multiple metrics, some similar to any classical IT project and others specific to this domain. As a customer, you should focus on three main high-level metrics that have to be constantly verified before and during the execution of the project: the duration, the cost and the risks.
This metric is extremely important because it has a huge impact both on the cost and the risks. In fact, moving from the costly legacy ecosystem in a shorter period increases the savings for you as a customer from one side and allows to avoid the tunnel effect of the never-ending project on the other side. In fact, although you are in a migration process, the existing application may need some fixes or improvements that have to be included in the ongoing modernization. The less time you spend merging, the safer it is for the modernization.
The duration can also be too long if you decide to modernize and add features at the same time. This approach is risky because the qualification phase will be too complicated. In case of bugs, it will be difficult to figure out if the origin of the bug is legacy or new. Depending on the KPIs of your project (we will talk about this later on), a shorter duration will allow you to rapidly focus on new added value features achieving business agility and a faster go to market.
The duration of the modernization project should be the duration of the technical migration of the existing system. Don’t add new business logic, new features or even new UX improvements. Move your legacy as-is, finalize your modernization project and only after this, you can start fine-tuning the modern application once in production environment.
The budget of a modernization project is mainly based on the number of legacy lines of code (LOC) candidate for transformation. Thus, financially speaking, as a customer, you need to pay attention to the proposed rate per line of code. Usually, this rate includes the licensing cost for the tools used during modernization, along with professional services costs required for delivering the modernization activities. Multiple customers fall in the trap of trying to figure out how to reduce the number of lines of code in order to reduce the budget. Probably your legacy system contains dead code and unused programs but only a deep analysis of the code itself will allow to detect such code portions. The dilemma is do you want to pay for tracking this eventual dead code or do you want to avoid any useless risk and transform all the business logic to the modern target?
Other expenses have also to be considered for the project such as allocating internal resources for building the test scenarios, qualifying the delivered modules/applications, etc. Your modernization partner has to be transparent with all the needed effort from your side in order to get your modernized application up and running on the final production environment.
Like any IT project, the biggest part of the cost is related to the people engaged in the project. Naturally, if your project is workforce-driven, the larger the teams are, the higher the cost will be. Consequently, you need to find a trade-off between the duration and the cost by allocating the most suitable number of resources (engineers, testers, architects, etc.) to have the best cost/duration ratio.
In most cases, when a modernization is correctly executed, it generates financial savings on cost structure that typically finance the entire or a part of the modernization project allowing a quicker Return on Investment. For example, transitioning from a Mainframe MIPS cost structure to Cloud managed services budget structure allows the adoption of the “Pay as you go” model that is highly interesting especially for batch processing.
Do not only focus on the lines of code rate. It is only one parameter among others. The effort on your side verifying the modernization results may cost more than the transformation cost itself.
Identifying, quantifying, monitoring and controlling risks are mandatory activities before and during the lifespan of the project. Some risks are common to all IT projects (team skills and experience, target architecture, technical decisions, etc.). There are no magical recipes to avoid all risks, however, your modernization partner must show and demonstrate a methodological workflow allowing to measure and mitigate the potential risks at early stage based on multiple steps including:
Risks are usually related to the lack of proven tools, methodology and expertise of the modernization team.
The cost/duration/risks trilogy can be tackled with a high automation degree of the whole process. This topic will be detailed in other blog posts.
As we have seen earlier, your modernization project is driven by various motivations that have to be translated to measurable goals. Here is a list of potential KPIs you may be interested in:
| KPIs | Details |
|---|---|
| Significant IT Cost Reductions |
IT budgets are tight and in most cases the lion’s share is allocated to legacy systems (especially mainframe) - up to 50 percent of the budget for many organizations. The cost of hardware, software, and maintenance are substantially higher than existing modern Cloud platforms. While hardware leasing costs are high, they are predictable. However, software licensing costs are volatile and difficult to calculate. Moreover, mainframe workload increases (and consequently its cost) driven by modern analytics, blockchain and more mobile activity hitting the platform. In fact, using a mainframe environment for the modern applications that support your digital transformation will increase your IT costs as you add CPU and memory capacity. According to Forester, 72 percent of customer-facing applications at these enterprises are completely or very reliant on mainframe processing. Typically, savings on computing power, elimination of runtime fees and maintenance costs reduction by the adoption of pay-as-you-go Cloud infrastructure and open source proven modern frameworks can substantially compress your IT budget. (e.g. target a reduction of infrastructure costs by 50% is a reasonable KPI). |
| Improve system and data security |
In the General Accounting Office IT report, we can read “legacy systems” are also operating with known security vulnerabilities and unsupported hardware and software. For example, DHS’s Federal Emergency. Management Agency performed a security assessment on its selected legacy system in September 2018. This review found 249 reported vulnerabilities, of which 168 were considered high or critical risk to the network. Such security weaknesses put the personal records and sensitive information of millions of customer/citizens at risk through security vulnerabilities and cyber-security attacks |
| Achieving Business Agility | Exposing modernized functionality as true services to the business opens up new opportunities to achieve business agility and eliminates technical silos (all your applications should be able to communicate through APIs). Shared APIs is designed to lower costs, achieve greater efficiencies across the services, improve employee productivity, and provide your team with access to top updated and pluggable interfaces. |
| Increased Scalability & Elasticity | Moving to the Cloud increases scalability and elasticity for capacity thanks to built-in managed services. To know more about these services agileit.com/news/10-benefits-cloud-managed-service-providers |
| Leveraging Data Analytics | Moving data from legacy platforms to relational databases and the Cloud improves data accessibility, integration, reporting and analytics. |
| Improved Customer Experience | Empower people with easy access to the information and applications they need. Real-time data processing enables real-time services. In fact, eliminating scheduled downtime for maintenance, improving disaster recovery by eliminating the single point of failure, and updating the system more quickly to meet changing needs are key elements to enhance customer service. |
| Shorter Time to Market | Combining standardized infrastructure with Cloud and DevOps practices can reduce change delivery from months to weeks or days. |
| Operational Efficiency | A legacy environment causes inefficiency costs incurred by the failure to proactively upgrade systems and application fixes (for technical issues, new features or to comply with one or multiple regulation frameworks). |
| Improve performance and SLA | Moving from legacy systems to modern technologies and infrastructure can help improving batches performance. |
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