Modernization of legacy systems seems to be all the rage in IT. Organizations are racing to modernize their systems, at times replacing systems that are functioning well and efficiently. This completely goes against the age-old proverb, “If it ain’t broke, don’t fix it.” Why then are we fixing systems that work perfectly well?
Why Do Legacy Systems Have Such a Bad Reputation?
Let us start by understanding “legacy systems.” Per Gartner, a legacy system is defined as, “An information system that may be based on outdated technologies but is critical to day-to-day operations. Replacing legacy applications and systems with systems based on new and different technologies is one of the information systems (IS) professional’s most significant challenges. As enterprises upgrade or change their technologies, they must ensure compatibility with old systems and data formats that are still in use.” Therein lies our first answer. A legacy system is not in itself a broken system. Instead it is a system that is critical to day-to-day operations, such as a payroll system, a database application, a tax processing application or a banking application.
However, these legacy systems, which form the backbone of many enterprises, are holding organizations back from leveraging new digital technologies and creating new experiences for their customers, stakeholders and partners. Existing tight dependencies between systems create a brittle, expensive, hard-to-maintain infrastructure. In many cases, the people who understand the legacy technologies in use have long since retired, making them impossible to sustain, with each break causing large-scale chaos across the organizations. This is what we call technical debt — the hidden cost of maintaining a system seems to work fine today.
Most businesses spend 70% to 80% of their IT budgets on supporting aging low-value legacy applications, leaving very little money to invest in optimizing business processes. In addition, in several cases these systems make it difficult to support the quick adoption of newer technologies such as cloud, big data, IoT and mobile. Hence modernization has become a digital imperative not just to stay competitive but merely to sustain.
Gartner predicts that every dollar invested in innovating digital business innovation through 2020 will require enterprises to spend at least three times that to continuously modernize the legacy application portfolio. Getting the most out of the time and effort spent on modernization efforts requires careful consideration of the modernization approach. “The key is to understand if your problem is caused by technology, architecture or functionality of the application, and how each modernization approach improves those aspects,” said Stefan van der Zijden, Gartner senior research director.
Big Bang or Piecemeal Replacement of Legacy Tech?
Organizations big and small have been struggling with approaching modernization within their IT environments. Some have cautiously taken minor steps by using modern software development techniques for newer development while keeping their legacy systems intact. Others may have decided to go big bang by moving all applications within a domain to the cloud through a large-scale lift and shift operation. Yet others are still grappling with where to begin and are spending a considerable amount of time developing a cloud strategy with a modernization front door.
The answer is there is no one correct approach to this problem. In fact, several approaches may be used by the same organization. The important thing to understand here is that irrespective of the overall approach, IT modernization is largely dependent on the organization’s mission, its current portfolio and its future business needs.
Let us consider the following scenarios:
- A complex, and long-standing institution. It contains a mix of legacy applications dating back decades all the way to newer applications built in the last five years. The legacy applications seem to be working fine but the number of people who understand the applications and the written code have steadily been retiring and some of the software and hardware on which they work has been on expensive and over extended support. The imperative to modernize is imminent and apparent, however the organization needs to continue its day-to-day operations and provide services to its clients without interruption. In such a situation a big bang approach is not going to work. The modernization needs to be done incrementally, following a tailored step-by-step approach starting with analysis of its existing portfolio and building a modernization roadmap that would work in harmony with the organization’s needs.
- A smaller organization that does not provide day-to-day services or require continuous availability. This organization has some legacy-built applications that have been functioning fine but not much work has been done on improving them since then. The business is now changing, and it needs to revaluate and build new applications to respond to an agile and dynamic market. In such a scenario, the rational approach would still begin with conducting an analysis of the current portfolio, followed by building a “to-be” state and then following a big bang approach of building everything from scratch instead of trying to build wrappers around existing applications.
- Yet in another situation, consider an organization that has various sub-organizations. Some of the newer sub-organizations have a largely modern portfolio and processes while the others have been around for a while and contain largely archaic monolithic on-premises applications. The organization conducts a cloud pilot and ROI study and decides that moving its entire portfolio to the cloud would provide large saving across all its sub-organizations. The CIO decides to move all applications to the cloud and then work on optimizing and improving them through a step-by-step approach. This would be what we call a hybrid approach. The move to the cloud is a big bang but following that the organization still follows an optimization approach where it starts with analyzing its portfolio through continuous monitoring and assessment. In this business climate, operating an agile landscape is key. With digital transformations driving customer demand, the IT architecture will need to dynamically adapt to the rapidly changing needs of the market. Hence, we need to continuously monitor and assess our modernization plan and adjust our processes and portfolio accordingly.
Modernizing your IT and business portfolio is a journey, not a leap. Whether an organization decides to change everything at once or cross the bridge one at a time, depends on its mission, portfolio and goals. Each scenario will need to be analyzed to build a personalized roadmap. The end goal remains the same — to build an agile, scalable and resilient portfolio that is able to respond to changing needs — but each organization might take a different road to get to it.