The Top 9 Legacy Modernization Drivers for Enterprise Organizations

Legacy systems create roadblocks that impede digital business transformation, obstructing an organization’s agility in responding to market demands, innovating solutions, and strengthening their competitive edge.

One thing is clear: technology is evolving rapidly right before our very eyes. Every aspect of our lives and the society we live in is touched by these changes. There’s no sign of a slowdown in sight. The microcosm of software development is experiencing the same thing. Organizations require speedier development philosophies to get their services and products to market faster than ever to remain competitive and relevant in the marketplace.

Business agility is the new source of business value.

We’ve known this day was coming for a long time. As developers faced the turn of the century, they started to question and criticize the popular processes and assumptions at the foundation of their field. Concepts like Waterfall development methods, having highly detailed requirements before starting development, and designing comprehensive architectures came under fire. In the mid-1990s, a small group of thought-leaders worked on approaches to the development designed for speed and change. The term “agile software development” emanated from this group in 2001, launching the software development microcosm into a new era. Since then, the agile philosophy has become the best-practices standard for software development.

As mainframe developers experienced with procedural languages retire at increasing rates, and the cost of maintaining the mainframe rises steadily, organizations are justifiably nervous about the future. These organizations need a strategy that embraces agile development and the cloud, yet balances with mainframe environments until a full modernization of their systems can be completed.

Some organizations are looking to a bimodal IT strategy to solve their problems. Under a bimodal strategy, the organization essentially runs two IT organizations, one mired in the old ways and one pursuing the new. While executing a bimodal strategy can be done and may help an organization manage key systems while adopting new, more efficient development techniques, it is rather complex and costly. The strategy essentially leaves the organization with two IT camps competing for limited resources, yet needing to work closely together. This strategy is designed for the short term; it’s not a strategy you would want to rely on permanently. It’s critical to transform the legacy environment, instead of adapting your methodologies to it, to ensure your organization can meet the requirements of the business and competitive demands of the market moving forward.

Legacy modernization efforts are being driven by specific business outcomes even as business and IT departments both strive to extend the life of existing applications while bringing additional functionality and value to the organization.

Business operations, risk management, and business growth are key driving forces for modernization efforts rather than simply seeking cost reductions from getting off a mainframe. The focus on business outcomes enables IT and the organization to focus their time and investments where the business outcomes are greatest and yet prioritize their modernization initiatives using a portfolio strategy.

“Three out of four Federal IT managers (77%) say application modernization will improve the end-user experience at their agency. “ MeriTalk – Future Ready Applications: The Modern Legacy https://www.meritalk.com/study/future-ready-applications/

The Challenge of Legacy Systems

The legacy systems found in most organizations have been in place for decades now and were frequently built to serve a single purpose. The result is that they rarely meet the criteria necessary to help an organization in the long term. In addition, the existing applications that match yesterday’s business models are not easily changed to meet the ever-changing business climate.

These legacy systems are perpetuating a variety of business challenges including:

  • Disjointed development and maintenance, resulting in “silo-based” use
  • Runtime, maintenance, and staffing costs are high and growing
  • Architecture makes business intelligence efforts either prohibitive or completely impossible
  • Design makes it difficult or impossible to change or adopt a new business model
  • Application resistance to change results in compliance and regulatory challenges
  • System design has created an inability to share data between internal and external systems

DevOps: Agile for Everyone

As organizational leaders experienced the successes that Agile brought to the development world, they questioned if it could be expanded to include the operational side of the house. From this, DevOps came into being.

DevOps is more than a methodology; it’s an organizational culture that requires an updated approach to the ways the organization processes data. Development teams and Operations work together from the beginning to develop and test software. The result is a straight line from start to finish; the rework seen on a traditional ops chart is avoided. Essentially, DevOps is agile development for IT and Operations, in concert with one another.
DevOps can provide a competitive advantage during software modernization efforts.

Top 9 Legacy Modernization Drivers: Compelling Reasons in the Organization

The following are typical legacy modernization drivers that compel business and IT managers to explore modernization strategies:

Managing Explosive Data Consumption – With the advent of the smartphone, individuals are producing and consuming far more data than at any time in history, and it’s only expected to continue to increase. Even our homes, cars, and appliances are consuming and producing data through internet connectivity. In fact, according to the 2015 IBM Cyber Monday Report, mobile traffic accounted for 47.9% of all online traffic, up 16.3% over 2014. Juniper Research has also predicted 195 billion mobile commerce transactions will be made annually by 2019 by mobile phone and tablet users, up from 72 billion this year, which is about 197 million transactions per day. In addition, mobile data traffic generated by devices like tablets, smartphones, and other feature phones will reach almost 197,000 petabytes by 2019, according to analysts at Juniper Research. Cisco research supports their findings and predicts that overall mobile data traffic is expected to grow to 30.6 exabytes per month by 2020, a stunning eightfold increase over 2015. Impacts of these trends can be clearly seen in the financial industry where KPGM research forecasts that global mobile banking will see exponential growth over the next 5-10 years further fueling a need to focus on a mobile first strategy within the industry.

Meeting the performance demands of this connected universe is proving to be a challenge in mainframe environments already. When integrating new applications with their older mainframe technology, organizations are seeing a great deal of complexity added to their application delivery chain. With this added complexity comes increasing costs. As data consumption continues to escalate at the dramatic rates predicted, finding lower-cost, more extensible, and more service-oriented alternatives to their legacy systems will be critical for the survival of organizations across industries.

The Internet of Things (loT) is on the rise. By 2020, 30 billion devices are expected to be connected to the Internet, and 40 trillion GB of data is expected to be created. – IDC Predictions 2012: Competing for 2020, Document 231720, December 2011, Frank Gens.

Eliminating Repetitive, Disconnected Systems and Improving Integration – Certain industries depend on interconnected data from disparate or diverse parts of the organization to maintain efficiencies and grow competitive advantage making integration one of the main business drivers of organizations considering legacy modernization. In addition, similar functionality exists on and off the legacy stack in many organizations, creating dual maintenance scenarios. For example, according to benchmark data collected by CSC, “a typical mid-to-large U.S. insurer maintains four or more policy admin systems, and many have portfolios of 10 or more systems .” Also, some multinationals have redundant platforms across countries or regions, due to acquisitions and/or governance of each region as a standalone profit center. Other business forces driving the need for integration include factors such as the need to streamline business processes or new business partnerships.

Organizations need to be able to reuse data to avoid recreating or redoing work that’s already been done to optimize their processes and ROI.
There are two types of application integration of importance to most organizations:

  • Tightly coupled applications
  • Interoperable applications

Interoperable applications are the most frequent type of integration style. The goal is to get diverse applications working together to help the organization achieve its business goals. In today’s business environment, interconnection requirements are standard, and the reusability of data is often a top priority.
Reusability, if possible at all, is extremely limited without adequate interfaces to link systems. Legacy applications were simply not designed for this. Older applications are typically highly complex, poorly architected solutions with custom hard-coded interfaces written with limited functionality in mind, making integrating legacy systems very difficult. This keeps existing silos in existence and prevents sharing of information across the organization and between organizations. In fact, integration and reusability may be impossible for organizations wishing to remain in a legacy state without major time and money investments and potentially serious risk to current systems.

On the business side, legacy systems were designed with usability as a secondary consideration since they were internally facing and often come with hard-to-learn interfaces and overall lack of functionality. The result is that business users often spend more time trying to figure out the system or avoid using it altogether, opting instead to manually complete required tasks. This not only costs time and increases employee frustration, but when employees revert to manual processes, information access and security become major concerns.

Gaining Agility and Cost Savings with Platform Migration – Many organizations look to move away from mainframe-based solutions to distributed environments for cost savings and agility reasons. In many cases, distributed platforms offer a lower cost alternative to the mainframe, as well as a more flexible infrastructure, including J2EE and .NET. Organizations are also reviewing their platform strategies as their need to use technologies such as Service Oriented Architectures (SOA) and Web services to improve their agility increases. Changing platforms isn’t a quick process, making a modernization strategy that supports having applications co-existing in more than one environment a common necessity.

Compliance and Regulatory Requirements – For an organization to meet their process compliance requirements, stemming from legislated standards such as Sarbanes-Oxley, HIPAA in the U.S., and BASEL II in Europe, they need the ability to extract business processes from their legacy systems, document those processes, and then transform those processes into new modern solutions. They also need to be able to regularly upgrade their software and operating systems to stay current with security patches and to ensure that all software in use within the organization is continuously supported. Failing to do so or continuing to use unsupported software can be viewed as negligence.

In many cases, legacy systems have been updated over the years with relatively minimal testing and release note documentation by staff no longer with the organization. When organizations look to update or customize their systems, they can easily generate an operating deficiency — a serious issue for organization subject SOX. If a control is not operating as it should or there is a technical fault present in any systems directly involved with the administration of an organization’s finances, and official support is no longer available, the change can put the organization at risk of a serious SOX violation. As it is C-level management that must bear the legal consequences of these types of SOX violations, modernization should be a major concern of theirs.

Reducing Costs – The pressure from investors, boards, and management to reduce operating costs is a significant driver for many modernization efforts. Many legacy environments, including mainframes, are expensive to operate in terms of hardware infrastructure, software license fees, and maintenance staff. There is an urgency to move to what are perceived as more cost-effective platforms. Cost reductions can also be achieved by moving applications to modern development environments that bring with them improved developer productivity and reductions in system maintenance costs.

According to the US Department of Defense, in 2014 their average mainframe per hour spend was $499.98, a shocking sixteen times the cost of running an equivalent environment similar performance characteristics on a Linux platform. The future outlook is dim with IT industry analysts estimating that most large organizations utilizing mainframes should expect 15–20% annual increases in their systems’ CPU resource consumption. With mainframe usage fees making up nearly 10% to 40% of an organization’s IT budget according to a study commissioned by Infosys, cost savings is naturally a motivating force behind many organization’s legacy modernization projects.

Not only is a cloud-based virtual infrastructure’s cost lower, but its usage model is also the opposite of the mainframe’s. The cost model used in the mainframe world is based on peak utilization: businesses pay a rate tied to the peak usage a system achieves over a billing period, even if that maximum is momentary. In a cloud-based environment, organizations typically pay for usage on a utilization basis and have total control over consumption of computing power in their control dashboard. In moving off the mainframe, organizations benefit from the change in billing model as well.

“Federal agencies spend 79% of their IT budgets or $62B annually on legacy systems. “MeriTalk, “Innovation Inspiration: Can Software Save IT?” 7/23/13

Reducing Code Complexity – Legacy systems have typically been modified countless times by many different developers over the years, resulting in code that is very complex and inflexible, known as spaghetti code. These systems take a very long time to modify and in many cases cannot be changed. Organizations need a way to move these legacy systems into an environment where they can be updated and maintained quickly and easily.

Increasing Speed to Market / Agility to Adapt – Organizations require agility to grow and respond to the marketplace. Rapid development and deployment of business software and software products is key to this agility. Many enterprise systems in production today were written three to five decades ago and were not architected or coded for flexibility and easy maintenance. Just as the demands the organization places on the software have evolved over time, so has our understanding of application development best practices.

As you look to transition these old mission-critical applications to modern technologies and architectures, you must first extract the business rules hidden in the code. Being able to reuse key components from legacy applications can provide organizations with a significant competitive advantage during this time of transition.

Leveraging Technology Developments – Developments in technology are occurring at a rate faster than ever before; organizations are continuously under pressure to assess these developments and leverage those technologies that will benefit their organization in their software applications. Many organizations need to modernize their rigid legacy applications to more flexible web infrastructures that will enable them to be more competitive and provide customers with better service. Other organizations have legacy application integration needs that require the use of Web service technologies and Service Oriented Architectures. As technology gets more sophisticated and organizations grow increasingly dependent on their core business systems, it is imperative that they ensure that this software is flexible and maintainable.

Preparing for a Change in Technological Skills and Business Knowledge – A mainframe systems skills shortage has been widely anticipated as increasing numbers of developers from the baby boomer generation opt to retire. According to analysts at Forrester and Gartner, tens of thousands of COBOL programmers retire every day, a trend which is expected to continue beyond 2019. Many organizations have found themselves very dependent on their core mainframe programmers for insight, understanding, and maintenance of key business applications that have been updated countless times over the years and have been in production for decades. Vast numbers of these applications are extremely complex, have no documentation, and there are few, if any, developers left with any understanding of the business rules embedded in the code. Modernizing these legacy systems into an environment that can be understood and maintained by non-mainframe skilled developers and system analysts is imperative to the future of these organizations before the skills shortage reaches a crisis level.

Modernize to support competitive differentiators like cloud, mobile, and big data analytics.
Improve customer service
Fuel innovation
Create new business value
Increase compliance

Eliminating Repetitive, Disconnected Systems and Improving Integration – Certain industries depend on interconnected data from disparate or diverse parts of the organization to maintain efficiencies and grow competitive advantage making integration one of the main business drivers of organizations considering legacy modernization. In addition, similar functionality exists on and off the legacy stack in many organizations, creating dual maintenance scenarios. For example, according to benchmark data collected by CSC, “a typical mid-to-large U.S. insurer maintains four or more policy admin systems, and many have portfolios of 10 or more systems .” Also, some multinationals have redundant platforms across countries or regions, due to acquisitions and/or governance of each region as a standalone profit center. Other business forces driving the need for integration include factors such as the need to streamline business processes or new business partnerships.

Organizations need to be able to reuse data to avoid recreating or redoing work that’s already been done to optimize their processes and ROI.
There are two types of application integration of importance to most organizations:

  • Tightly coupled applications
  • Interoperable applications

Interoperable applications are the most frequent type of integration style. The goal is to get diverse applications working together to help the organization achieve its business goals. In today’s business environment, interconnection requirements are standard, and reusability of data is often a top priority.
Reusability, if possible at all, is extremely limited without adequate interfaces to link systems. Legacy applications were simply not designed for this. Older applications are typically highly complex, poorly architected solutions with custom hard-coded interfaces written with limited functionality in mind, making integrating legacy systems very difficult. This keeps existing silos in existence and prevents sharing of information across the organization and between organizations. In fact, integration and reusability may be impossible for organizations wishing to remain in a legacy state without major time and money investments and potentially serious risk to current systems.

On the business side, legacy systems were designed with usability as a secondary consideration since they were internally facing and often come with hard-to-learn interfaces and overall lack of functionality. The result is that business users often spend more time trying to figure out the system or avoid using it altogether, opting instead to manually complete required tasks. This not only costs time and increases employee frustration, but when employees revert to manual processes, information access and security become major concerns.

“92 percent of Federal IT managers say that it’s urgent for their agency to modernize legacy applications, citing the largest driving factors as security issues (42%), time required to manage/ maintain systems (36%), inflexibility (31%), integration issues (31%), innovation hindered (30%), and the difficulty finding staff with experience managing/maintaining legacy systems (29%).” MeriTalk – Future Ready Applications: The Modern Legacy https://www.meritalk.com/study/future-ready-applications/

Opportunity

If your enterprise is like most, you have a variety of platforms that span decades of technology innovations; from the mainframe to the cloud. Staying with this style of IT environment is both costly and stifling; it limits you from innovating and growing your organization. Legacy modernization is the preferred solution to this situation.

“Reboot” your IT portfolio through modernization for greater business and system agility, operational excellence, and cost minimization. This frees up your time and money to focus on innovation, not technical implementation.

Modernizing your legacy applications is about leveraging their value, reusing embedded business rules and intellectual property, and transforming them to more modern architectures, technologies, and designs. There are virtually as many approaches to modernization as there are drivers compelling an organization to take this strategic step for their organization. Each approach has various pros/cons and results. It is critical to understand each of these approaches and how QAT Global’s recommended approach results in the strongest outcomes for modernizing your mission-critical legacy applications.

Benefits

Mainframe Migration Aligns with CIO Imperatives

  • Cost Reduction – Infrastructure Modernization
    • Scalability at a fraction of mainframe cost
    • Simpler operations
    • Broader choices, a strong cost-benefit ratio, and greater budget flexibility
  • Speed Up Business – Innovation, Agility
  • IT Simplification – Virtualization, Cloud

Our Legacy Renewal Solution enables organizations to:

  • Extract and reuse their key business rules from the legacy code
  • Document these business rules and processes as they are extracted from the legacy code
  • Make improvements to the extracted business rules to optimize processes in the modernized system
  • Modernize the system to a new platform and architecture
  • Future-proof their modernized solutions from future advances in technology
  • Realize time, cost, and risk reductions typically associated with legacy modernization

Federal IT managers say the top deciding factors they use when prioritizing which applications to modernize include:
#1 Security risks
#2 Mission criticality
#3 Technical adequacy
#4 Widespread use of application
#5 TCO
MeriTalk – Future Ready Applications: The Modern Legacy https://www.meritalk.com/study/future-ready-applications/

Take the Steps for Success

Ready to start on the path to modernizing your software with a practical approach? Using an Agile modernization approach with proper planning and the right people on your team will put you on the path to success. The development team at QAT Global is experienced in modernizing legacy applications and working with clients who have complex environments. Put your next modernization project on the path to success, start the conversation with our development team today.

Free E-Book – What are Your Legacy Systems Really Costing You?

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