Legacy Modernization - ROEI

Legacy Modernization - ROEI (Return On Existing Investment)

IT organizations are consistently faced with pressures to increase the quality of their customer service, to increase profits and to provide ongoing access to needed information. Valuable applications, built on older technologies, present challenges to any organization. According to a report published by Infosys in 2010, nearly 70-80% of an IT department’s total annual budget is consumed by system maintenance. With so much of the budget being dedicated to maintenance, little is left for technology innovation or new developments.

Over time, lack of innovations or new technology developments can lead to inefficiency systems, high maintenance costs and lack of organizational flexibility. Inevitably, organizations must address these gaps in technologies in order to not only properly leverage systems for organizational growth, but to achieve business sustainability. One viable strategy that assists IT leaders in addressing these issues is legacy modernization.

What is Legacy Modernization?

Any production enabled software can be defined as a legacy application, regardless of language or platform. Legacy modernization refers to the conversion of aging applications into more modern architectures. As organizations evolve, so does their need for applications within their IT portfolio. Combining the strengths of current applications with current opportunities in new technological development, describes the essence of legacy modernization.

One of the primary drivers behind legacy modernization is the need to integrate current IT applications. This integration need can be driven by such factors as mergers and acquisitions, new business partnerships or the need for greater organizational integration.

Other drivers which compel organizations to consider legacy modernization include the need for:

·         Platform Migration

·         Regulatory Compliance

·         Cost Reduction

·         Reduction in Process Complexity

·         Enhanced Go-to-Market Flexibility

Regardless of what prompted legacy modernization considerations, business leaders must fully understand the ROI of the underlying investment prior to beginning any new implementation plan. While there are raw costs associated with legacy modernization implementation, most industry leaders will suggest that there is a greater cost associated with lack of implementation or change. Consider where your organization will be should you not update your main frame applications. Will you remain competitive?

Steps to Modernization

When beginning legacy modernization, the first step is to assess the IT portfolio’s current applications. Consider the following questions:

·         What value is the organization currently receiving from the current IT portfolio?

·         How could current applications be integrated with newer technologies?

·         As a business leader, how can you balance the need for newer technologies with the underlying cost of completing the conversions?

Once the initial assessment has been completed, the enactment, or integration phase can begin. Legacy modernization requires planning and preparation for successful results.

While organizations often choose to ignore application issues until they become truly prohibitive to the business, ongoing updates and changes will not only enable the business units to operate more efficiently, but will reduce overall IT costs and provide much needed time to focus on developments as opposed to maintenance.

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David Peterson

David G. Peterson is a business consultant and author of Handling the Remedy. He has extensive international experience managing projects and operations for large financial institutions. He has worked in North America, Europe, Middle East and Asia skillfully managing business and technical requirements, core systems enhancement and support, merger and acquisition integration's, business process reengineering, off-shoring and outsourcing.