Legacy System Modernization: An Important Shift to Evolve Your Business

Legacy system modernization (re-platforming) is transporting existing or traditional software functionalities to a context that is compliant with up to date IT systems. A legacy system can be any piece of software, incumbent technology or an entire system that blocks or slows down an organization’s ability to grow, shift and adapt in the face of changing market dynamics. Legacy modernization is an open ended journey to streamline process efficiency, collaboration across platforms, improve business performance and create new ways of serving customers.

Advantages of Legacy Modernization:

  • Reduce processing time

  • Analyze frauds quickly and avoid chances of them repeating

  • Address mobility challenges

  • Implement business intelligence into the core systems

Legacy systems are software that were deployed way back in part early 2000s.  Legacy technology face issues with

  • Maintenance

  • Support

  • Enhancement

  • Integration

  • User Experience

Companies now realize that they must transform their IT systems with a modern technology stack or risk their relevance.

However how companies approach this transformation depends on factors such as their organizational culture, scope, urgency, risk appetite, existing technology stack, technical expertise and funding.

The Need for Legacy System Modernization

Legacy modernizing software is bringing the entire enterprise up to speed with the digital environment and does not entail just a software update.

The Deloitte study  on legacy systems and modernizations looked at the primary business drivers behind legacy system modernization, key factors on deciding on a solution and what approach IT leaders are employing to modernize systems. Some key drivers that emerged were:

  • Relevance

Relevance was a major factor in undertaking modernization techniques but was not however considered the most important factor.

  • Being Competitive

Almost 9 out of 10 respondents of the study stated that employing modernization techniques helped to keep them competitive.

  • Timing of Market Presence

1 in 5 respondents also stated that the speed with which their product hit the market was the most influential business driver to legacy modernization.

Benefits of Legacy System Modernization

Every organization needs to undergo change to stay efficient and profitable. The benefits of modernizing the legacy system are as follows:

  • Being Future Ready

To bridge the gap between customer expectations and current offerings companies need to rethink their business models and get themselves up to speed with regard to modernization of any legacy systems.

  • Organizational Efficiency and Agility

Outdated software is less efficient, has a negative impact on employee productivity and can hold back innovation leading to losses.

Time to market is always crucial and indicates how agile the organization is. Deployment of solutions should be measured in days or weeks and not in months. Modernizing with a focus on continuous delivery – integrating product development with IT operations can be very effective.

  • Financial Gain

Updating existing software and systems can initially seem like a costly endeavor.  However, there will be significant change in maintenance cost and overhead expenses for the better.

  • Security

Accenture’s 2018 report on the state of cyber resilience identified legacy infrastructure as having one of the biggest impacts on damaging cyber-attacks along with lost or stolen information. Legacy systems not only create loss of business but also have a negative impact on employee morale and time spent on recovery. Security thus comes as a huge advantage of modernizing legacy systems.

  • Software Integration

Modern enterprise software almost always use application programming interface (API) to bring full value to the enterprise.  Third party software and the API’s can be used to track transactions, share data and authenticate users. Modern software has a built-in capacity for integration which the legacy systems lack or require greater customization and/or coding time.

  • Growth Opportunities

Adapting and incorporating new systems allows for better customer experience, improved backend maintenance and shorter deployment time. This supports the business and primes it for growth.

Legacy System Modernization-Steps and Checklist

For a successful modernization project the following 7 points will serve as a route map to chart the further course of action

Assess the current state of legacy systems

Do a complete assessment of all systems in place in order to arrive at current and potential issues which could serve as pitfalls. Study all aspects of the current technology being used such as coding, architecture, visual feel and look.

Select the fastest and most applicable modernization route

Based on the assessment conducted as above opt for a method which delivers the best result keeping in mind company goals and objectives. Remember that some of the existing systems could be customized or improvised to deliver the desired results rather than a complete revamping of the system.

Rethink the architecture and simplify based on priority

Many times, the software introduced to improve existing systems may fail due to their complexity. When it comes to modernization of legacy systems, less is more in terms of architecture and functionality. Implement only the most important features. These changes can be implemented in such a manner that more changes can be incorporated at a later stage

Choose the technology pack to deliver optimal performance and user experience

A careful choice of technology keeping in mind product specifics and one that is future ready needs to be made. Consulting with the internal IT staff or a professional tech consultancy  would help to bring forth a reliable and efficient product.

Document for future growth

Orderly documented and clean codes make the software easier to understand, enhance and maintain in the future.

Create a separate support and retirement schedule for the legacy systems

Even if the new system is up and running successfully, document and archive the older system in order to facilitate easy retrieval in case of any requirement or emergency.

Budget for training and system updates

Invest in staff training in order to raise the levels of efficiency, performance and adaptation of new systems. Training your existing staff who know the existing processes on new technologies will be beneficial to the organization and the employees alike.

Legacy System Modernization Approaches

Organizations may opt for different approaches for legacy system modernization depending on their needs and setup.

  • Complete Transformation

The entire system is rebuilt using new technology. This kind of transformation is the riskiest yet offers the highest return and gives the best competitive edge. The technology stack and architecture are modern enough to remain competitive for several years.

  • Gradual Replacement

A component or a functional block of the IT system is replaced with the new technology whereas the rest of the system remains on the old technology. Over time the rest of the system is gradually replaced. This is a low risk way to transform the entire system, part by part. It delivers quicker results compared to total transformation.

  • Duct Tape Approach

Localized small-scale changes are performed using new technology to address specific issues in the application while the core architecture and technology remain the same. This method offers small scale changes and offers comparatively big returns. It is a less risky approach and is supported by an ad hoc budget.

  • Improve Existing

The existing system is modified to offer better results through improved design. This method increases the lifespan of the existing technology and addresses only the burning issues. The existing legacy team can handle the changes and does not require any new technical skills.

  • No System Change

Companies take a wait and watch approach and not undertake any modernization drives or system changes.  Sometimes, this can be a tempting option since there is no cost involved at all. However, the true cost of not making any changes will add up over a period of time in terms of losing both markets share as well as lacking support for innovation.

Legacy System Modernization: An Important Shift to Evolve Your Business

Check out our Case Study to know more about on digitalization of Portfolio Risk Management.

Conclusion

Application modernization does not happen overnight. It is an incremental process and may include implementing technologies such as cloud, mobility, advanced analytics and cyber Security. Legacy modernization is an iterative approach that enables the company to transform their IT ecosystem based on current and future business needs and build a flexible foundation for future innovation.

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