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Legacy System Transformation. Modernizing Internet applications as a component of digital transformation
05 / 06 / 2019
Problems with outdated systems and machines often cause production line downtime. One hour of downtime can cost a business from several hundreds euros in the food industry to even hundreds of millions of euros in the refining industry. It’s not only about financial loss, but also lost chances, damage to reputation and reduction of your business’s competitive edge.
Time also does not favor IT systems, since obsolete technologies inhibit smooth functioning and further development. These problems can be solved by Legacy System Transformation. The process ensures the safe and seamless operations of systems and critical applications.
The Gartner Institute defines a legacy application or system as “an application or system based on outdated technologies, critical to properly performing day-to-day operations”. Replacing legacy solutions with systems based on modern technologies is one of the greatest challenges brought by digital transformation. At the same time, as enterprises upgrade, they must ensure compatibility with old systems and data formats that are still in use.
The need for LST by companies across diverse industries is also a product of legal changes imposed by both national legislation and EU directives. These include the Payment Services Directive (PSD2) within the internal market, directives on rail system interoperability within the EU and on telematics applications for freight and passenger transport services, and the broadly discussed General Data Protection Regulation (GDPR).
The 2018 “FLEXERA MANUFACTURER PRODUCT EOL/EOS” report points out that outdated technologies are a serious problem faced by all organizations. It presents the primary costs resulting from the use of unmonitored and inadequately secured environments. These include data safety expenses, audits conducted by suppliers, higher costs of maintaining unsupported products and losses reaching as high as $500,000 per hour of downtime in database operation.
Legacy System Transformation helps you avoid such costs. This system effectively deals not only with the obstacles inhibiting digital transformation, but also with the business risk generated by each subsequent crash. The approach consists in verifying the condition of a problematic IT system and preparing strategy recommendations to achieve the target solution. And if need be, implementing the necessary measures to ensure its seamless and safe functioning.
A critical aspect of Legacy System Transformation is securing the present system while introducing the necessary changes. Ensuring uninterrupted operation of critical systems is of key importance. The problem has to be tackled from two perspectives. On the one hand, it’s necessary to recommend a target solution, while on the other, to introduce ad-hoc measures enabling continued operation of a system.
Implementing the process delivers a range of benefits to enterprises which have to redefine their business goals and localize them in their present architecture. Companies also have to plan effective integration with systems currently in use and ensure synergy between them.
Software architecture or the technology used can make it hard to maintain or develop obsolete software and integrate it with new systems. Also, over time it gets harder and harder to ensure seamless operation of systems and critical applications. In fact, it’s often impossible. That’s why using older systems is considered to be one of the most critical barriers to performing digital transformation in enterprises.
Integrating systems also improves data safety, a lesson learned in March by Norst Hydro, one of the largest aluminum producers in the world. The company became a victim of a blocking virus which affected its IT system in most areas of its business activities. It also caused major losses, including downtime in production facilities and a plunge in the company’s share value.
The cyberattack was possible because older solutions tend to be more vulnerable to malware. This is hackers have had enough time to explore and find gaps in the code of software on the market for years. Moreover, suppliers of obsolete software rarely provide updates. As a consequence, the system stops meeting the newest safety requirements. Even if a company develops a bespoke system and has significant resources, the software needs to be maintained by continually introducing subsequent fixes and updates. This triggers the need for additional investment in ensuring its safety.
All this can lead to the so-called “leaky bucket effect”. It means that having plugged one gap, we find another defect that needs to be secured. At the same time, we must remember that digital transformation forces companies to use data secured earlier within the organization. This leads to the need to protect it.
Legacy System Transformation also enables cost reduction. Older systems are usually very complex in terms of code length and functionalities. Due to their monolithic nature, a change to one module may disrupt the functioning of an entire application. Therefore, each update to an existing system consumes time and energy, in turn generating additional costs. The same applies to the entire infrastructure. Over time, maintenance becomes more and more difficult and expensive.
Older systems tend to need a specific technical environment, which includes the equipment. Therefore, investing in infrastructure maintenance is much more costly when compared to cloud-based modern solutions. Using outdated technologies also requires that employees be equipped with a specific set of capabilities and knowledge when supporting and maintaining older systems. Companies are thus forced to invest in dedicated staff training, which generates additional expenses.
Legacy System Transformation enables businesses to align themselves with current IT standards and create a competitive edge. Investing in support and maintenance of older software reduces the time and space available for implementing new and innovative solutions. This can take away your competitive advantage. Instead of implementing the latest IT practices and business models, companies focus on maintaining outdated software. It increases the risk of overlooking new opportunities for development. In the meantime, those opportunities can be noticed and exploited by the competition. In these cases, the cost of the lost opportunity can be calculated by the income the competition gains from newly acquired clients. That’s why the ability to quickly implement changes is key to building competitiveness effectively.
Businesses that want to be perceived as innovative have to be capable of opening a new office in another country within a month, or of instantly launching a new product. Achieving this would be impossible without well-functioning IT systems. This trend is presented in the graph below. It shows how much faster it is now to adopt innovations, and how important the flexible and quick implementation of change is for maintaining competitive advantage.
Where to start?
The Gartner Institute anticipates that the expenses imposed by modernization of existing systems on businesses will be more than three times the value of investments planned till 2020. Their effectiveness depends on the approach choses by a given enterprise. One of the most frequent choices is migration of the system with the use of cloud solutions and introducing minor upgrades. However, this approach also imposes multiple limitations. This is because the primary business logic and architecture remain mostly unchanged. Therefore, in many cases, more innovative solutions are necessary. These consist in implementing changes based on advanced technologies. These may include changes related to optimizing architecture, efficiency or refactoring applications. They could even mean rebuilding the entire system.
Regardless of the subsequent modernization method, the first step in Legacy System Transformation is to verify the condition of a problematic IT system. We develop recommendations for subsequent development phases based on technical analysis, outcome of documents verification and business, functional, performance and legal opportunities. In order to liquidate technological debt and modernize systems step-by-step, the best solution must be introduced. This will translate into seamless, stable and safe operation, as well as expansion of competitive edge.
Regardless of the reasons for system modernization, the key benefits expected by businesses or the methods employed in the modernization, Legacy System Transformation is a complex and time-consuming but absolutely vital process. Businesses will not complete their digital transformation effectively if they base their activities on outdated software. Choosing the right path for further growth has a significant impact on accomplishing business goals and creating a competitive edge. At a time when digital transformation is becoming a priority for more and more enterprises, you can’t afford to ignore these issues.
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