Today’s IT executives are managing very complex environments that contain a large variety of platforms and technologies – many of which are past their expected life, beyond vendor support and slowing down the business with the costs to maintain/support/change. The key to reducing costs and improving application change delivery (through enhancements, new product support, and new features and options) is simplifying the IT landscape and finding the most cost-effective operating environment. Recent estimates suggest that the typical IT budget is 80 percent “keeping the lights on” (support) and 20 percent new business (what the business wants), with support costs increasing.

Many organizations are looking to application/system modernization as the solution to these challenges. These initiatives include migrating mainframe systems to distributed operating systems (including cloud), software package replacements, re-writes, database conversions and new front-ends (Web, portal, graphical user interface).

The first question is “Where do I start?” It’s important to understand the current IT landscape and prioritize your modernization projects. To prioritize which applications should be modernized, all applications should be plotted onto a business value versus operational cost chart. The applications with the highest business value and highest cost have the highest impact and best business cases. These applications should be first to be modernized – the cost of these applications must be reduced. It’s important for IT to work with the business to align the technology and application roadmap with business/product plans. An application may be important today, but make sure the product or function it supports is part of the long-term company strategy.

The next question is “What approach do I take?” There are a few strategies to consider:

Package. If the application selected for modernization is already a package, you’ll need to determine if there is a more current version, if there is one that runs on a lower cost platform, and what the vendor fees and additional costs will be to upgrade – including re-applying any customization, interfaces and training. If you are looking to replace an in-house or highly customized system with a package, there are some very big potential challenges:

  • Determining what the current system does today (extract the business logic/rules)
  • Recreating that in a package without losing any business functions or strategic advantage,
  • Selecting the right package,
  • Calculating the impact introducing a new system will have on the business,
  • Losing in-house knowledge,
  • Needing to retrain/replace the IT development team, and
  • Needing to retest every function, operation and process supported by the application.

Essentially, everything will be changing. There are many studies done on replacement package projects, and 80 percent or more are late, 50 percent are over budget and 20 percent are canceled before completion.  
Re-Write. There are a couple of strategies when considering this option: code/language conversion or re-engineering. Code conversion is usually considered when the current language is older, obsolete and/or tough to find skilled resources for, such as DYL280, ULTIM and Assembler. This is also a good option for reducing costs if the programs have expensive runtime license fees and/or need to be interpreted/compiled during execution (like some reporting languages). By converting to more traditional compiled languages, the licensing and CPU savings can be substantial. There are several specialized companies performing these types of conversions – make sure there is a warranty, check references and ask them to convert a sample program before you select the option and vendor. This isn’t a good option for languages like COBOL, an automated conversion to a language like Java will result in a mixture of both languages There are plenty of COBOL programmers and there is more COBOL program developed everyday than any other language. With the re-engineering option, you need to redesign and redevelop the entire application using new technology, and you are faced with the same issues as the replacement package option – extracting the business rules/functions, anticipating impact on the business/users, retraining and retesting everything.   

Migration or Re-Platforming. The process of moving a mainframe or mid-range application to a distributed environment has the least risk and the shortest timeline. The advantage of this option is that it involves the least amount of change. This option is usually the first step of a modernization strategy, and can be combined with some level of re-engineering. As an example, the migration of a mainframe application to Windows can be combined with converting the database to SQL and integrating it with SharePoint. This option also guarantees that the business rules and strategic advantage developed into the application over the last 10 to 20 years remains 100 percent untouched. Many organizations migrate to a lower cost environment (modernize the operating system) and then take advantage of the new platform to modernize the presentation layer, interfaces, database, etc. Visual Studio and Eclipse both support COBOL development and deployment to most distributed operating systems, and enable the extension of COBOL into .NET, Web services and Java/J2EE.

Most applications aren’t broken, but there is a need to run them in a more cost-effective environment and provide the development and support teams with better tools. When selecting your application modernization project, also consider how you are going to support it after the project.

With the right option, most companies realize 50 percent or more operational savings, and a 30 percent or more productivity gain. Reducing IT operational costs has a positive impact on the bottom line of a company. It’s important to study your options, build your case, involve your business and select the right partner.

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