A Rational Approach to Enterprise Modernization
Today we’re starting a new series called “A Rational approach to enterprise modernization.” This series is meant to help you and your business to optimize the value of your applications, people, teams and infrastructure. It's based on a thought leadership white paper from Ashok Reddy.
Over the past half century, businesses of all types across the globe have made significant investments in software and systems to automate business processes, deliver innovative capabilities, and integrate operations. As technology has evolved, organizations have carefully considered choices about platforms, programming languages, and methodologies in order to address business needs in the most effective ways possible as each new approach or capability has become available. But multiple decisions about computing infrastructure made over a number of years have led to deeply embedded and often disjointed archeological layers of technology and information assets.
Organizations find themselves with an incredibly diverse and evolving set of contributors distributed across geographies and generations with different skills, needs, and expectations. Furthermore, new technologies continue to emerge at an increasing pace.
Today, technology is what organizations rely on to differentiate their core capabilities, control costs, and drive sustainable growth. Mapping the best technology strategy to desired business process improvements has never been more mission-critical, yet it has never been more complex. Realizing that the status quo is no longer a viable choice, organizations must consider ways to modernize their technology infrastructure to deliver differentiated products and services.
Outsourcing is a common path today for at least a portion, if not all of, an organization’s IT operations. Leveraging packaged, comm
A third option, and one that is the primary focus of this paper, is modernizing existing applications, processes, and development infrastructure. These options are not mutually exclusive, and there is no single, correct “one size fits all” solution. The key for your business is to strike the right balance among numerous strategic options in order to optimize your desired business results.
In this series you will learn about a new, broad, and all-encompassing multiplatform view of modernization in the context of applications, people and teams. Our goal is to help you:
Key challenges in enterprise modernization
A typical view of IT modernization shifts immediately to phrases like “legacy modernization” and assumes the discussion will be about mainframe systems and software. This is only partly true; “legacy” means any existing system, whether it was created last week, or 30 years ago.
The scope of IT modernization encompasses all systems, including distributed applications written in Java™, Microsoft VisualBasic, C, C++, C#, PHP, and more. It’s about open source, Blackberries, iPhones, outsourcing, process improvement, and finding the right combination of assets to ensure that the technology is delivering the necessary business results. Ultimately, it’s about ensuring that the IT organization can support the vast sea of challenges that businesses are confronted with.
Here are the primary challenges as we see them:
Poor alignment between the IT strategy and the business strategyThis is a near universal problem. For decades, corporate executives and department managers have complained about budget overruns and schedule delays of complex IT projects. Underlying causes include the intricacy and size of modern applications, as well as poor communication between business, which features operational and IT experts who speak dissimilar jargon. The accelerating pace of evolving technologies only exacerbates the problem. The 2008-2009 economic downturn emphasized the need for agility as many companies shifted their business strategy, both to reduce cost and to seek competitive advantage. Those who can shift more quickly and efficiently can set themselves apart from the competition.
High application maintenance costs consume 70-80% of most IT budgets, given the sheer mass of code and assets to be maintained. The lack of knowledge about the value, costs, interdependencies, and potential change impact relative to those assets is a key business challenge. Many companies seek modest improvements (2 - 5 percent) in annual maintenance productivity, based on more effective use of current tools, maintenance skills, and life cycle governance methods. Achieving more significant maintenance productivity improvements will require changes to one or more of these IT expense factors.
Inflexible, aging and poorly integrated IT systemsThis can also hinder your ability to quickly innovate and deliver new products and services to your customers. Today’s business users have grown accustomed to the ease of use of modern web-based applications. However, many organizations still depend on traditional green-screen or character-based applications which can be inefficient, difficult to use and hard to change. Finding cost-effective ways to modernize and extend these IT systems to deliver new differentiated service offerings can deliver greater return on technology investments and avoid costly rewrites.
A good example of aging application technology: It is estimated that there are approximately 200 billion lines of COBOL code in production, with 5 billion lines of new code added to these highly valued core production systems each year. As much as 70% of business data worldwide is stored on mainframes and approximately 80% of daily business transactions are processed in COBOL. There are about 1.5 - 2 million developers globally developing and maintaining COBOL code today (see for example the article from January 2011).
In addition, the aging of the current IT work force creates concern that they will walk away with much of the business and technical knowledge accumulated over decades of building and maintaining the applications that run the business. The difficulty in attracting new talent to a green-screen environment can also stifle innovation and potentially put your organization at a competitive disadvantage. Organizations must strike a balance between (a) training existing personnel with deep business knowledge and experience and (b) hiring fresh personnel with modern technology skills but less business logic knowledge and experience. Reaching the right balance in resources is essential to minimizing risk on a modernization project.
The lack of collaboration among different development teamsThis is a challenge across multiple dimensions. You may manage multiple development organizations across mainframes and distributed systems, perhaps in multiple physical locations, and could be relying on outsourced personnel. This can potentially cause domain, cultural and coordination challenges, especially recognizing that a majority of your enterprise applications are multiplatform in nature. Your company may have grown through acquisition, requiring application and hardware consolidation and painful changes in the merged organization. The use of different tools and processes among separate development teams creates a lack visibility into how, for example, changes in one part of an application on one platform will impact other parts of the application on another platform. This lack of integration translates to significantly reduced efficiency, lower quality and increased costs.
Stay tuned for part two of our enterprise modernization series: Improving application knowledge, development skills, team collaboration, and infrastructure efficiency