Although there are a number of forces driving companies to modernize their IT systems these days, the overriding impetus for enterprise IT modernization (EIM) is the need to easily address changing business demands in order to maintain a competitive edge in the market.

CIOs understand that EIM can significantly reduce costs through the implementation of more efficient, standardized IT systems that lower maintenance and human resource expenses. Modernized systems also guarantee shorter time-to-market, easier application integration, consolidation of subsystems, and the ability to expand functionality while fully preserving corporate business knowledge. Their ROI can be measured not only directly within the IT budget, but also throughout the organization, due to increased productivity and more efficient decision-making processes.

Since legacy systems include all production systems and their associated data, EIM is, simply put, the process of ensuring that legacy systems fully meet the enterprise’s present requirements and current technology needs. Viewing EIM as a constantly evolving, ongoing process—a kind of large-scale never-ending maintenance operation—defuses the threatening nature of EIM projects. By redefining EIM, it becomes more accessible and more realistically achievable.

The Business Case for Enterprise IT Modernization

The consideration currently given to EIM is a direct reflection of today's business climate. Businesses require cutting-edge IT systems in order to stay ahead in a dynamic marketplace characterized by rapid change, globalization, economies of scale, increasing competition, and diminishing margins.

While EIM can be viewed as a basic and ongoing need of every IT system, more often than not, the decision to launch a modernization initiative surfaces at a critical juncture for the organization. Examples of the business drivers that are leading management teams to engage in modernization projects include competitive pressures, mergers and acquisitions, standards and regulatory changes, a diminishing legacy skills base, and many others.

CIOs understand the need for periodic and ongoing IT Modernization efforts as a cost-effective measure to enable business growth and extend the ROI of existing IT investments. In order to achieve efficiency, the cost of modernizing must be weighed against the alternatives: not modernizing at all or completely replacing IT systems.

IT System Evolution

Enterprise IT systems are always growing and evolving: organizations add additional modules, integrate systems and improve connectivity. The advantage of system evolution is that core business logic and processes are retained, preserving a significant investment of time and money. However, in the context of the evolutionary mindset, IT managers are inclined to adopt an “if it ain’t broke—don’t fix it” attitude to modernization projects, or at least rationalize that the cost of modernization is higher than the cost of doing nothing.

But there are actually very significant costs associated with “doing nothing.” System maintenance, human resource costs and patch-development have been shown to grow over time, leading to a large increase in direct IT costs. Even more important are the indirect IT costs that result from an organization’s inability to respond quickly to market demands due to sluggish IT response.

Taken together, the direct and indirect costs of the “doing nothing” approach easily outweigh its benefits. In fact, this type of mindset often results in an inevitable and often tremendously expensive “do-or-die” modernization project, due to lack of foresight and pressing business imperatives.

IT System Revolution

Under pressure to meet changing business demands, enterprises also consider revolutionary modernization methods—replacing entire legacy systems, rebuilding new custom applications or buying packaged software to fulfill mission-critical functions.

There are advantages to revolution—most notably the fact that the end product is usually the most technologically advanced. But this, of course, assumes no development delays for organizational or technical reasons. It is not surprising that many large development and integration projects end so significantly past their original schedule and over their initial budget that they become technologically outdated before they are even launched.

The major disadvantage of revolution is that it often involves the loss of years of accumulated application business logic—an unacceptable sacrifice in difficult economic times. Additionally, although legacy applications are frequently large, monolithic, and difficult to modify—they do work. And taking them out of production means costly system downtime coupled with the necessary redevelopment of operational and business processes. Such changes tend to be enormously costly, often prohibitively so.

EIM—The Golden Path

EIM represents Accelerated Evolution—the optimal solution between evolution and revolution. With EIM, the value of legacy IT investments is extended through the use of a combination of cost-effective alternatives to overall replacement—migrating systems to new IT environments, transforming them to address new requirements, and extending them to new technologies, while reusing proven business logic and preserving the knowledge of the current IT staff.

Modernization is a comprehensive, cost-effective and safe way to preserve legacy investments, while simultaneously avoiding the costs of maintaining systems in their current state and the business impact of switching to an entirely new environment. As a rule, modernizing systems to suit ongoing needs costs a fraction of the cost of implementing a new comparable system, with minimal risk of significant business interruptions. Overall, industry analysts concur that EIM can lead to 20-40% percent reduction in costs due to more efficient utilization of modern technology, lower human resource requirements, and lower maintenance costs.

Moreover, with an EIM approach, organizations can maintain their old application functionality, which users are comfortable with and serves them well, while creating an environment that serves as a basis for modifications, ease of maintenance, etc.

The Modernization Process

The rigorous complexity of enterprise-level IT modernization projects demands a structured, experienced approach. When facing the challenges of moving entire mission-critical environments—that support crucial business processes and have far-reaching business repercussions—the key to success is having a strategic combination of innovative tools, skilled manpower and proven methodology that, when used together, are appropriate for the company’s specific IT environment and business needs.

To achieve the company’s goals, it is best to approach EIM in phases:

Phase I: Understanding

In complex, interconnected and distributed enterprise IT environments, the essential first step on the road to efficient modernization is Understanding. Only by performing an in-depth inventory of the interrelationships and interdependencies of current systems, can CIOs and their team members effectively analyze all potential IT impacts.

Only by analyzing this information can IT executives identify the least risky and most cost-effective modernization method based on their specific IT environment and project needs. Only with a comprehensive view of the organization’s IT assets can they confidently make informed strategic decisions regarding a wide range of critical enterprise-level issues.

For example, before launching a modernization project, programmers, system analysts and managers need to understand the functionality and structure of existing legacy application code. However, understanding legacy systems is often a difficult task since the code may be written in antiquated languages, with messy or indecipherable structure, and insufficient documentation. Consequently, the process must include:

• Documenting business logic, data structure controls, user interface and system management code that are often mixed and impossible to tell apart

• Clarifying the functionality of specific application software so that programmers can be sure that particular code performs a specific task

• Identifying relationships and interactions between different parts of the system that may be vague or completely unknown

• Removing inactive, obsolete or redundant code or data structures while making sure that this process does not cause a malfunction or other unknown impact

Recently, automated tools have been developed that automatically conduct a complete inventory survey of the source system, examining system interrelationships, and interdependencies, and identifying, classifying, and mapping all relevant components. These tools also report on missing and redundant items. The resulting detailed reports contain the information that IT management requires in order to fully understand legacy systems.

Additional Application-dependent Factors

Two more factors influence the ultimate decision. The first of these is the quality of the legacy application. “Quality” in this context should be assessed in terms of parameters such as:

• Current effectiveness—measured by the amount and type of errors generated, number of workarounds and level of support needed;

• Stability of core business rules—measured by the amount of changes to the application logic expected in the medium-term.

There is an underlying assumption in legacy transformation that the existing software asset is a valuable one. If the business model is expected to change, then this assumption may not be valid. At the same time, legacy code is often the only repository of business logic in the enterprise. Thus, even when “starting from scratch” through redevelopment, there will be a need to reconstruct and document this critical organizational asset.

The issue of legacy system functionality is another factor that must be taken into account when deciding which modernization method to apply in a specific situation. Functionality—how closely the application adheres to functionality requirements—is typically related to the stage of the legacy lifecycle. In earlier stages, a legacy application will likely map more closely to the requirements, even though the platform may be obsolete. With time, business needs vary and diversify, and functionality gaps inevitably occur in the legacy application.

Phase II: Implementation

The information resulting from the initial Understanding phase allows CIOs and other executives to learn the strengths and weaknesses of existing IT systems as the basis for strategic and tactical decision making. As a result, they are able to consider the different modernization options available to them or any combination that best suits their specific IT and business needs. These options can be broadly divided into three categories:

Migrations

Migration describes the process of transferring software from a legacy environment (DBMS, platform, language, etc.) to a newer, more modern computing environment. Migrations can be relatively simple or very complex, depending on the type, structure, size, complexity and functionality of the legacy application or data source. State-of-the-art migration tools enable semi- and fully-automated migration of legacy applications, platforms, languages and the data residing in them. Migration is typically a strategic positioning decision to replatform legacy systems, preserving and safeguarding the current business rules while providing a new and more cost-effective development environment for future business requirements.

When planning a migration project, it is important to select a solution that has a clear path to future technologies and will eventually allow elimination of any memory of the outdated technology. The new environment must enable the IT manager to continuously make enhancements to the core system as well as to leverage such things as Web tools and Service-Oriented Architecture (SOA) concepts in conjunction with the new system.

Remediations

IT remediations are those changes and modifications in software structure, function or resulting outputs that are required by regulatory changes and new business requirements (such as moving to a new currency system or numbering convention). Such requirements typically necessitate enterprise-wide application remediations. In other cases, consolidating separate servers and standardizing on enterprise-wide conventions require similar remediations. Without these, legacy systems might be rendered obsolete or inadequate.

Remediations, too, involve highly complex and precise handling of existing application code and system functionality. Advanced, specialized remediation tools allow such mission-critical, cross-platform, enterprise-wide change to be accomplished rapidly and automatically, with minimal risk and maximum end-user transparency.

Redevelopment

Depending on quality and type of legacy system, EIM experts often decide to restructure or reengineer parts of existing software systems. Based on the understanding gained during the first phase of the project, companies are able to extend ROI by reusing the business logic of existing applications.

Modernization-related redevelopment first captures the organization’s mission-specific business rules (enterprise requirements, workflow, structure, procedures, etc.). Then, based on this extracted business logic, redevelopment and new code development commences. Throughout the process, the goal is to ensure portability, upgradeability, object or object-like structuring and future-proof reusability in the new or renewed code.

Enterprise decision-makers, knowledgeable in the organization’s current business processes, can choose re-implementation of the legacy IT environment as the appropriate way to modernize through incremental redevelopment. Consequently, the systems can be extended into new technologies, resulting in code built directly on the structure and functionality of existing systems and applications.

The Benefits of Automation

In the past, many IT modernization projects were rejected by CFOs and senior management due to the financial burden they put on the enterprise, in addition to their inherent high risk of failure. Over time, as substantial automation of EIM has become feasible, modernization is now considered an economically attractive option compared with completely rewriting or replacing legacy applications.

Today’s automated modernization tools cover all aspects of the EIM process, automating labor-intensive and resource-intensive portions of the projects, while leaving key decisions in the hands of the experts. High-performance, flexible and proven EIM tools were specifically designed for enterprise-level projects, and are implemented using a proven and tested methodology.

Phase III: Ongoing Maintenance

Although EIM is often viewed as a one-time endeavor, this “snapshot perspective” is incompatible with today's dynamic IT reality. Beyond the initial impact analysis conducted in the Understanding phase of modernization, it is important for companies to maintain a continuously updated IT data repository. Observation over time facilitates more effective understanding, management, and maintenance of complex IT environments, providing CIOs with the “bigger picture” they need in order to adapt to new technologies and needs.

This IT data repository—a comprehensive Application Portfolio Management product—consolidates strategic system information, allows for the addition of other operational data, and is housed in a comprehensive metadata repository. IT executives can then use the warehouse’s powerful and dynamic capabilities to update complementary information, run ad hoc personal queries, and generate customized, in-depth reports.

The advantages of conducting continuous IT data warehousing include, among others:

• Significant reduction of ongoing maintenance costs

• Rapid response to production problems and changing enterprise requirements

• Continuous enablement of application performance optimization

• Accurate delivery of complete IT project estimates

• Major improvements in the delivery time and quality of routine, occasional, or ongoing application changes

• Timely support of application consolidation initiatives

Summary

IT systems are a core part of enterprise infrastructure—as mission-critical to business continuity and operation as any asset, building, office, or warehouse. Thus, CIOs are focused on keeping applications current by employing technologies that support a rapid application development environment.

Keeping IT systems running efficiently demands that IT staff constantly revisit, improve, and streamline processes in all existing systems, maintaining high availability on a routine basis. However, the status quo is often insufficient to meet evolving business demands, and IT is called upon to develop new applications and expand the functionality of existing applications to meet new challenges.

In the rapidly changing world of platforms, databases, languages, and computing environments, enterprise systems may be physically located on different continents, and share data from hundreds of sources. Bringing all these systems in line with business goals and keeping them performing according to current business standards requires a thorough understanding of the current IT environment, a proven methodology, and the use of automated tools.

Tsipora Cohen is Vice President of Marketing at BluePhoenix Solutions.

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