The goal of many businesses is simple: Have the business and IT departments work together to drive growth and innovation, at an affordable cost. Applications play a critical role, and modernizing them is the key to achieving long-term sustainable results. Luckily, by applying a comprehensive and strategic approach to application modernization, organizations can create an application environment that is efficient as well as cost effective for the business. The first step in the process is to assess all of the applications currently in the environment in order to effectively modernize the application portfolio.
THE MESS WE GET IN
Cost: Organizations are spending upwards of 70–80 percent of their technology budget on maintenance and keeping the lights on.1 Whether these costs are infrastructure, application licenses, or support staff, they inhibit the flexibility as well as the ability to innovate and grow the business.
Complexity: Much of the code found in applications today is redundant, and it is common to see multiple instances of redundant applications. In many cases, the applications have been “patched” many times, becoming so bloated that changing them is a risk that threatens business continuity. In addition, the accumulation of applications through growth and acquisitions steadily increases the total number of applications in the portfolio and the level of complexity.
Security: As we move to a world that allows information to flow through many different devices and techniques, providing a security layer to match is difficult, especially if you have to change the applications to implement security. Tactical attempts to modernize applications have served as Band-aids that add to complexity, which only decreases overall security. New regulations on data security exacerbate the problems.
The combination of these issues makes it a struggle to keep applications aligned to the business. The good news is steps can be taken, which offer minimal risk and compelling IT and business benefits.
THE MESS CAN BE CLEANED UP, BUT…
What’s ironic is that most organizations acknowledge that a formal application modernization program would benefit their organization. In fact, recent HP-commissioned research with more than 200 global organizations conducted by Forrester Consulting showed that 78 percent of respondents believe their organization would greatly benefit from an application rationalization effort. But in contrast, only 56 percent plan to do so. That’s not the end of the contradictions.2
The study also addressed how applications should be modernized versus how they will be modernized. Eighteen percent of respondents believe that 21–40 percent of their applications should be migrated to new technology platforms, but only 14 percent will do so. Forty-seven percent of respondents believe that they should add new features but not modernize up to 20 percent of their applications. Yet 44 percent will modernize. Forty-three percent of respondents believe that their applications should be maintained but not modernized up to 20 percent of the time. Yet 34 percent will modernize.3
Further, respondents were asked to rate their perception of modernization risk before and after employing various techniques. The percentage of respondents that perceived high/ very high risk ranged from a low of 39 percent to a high of 50 percent— noting worry about requirements for external help, but most worried about the risk of cost overruns, business process impact, staffing, scheduling overruns, and technical issues. The good news is many organizations overestimated their exposure to risk. After modernization, 25–30 percent of survey respondents actually experienced less risk than they feared.4
The research further found that the top barriers preventing strategic modernization programs were cost, risk, business buy-in, and subject matter expertise. The study also asked respondents, “What would accelerate your plans to modernize/replace your applications?” The number one accelerator by a substantial margin is the ability to bring all parties to the table to reach agreement, followed in turn by increased staff/funding, the ability to make a proper business case, and the ability to lessen risk.
Why is that significant? It ties together many of the points—risks are actually less of an issue than they seem, modernization plans must be relevant to organizational plans, and cost is an ever-present issue. Still, enterprise leaders who do not understand our reasoning for modernization will not support it.
WHY MODERNIZE NOW
The most compelling reason for a formal application modernization approach is that other organizations, including competitors, are modernizing and gaining a competitive edge.
Secondly, there are many benefits that provide significant outcomes from modernization. Organizations see results that include:
- Better alignment of business and technology
- Increased agility
- Improved security
- Improved business continuity
- More balanced technology maintenance spend to 50 percent or less of the IT budget
- Improved understanding of how business processes are implemented in the applications
A COMPREHENSIVE APPROACH
Transforming the applications portfolio requires a comprehensive approach that treats each application appropriately based on its value to the business. The approach should also address the applications management processes to ensure that the applications portfolio will support the needs of the organization as they change and evolve over time.
Modernizing the applications portfolio itself can be achieved through assessment and a program road map designed to maximize benefits, accelerate ROI, minimize risk, all while identifying self-funding options. HP advocates an approach that consists of three phases: assess, modernize, and manage.
Assess: Assess the complete technology environment including applications, data, and infrastructure. Discover the assets available today through automation, inspections, and code samples. Analyze that information in comparison to business goals as well as priorities, and determine the strategic value of each application to the business. Look for redundancies in applications and identify opportunities for modernization. Finally, decide the best approach to reach the ideal future state and accompanying modernization road map.
Modernize: This phase includes realigning the applications portfolio so that it works for the business. It is designed to improve quality, security, information management, and performance. Multiple strategies are required to modernize an environment. Three basic approaches can help: keep, change, and retire. A modernization road map consisting of all three approaches will maximize benefits of the organization, while reducing costs.
- Keep: The focus is on making as little direct impact on the application as possible. We would use this approach for performing actions such as extracting business logic from existing applications or simply extracting knowledge for the purposes of documenting the application. It could be used for rehosting applications to higher performance, lowering cost platforms, or wrapping existing applications as services to expose their functions to other systems. This approach is focused on cost savings.
- Change: This is where we will make fundamental changes in the structures of the applications so they meet the new demands of the business. Examples include replacing legacy applications with packaged ERP or industry applications. It could also be modernizing from legacy languages to new .Net or J2EE based languages. Where is makes sense, it could include going to SOA or cloud computing models. This approach is focused on increasing agility.
- Retire: For applications that perform duplicate business functions or no longer provide business value, this involves rationalizing the application’s role and capturing and archiving data from the retired application. This process is critical to minimize disruption to existing users and for future business reporting and regulatory needs.
Manage: The third phase is all about gaining the greatest degree of visibility and control to maintain the optimized environment. By understanding the current investments in the application portfolio, IT can calibrate those investments for the greatest impact.
For companies that choose to not manage the application portfolio internally, one viable option to consider is outsourcing to an experienced service provider. Whether an organization chooses to outsource the management of the entire portfolio or only select applications, this phase will need to include the following:
- Clearly defined standardized service offerings based on ITIL framework
- Right-size support based on the criticality of each application by choosing from service package tiers
- Scalable, global delivery capabilities representing the highest industry standards backed by service level commitments
- Fixed, predictive spending levels that can adjust as the applications portfolio changes
- The ability to tune investments without renegotiation for quick and easy business alignment
HOW MODERNIZATION PAYS OFF
Each organization, including its process and benefits, is unique. By taking the steps to complete application modernization, businesses will be able to deliver impressive outcomes. Some of the specific benefits that applications modernization provides include:
- Increased responsiveness to business priorities and changing demands by eliminating the complexity inherent to legacy systems and server sprawl.
- Improved productivity for employees and reduced maintenance costs by streamlining complex, legacy systems to more modern, efficient technologies.
- Faster speed to market with modernized infrastructure and applications.
It is clear that organizations need to take action and truly understand the infrastructure in order to garner the business results that they desire. Applications modernization is one way for organizations to take control of the data center and uncover important information that would not have been made available without the process. Without applications modernization, organizations cannot effectively leverage their portfolios, which slows down innovation and business growth for companies all over the globe.
1. 2009 InformationWeek Analytics Survey of InformationWeek 500 executive.
2. Source: A commissioned study conducted by Forrester Consulting on behalf of HP, May 2010.