In a recent post, we explained how large organizations are not necessarily streets ahead of SMEs when it comes to digital transformation. The main reason? Ageing technology.
Many organizations are still deeply entrenched in legacy systems – on platforms such as Mainframe,and OpenVMS – to keep their business operating. So, despite their thirst for digital transformation, it’s these systems that are unable to reliably support or integrate with modern applications such as the Cloud. Simply put, any organization that depends on ageing systems to innovate and scale will likely lead to failure.
It’s worrying, then, that fewer than half (47%) of large organizations have a digital transformation strategy – according to our 2019 Digital Business Report. What’s perplexing is that 46% say cost is the biggest barrier to achieving a successful digital strategy.
The reality is that their dependence on an ageing technology creates unnecessary expense. Core legacy business applications, and the infrastructure required to run them, often consume a disproportionately high share of a company’s IT budget.
In fact, there are plenty of statistics suggesting that maintaining and operating legacy applications consumes anywhere between 60% and 80% of corporate IT budgets. Most CIOs are willing to bear that large cost because they believe it provides a level of robustness, stability, performance and scalability that can’t be found elsewhere.
Given the critical nature of the applications, they feel this is a reasonable price to pay. However, surely this is a significant amount of money that could be redirected to modern systems that would bring greater competitive advantage in the future?
Organizations need to be thinking about the long-term if they are to both innovate and cut costs, which is why it’s really alarming that our report also shows a mere 6% are prioritizing future needs when choosing new technology. It seems many organizations are blindsided by systems that work right now without thinking about the long-term impact.
We know that the integration of, and migration from, legacy environments to modern technology platforms is a growing challenge for many organizations around the globe. But, if organizations stand still, they will find themselves in what is commonly called ‘technical debt’. It’s a concept in software development that reflects the implied cost of additional rework caused by choosing an easy solution now, instead of using a better approach that would take longer – leading to a drain on financial, physical and human resources.
So what’s the answer? CIOs need to understand, and build a strong business case for, investing in application modernization. This means convincing management that legacy systems are expensive and problematic barriers to long-term digital transformation.
Large organizations should also work with a reputable service provider that has proven capabilities and experience in application modernization to help them achieve successful digital transformation.
At Advanced, for example, we are proud to have over 35 years of experience in Application Modernization with a range of solutions to support the journey to a more modern environment.
We are already working with large corporates around the world including ProRail in the Netherlands and the Department for Work and Pensions in the UK.
If you’re keen to understand more about the issues and opportunities around modernization journeys, watch our on-demand webinar where large organizations can explore the catalysts for digital change. We look at the options for making the most of applications as well as discuss real life modernization stories from organizations that have reshaped their infrastructure and applications. Sign up here.