5 minute read 5 Apr 2021
Application modernization

Application Modernization and its impact on Digitization

By Arindam Sen

EY India Operations and Business Services Partner

Seasoned technology executive with rich experience in digital transformation. Leader in setting up GCCs. Enjoys playing badminton, drums and composing electronic music.

5 minute read 5 Apr 2021

Modernizing legacy application for digital transformation is key, explores an EY Survey

The accelerating pace of technology evolution and customer-driven change is infusing significant demand for better working business applications. Many medium and large organizations continue to operate technologies considered “legacy” or “obsolete”, thereby impeding their ability to remain agile and progressive. Leaders in such organizations, therefore, face technology investment decisions more than ever before. There is a need for legacy modernization. There is a need for organizations to transform their existing legacy applications in order to become more agile and efficient.

Most of the businesses were put to litmus test for survival during past several months and realized that there is a need for a call to action. This established that they all needed to innovate. However, innovation at scale is difficult unless the risks associated with traditional technologies are evaluated and mechanisms to monitor and mitigate these risks are established.

An EY survey, which included interactions with numerous CIOs, identified several issues and imperatives to enable organizations to scale up their technology implementations.

 “Technical debt” emerged as a major problem within legacy applications. One may argue the newness of the problem, however, the premise for this gaining importance is as follows:

(a)   Absence of a modernization strategy addressing wider application landscape instead of a part of it

(b)   Lack of executional knowledge amongst the leadership to drive a modernization program elevating the fear of failure  

(c)   Inter-lock with legacy applications at an operational level, for example: “Built-to-suit: in-house applications catering to the nuances of a business process

(d)   Inadequate vendor-partner ecosystem capable of continuing to provide support during pre and post modernization journey

(e)   Lastly, lack of clarity on impact to the processes, operations and governance

Our experience based on several successful application modernization mandates has led to establishing a framework, formulated as “DARE”. The framework caters holistically to the above-mentioned root causes and more. It helps in approaching such issues with a methodical staged approach, focusing on four key dimensions to effectively facilitate the initiation and traversing through the technology modernization journey for small to large scale application portfolios. The four stages are:

  • Discovery

    This stage helps in evaluating the health of the application portfolio through code behind analysis, where applicable.

  • Analysis

    This stage is a more detailed insight into the landscape to understand critical security vulnerabilities and cloud readiness. It also includes licensing compliance, which is extremely important while using open source libraries.

  • Rationalization

    This stage helps categorize applications based on functional and technical adequacy, usage, cost of ownership and a myriad of other factors. It is an added step of providing recommendations to remediate the findings from the first stage, for each set of categorized applications. For example, some applications may be most suited for decommissioning while others would need to be rebuilt from scratch. Yet others can be re hosted on the cloud. Our experience has shown that this process of categorization provides unique insights into the application landscape and helps build an inventory which must then be kept updated as more applications are added into the portfolio. A proper inventory is usually the most difficult step and a must to a successful modernization exercise.

  • Execution

    The final stage is that of Execution. This can be broken down to more manageable chunks keeping in mind the efforts required by both the technical and the non-technical teams. It also includes change management efforts associated with such an exercise.

Application Modernization, though often associated with Cloud migration, is much more. It underpins the digital transformation strategy of any organization and can be used to develop roadmaps for other technology transformations such as HR, Finance or Supply Chain. An oil and gas major recently identified over 125 applications across eight domains which translated to a 14% reduction in technical debt. It also identified the potential to consolidate several Business intelligence platforms for improved reporting and decision making. Similarly, an alco-bev major identified a bunch of applications that could be rationalized to help reduce their overall IT spend but also removed potential roadblocks in the migration to Office 365.

These organizations and others have identified that in order to increase their agility, reduce spend and balance their two speed IT, modernization is an imperative.

A modernization exercise need not only be about ‘out with the old and in with the new’, it can also involve a rethinking of processes and more efficient ways of accomplishing the present by continuing to redirect technology spends towards growth and innovation instead of run and maintain. The benefits are further amplified if the overall architecture is simplified and supports agility, interoperability and integration. Abstraction and federation are also alternatives while dealing with legacy in a service tiered architecture – more complex initially but can allow a modernization exercise to happen in smaller steps.

Any modernization exercise requires careful planning, architectural review and risk mitigation. It is generally a multi-year exercise and needs to be adequately budgeted for. It does not always include implementation of entirely new platforms but can happen and must be accounted for in the planning.

Summary

Technical debt is always a concern within large enterprises especially those that have grown through acquisition and it does not need to be an impediment to digitization but cannot be an afterthought as well – they must work hand in glove.

About this article

By Arindam Sen

EY India Operations and Business Services Partner

Seasoned technology executive with rich experience in digital transformation. Leader in setting up GCCs. Enjoys playing badminton, drums and composing electronic music.