Legacy technology can hinder your ability to meet changing market dynamics. Here’s how to prioritize and execute IT modernization efforts that drive business value.- legacy IT systems
The IT stack at Live Nation Entertainment resembled the setup typically found at most companies of any substantial size and age: a mix of new systems with some older hardware and software.
Similarly, Live Nation found itself in another typical situation: trying to move at the speed of business while dealing with legacy systems not up to the task.
Those situations drove the company’s decision to ramp up modernization, says Jake Burns, the vice president of cloud services at the Beverly Hills-based global entertainment company.
“For a couple of years, I and my peers were starting to feel that way. But then, at the end of 2015, the senior leadership made a decision to modernize IT. It became my project in 2016,” he says.
Since then Burns has led Live Nation’s multiphase modernization efforts. The first phase involved ditching much of the corporate on-premises data center and migrating its applications to AWS, a move that increased efficiency and speed while decreasing costs.
The 2017/2018 Logicalis Global CIO Survey found that legacy systems were top of mind for many of the 890 CIOs polled. Most of the CIOs surveyed say they’re focused on digital transformation, with 44 percent citing the complexity of legacy technology as their top obstacle. The survey also found that 51 percent of CIOs plan to replace or adapt existing infrastructure as part of their digital transformation efforts.
There’s a good reason for those figures, says Rudy Puryear, partner and director in Bain & Co.’s Chicago office and leader of the management consulting firms’ global IT practice.
“[Legacy IT] is full of unnecessary complexity and cost. There is nothing simple or straightforward about it. When the business says, ‘I need you to make this change,’ it’s 50 connected moves behind the IT curtain where everyone is praying they don’t step on a landmine and every change or addition takes more time and cost than it should,” Puryear says.
Puryear says companies should anticipate compounding costs when it comes to legacy systems. Legacy systems hinder productivity and innovation; that’s the first cost. Then comes the continuing cost of maintaining them, which takes increasing amounts of the IT budget away from more worthwhile investments like those for differentiating and innovative technologies.
Although there’s no single roadmap for modernization, leading CIOs and management consultants to agree that there are key elements to consider for successfully achieving that objective.
At Live Nation, one of the first steps was to define legacy and identify which systems met that definition, Burns says.
Burns and his colleagues landed on three defining factors for legacy technology: the vendor has stopped supporting it; the system isn’t owned by someone in the business, even if it’s mission-critical; or it’s not in the cloud.
This list in part reflects Live Nation’s belief that modernizing means moving everything to the cloud, Burns says, adding that the company started migrating its corporate infrastructure to AWS in January 2016 and was 90 percent complete by December 2017. (Infrastructure tied to other divisions of the company isn’t as far along, he says.) The next phase of the company’s modernization work will focus on moving its application portfolio to software-as-a-service offerings, Burns says.
Live Nation’s work in this area has revealed a few other important points about modernization. First, Burns says, is the need to implement training so staff can successfully work in the new environment.
Burns frontloaded training, spending the first several months of the initiative putting workers through AWS courses and encouraging “everyone to get all the certifications they could.” He also had his team set up test environments along the way so they could experiment as a way to reinforce their lessons.
Another key lesson Burns learned was to seek out expertise and specialized services. For instance, Live Nation is running Oracle in AWS and realized it needed something to help the company manage storage. Burns turned to Actifio, a Waltham, Mass.-based company delivering enterprise data as a service, to help fill that gap, which had been producing some failures early on in Live Nation’s move to the cloud.
He says it’s easy for enterprise IT to underestimate the need for third-party help. “It’s not only underestimating where you need specialized services but underestimating the complexity, too. They think it’s going to be simple, but then it doesn’t work the way they think it’s going to,” Burns says.
The ability to make such mistakes, learn from them and correct them — without feeling the need to abandon the whole effort — is another key component for success, Burns says. That’s why it’s so critical to gain executive-level commitment to modernize — something he says he had from the CEO on down.
“You have to have an organization willing to take a risk and willing to put in the work to get to this point,” he explains. “It’s about organizational change. The technology is out there; you can buy the technology. But if your organization is getting in the way, it will never happen.”
Most enterprise IT shops, particularly the largest ones, have some legacy within their hardware and software portfolios, says Jason McDonald, U.S. president of the global transformational technical consultancy Contino.
Yet what constitutes “legacy” can vary from one company to the next, McDonald says. The term often refers to monolithic and mainframe systems, but it can apply to any technology that hinders an organization’s ability to meet changing market dynamics.
Shanna Cotti-Osmanski, senior vice president of IT and CIO at Charles River Laboratories, takes that broader view of legacy.
“When I think about legacy and what it is, I think of it as something that’s in some way hindering our operations. Either we’re not able to get information out of it fast enough for ourselves or our customers, or it’s not efficient, or the processes built into the systems aren’t efficient,” Cotti-Osmanski says.
By that definition, Cotti-Osmanski says Charles River, a Wilmington, Mass., company providing contract resource services to the pharmaceutical, medical device, and biotechnology industries, has its fair share of legacy systems.
Yet her team isn’t rushing to replace all of it. Cotti-Osmanski says it’s important to take a strategic approach.
She calculates the value a modernization project will bring to the company. She considers dollars when thinking about the ROI of replacing legacy. And she weighs compliance, data integration, and security factors as well as whether a modern replacement will better support innovation.
Cotti-Osmanski has found that replacing some legacy systems will have strong ROI based on those considerations but others won’t.
“Replacing some of these systems can be very expensive, so we have to look at the best way to solve the problem and drive the best value for the company,” she says. “Everything we do in IT is aligned with our overall company goals. And we do business cases and value cases for every project we do.”
Thus, she says her team works to prioritize the modernization efforts at Charles River.
Cotti-Osmanski estimates that legacy hardware and software made up about 50 percent of her company’s IT stack five years ago. She has cut that in half, with legacy now making up only 20 to 25 percent.
She notes that the company’s modernization efforts frequently involve moving to cloud options, but the cloud is not an automatic.
“As we modernize applications, that’s also when we look at the hardware underneath it. But we haven’t done a major data center push out to the cloud. We’re moving to the cloud, but it’s on a solution-by-solution basis, or suite of solutions,” she says. “I don’t see that having an on-prem data center will hold us back or differentiate us significantly in the near future.”
Cotti-Osmanski says it’s critical for CIOs to understand their own company’s unique needs along with what technologies will drive value and help differentiate itself in the market as they devise their modernization strategy.
“Every business has different goals and different strategies. So your definition of modernization has to fit with how you’re driving the goals of your company and meeting the needs of your customer,” she says. “Modernization to me means agility. Although there is a huge advantage to being in the cloud, it doesn’t mean we have to be in the cloud.”
Companies seeking to modernize must recognize, too, that they need to do more than swap out old IT for new, McDonald says.
“Time and time again you have organizations try to go through digital transformation exercises and they’re failing because they’re relying on outdated systems, models, and team compositions. They’re trying to get into the new world with the outdated model,” he explains.
Rather, organizations need to deliver technology as fast as the business needs it and in a way that supports business goals. That, he says, represents modern IT. With that perspective in mind, McDonald says he believes organizations must adopt DevOps to be successful at modernization efforts.
“If you’re moving from monolithic to microservices architecture, you have to change the way you operate it as well,” he says. “That’s how we see large organizations successfully go after their legacy estate: by changing how they build, deploy and operate.”
McDonald acknowledges that adopting DevOps and other transformational changes can’t happen overnight and in most cases, given the amount of legacy that still exists at most organizations, can’t be implemented throughout the entire organization all at once.
So he advises IT leaders to assess their portfolios and strategize their modernization efforts based first on what will impact top-line revenue and then drill down. He also recommends they build a center of excellence that will develop and demonstrate the best practices for the new way of working. “They help create the forward-thinking culture of innovation,” he adds.
That’s part of what drives Joel Jacobs, vice president, CIO, and CSO at The MITRE Corp., a not-for-profit organization that operates research and development centers sponsored by the federal government with headquarters in Bedford, Mass., and McLean, Va.
“It takes more energy and effort to run old gear,” he says, adding there comes a point with technology that it’s “past its prime [and] it’s going to start hurting you.”
That can cost in terms of internal or external reputation, actual operational dollars, lost opportunities or diminished market share, Jacobs says.
“We rotate through our infrastructure or services to determine if something is past its prime, whether there’s something better or a better option. That’s what usually triggers a replacement. It’s a continual process,” he says, adding that this team evaluates a range of alternatives including on-premises, cloud, and open source when making a determination on whether and how to modernize.
Jacobs’ team also works to keep a holistic view to understand how modernization in one area could impact other areas. “You might put an extra strain on something else,” he says.
“Part of it has to be, Is it worth it?” he says. “The idea of modernization can be evolution or revolution, and you have to determine the business value of the choices of a given service or capability.”
As such, all executives need to recognize that modernization isn’t a project but rather an ongoing process that IT should always be managing, Jacobs says.
“A continuous evolution of the offerings and services is inevitable, and you can’t go too long before something is going to start being negative,” he says. “Make sure you understand the signals you’re getting from your customers. They’re not wrong when they think something should be better. Make sure you understand what they’re trying to get done, what they’re trying to achieve, so you can fit your modernization plan into helping them execute strategy.”
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