IT modernization and the Legacy burden ?

IT Modernization and the Legacy burden: A strategic lever for CIOs to innovate and preserve competitiveness

 

Legacy systems are a real burden. CIOs of large companies face a major challenge: modernizing their information systems (IS). Managing legacy systems is a real challenge for CIOs in terms of costs and resource consumption. The transition from an old IT infrastructure to a more modern one is a complex but essential step to maintain a competitive advantage and the operational efficiency of the company.

According to McKinsey, managing tech debt includes the cost of modernizing the entire technology stack as well as a “complexity tax” that slows productivity and negatively impacts the budget and return on investment. It is estimated that some companies spend more than half of their IT project budget just on integrating and fixing legacy systems.

In the private sector, the share of the annual IT budget devoted to maintaining legacy systems can reach up to 80%, hence their impact on the ability of CIOs to invest in innovation.

Excella points out that, until recently, banking and insurance systems devoted nearly 75% of their IT budgets to maintaining systems such as COBOL systems, which handle around $3 trillion in daily commerce despite their great age!

Faced with these challenges, it is essential for CIOs to implement effective IT modernization strategies, carefully evaluating the costs, benefits, and risks involved. Solutions such as cloud migration, application re-engineering, or API encapsulation can help reduce these costs and free up resources for projects with higher added value for the business:

1. Decommissioning: Removing obsolete components to simplify SI architecture and reduce maintenance costs. This may include shutting down mainframe systems or aging applications in favor of more modern and flexible solutions.
2. Cloud Migration: Adopting cloud platforms like AWS, Azure, or Google Cloud to benefit from their elasticity,resilience, and a pay-as-you-go model. Containerization services (Docker, Kubernetes) facilitate this transition by ensuring the portability and orchestration of applications.
3. Refactoring and reengineering: Using modern frameworks (React, Angular for the front-end, or Spring and .NET for the back-end) to rebuild legacy applications, thus improving their performance and integration.
4. Encapsulation: Applying an abstraction layer (via APIs or microservices) around existing systems to integrate them with new applications, without complete overhaul.

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The selection of strategy and technologies depends on the specific objectives of each company, the current state of the IS, and the skills available internally. Harington plays a key role in supporting CIOs in this modernization journey.

Step 1: Diagnosis and strategy

The first step is to conduct a complete audit of the existing IS, identifying critical applications that need updating or replacing. Harington recommends favoring an approach that aligns modernization with the company’s business objectives,ensuring that the transformation supports growth, innovation, and operational efficiency.

Step 2: Choosing technologies and modernization approaches

The selection of modern technologies is crucial. Cloud computing, microservices architectures, and containers offer flexibility, scalability, and cost reduction. Adopting agile and DevOps methodologies accelerates application development and deployment, strengthening responsiveness to market needs.

Step 3: Change management

An often-underestimated aspect is the human dimension. Successful modernization requires the buy-in of IT and business teams, involving training and change management support. Harington emphasizes continuous training to facilitate this transition.

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IT modernization is crucial to alleviate the burden of legacy systems and capitalize on innovative technologies, thus promoting agility and growth. Need support? Thinking about or starting a project? Challenge us!