Using a modernisation strategy to drive innovation: a four-pronged approach

IT departments are under enormous pressure to deliver value back to the business quickly despite facing tighter budgets to keep their companies progressing. Providing much-needed innovation and ‘time to value’ without jeopardising business continuity or application stability, and without undermining crucial strategic investment, is the delicate balancing act facing CIOs globally.

The application portfolios responsible for running most core business processes today, including 90% of all transactions within the financial services sector are written in COBOL and continue to provide the high-value, high-performance business-processing backbone expected within today’s global 2000 companies.

Yet CIOs from nine countries around the globe recently estimated in a poll that it would take an average of $11 million to bring existing applications, such as mainframe applications, up to date – an increase of almost a third (29%) from May 2012 when this IT Backlog figure stood at $8.5 million. This backlog of maintenance, for any existing platform, has resulted in creeping inefficiencies.

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Companies adopting a broad approach to IT modernisation can dramatically boost productivity, releasing considerable resources for new development without impacting the company’s financial resources. This can be done by improving user and operational efficiencies in application maintenance and infrastructure support and building upon existing investments in the mainframe ecosystem to meet demand.

There are four proven ways for an application organisation to increase productivity to deliver phenomenal value to their organisation. Through assessing where inefficiencies may lie and where productivity gains can be made – the IT department can deliver benefits that, in tandem with a cohesive modernisation strategy, can offer a way to release much needed value and innovation in today’s businesses.

Deliver more efficiently by re-using existing functions

An organisation’s business processes are, in most cases, reliant on its technological infrastructure. But for companies with huge IT investments stretching back decades, this reliance is based on aging applications from the business that IT is no longer able to support. However, it’s these applications upon which the company’s success has been built, and in whose code the competitive advantage and business ingenuity for future growth lies.

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In fact, these applications represent a tried and trusted set of highly stable business components that continue to provide incalculable value – making them ideal weapons in every organisation’s battle to deliver innovation. In utilising them, IT organisations no longer need to expose the business to highly-disruptive replacement initiatives, many of which fail to deliver the required business value and can actually introduce complexities and risk.

The Co-operative Bank’s £1.5 billion capital shortfall, according to a report by Sir Christopher Kelly, is a great example of this. Whilst largely due to a series poor management decisions, it was also partly due to the problems encountered as the bank attempted to replace its core banking systems – a project which was cancelled in 2013 and cost almost £300 million.

The Standish Group’s independent report Modernisation: Clearing a Pathway to Success, delivers an objective comparison of the return on investments associated with rewriting, buying a commercial off-the-shelf (COTS) package, and modernising a particular application against the cost and risk that is involved in doing so.

The study found that application modernisation had the highest likelihood (53%) of being completed on time, on budget and with critical features included. This compares to a 30% success rate for replacing the application with a COTS package and just 4% success when re-writing the application from scratch using the latest tools and techniques.

Using tools that modernise core, trusted IBM zEnterprise application assets, companies can deliver flexible new services that respond quickly to changing business demands, ensuring maximum value from IT investments continues to be delivered.

Base IT strategy on a single source of truth

The relentless progression of technology, combined with a company’s merger and acquisition activities and the rise of departmental and end-user autonomy, has ensured the build-up of layer upon layer of complexity, duplication and redundancy within the enterprise application portfolio. This accumulation of ‘assets’ is further compounded by a lack of understanding of where the value really lies within the IT landscape, and which items it is therefore prudent, or indeed safe, to discard.

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Departmental and divisional responsibility for application procurement leads to a proliferation of tools doing the same job, creating dis-economies of scale and fragmented systems. It is vital that companies enhance their understanding of the value of what they have, and then seek to remove the elements that are no longer appropriate.

Using rich technical insight into the inventory and structure of the application portfolio to rationalise infrastructure elements will enable greater efficiencies in licensing and resourcing, while reducing the inherent complexity of the portfolio. Development organisations can optimise the cost and agility of core applications, as managers scope and plan modernisation and development tasks better, while developers understand how to modernise applications to respond to business requirements with a higher degree of confidence. The returns are significant: maintenance costs go down, while the productivity of development teams goes up.

Understanding where the value lies enables the IT operation to focus on removing the ‘dead wood’ and nurturing the healthy growth opportunities.

Increase existing mainframe programmer productivity by 30 to 40%

Technological evolution at home and in the workplace has led to productivity benefits that would undoubtedly have made previous generations envious. Unsurprisingly, the business of managing IT has seen its equal share of advancement and innovation, delivering dramatic gains in all aspects of the development life cycle.

And yet, many companies are still supporting their enterprise applications using tooling that has changed little since the 1980s, often when the programmes they are maintaining were first created. There is a real opportunity for organisations to invest in newer development environments that leverage the productivity of workstations.

Today’s mainframe development teams can exploit contemporary Windows-based integrated development environments (IDEs) to perform the majority of their analysis, development and testing tasks. Companies already using this approach can attest to significant developer productivity increases in combination with reduced mainframe CPU usage to realise annual cost savings – with as much as 40% attributed to increased productivity alone.

Furthermore, through improved analysis and testing of application changes, there is an increase in code quality which takes the potential for cost savings still further. The Standish Group, in studying the impact of application downtime, reports the average cost per application bug to be $50,000, while the cost for production application downtime ranges from $12,000 per minute for e-commerce applications to $73,000 per minute for trading applications. Its final category of ‘cost per lost transaction’ clearly reinforces the ‘iceberg’ factor, with many of the significantly higher potential costs lying buried beneath more obvious results.

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The basic nature of accessibility of applications can also have a severe impact on the development teams’ productivity, taking away time to do what they do best: driving innovation. Meeting increased user demand to access applications on multiple platforms and devices, in line with trends such as BYOD and even cloud, mean the development team need to modernise applications for desktop, web or mobile to improve user experience. By doing so, organisations could deploy on HTML 5 or the cloud and potentially increase time to market value by as much as 25%.

Choose the right platform to be fit for purpose

For many large companies, merger and acquisition activity has resulted in the IT organisation managing and operating multiple vendors’ mainframe and mid-range environments. This has brought significant challenges for IT, with large portions of available budgets being squandered through resource fragmentation, development silos and application integration obstacles. Platform consolidation to a single, unified environment provides IT departments with a very real alternative for removing non-strategic platforms from the organisation- helping to reduce any risk that could be introduced along the way, whilst streamlining processes that could hinder productivity.

Companies whose IT landscapes include proprietary platforms, such as VAX, VME, BS2000 and Unisys, to name but a few, can amalgamate applications on to the IBM zEnterprise mainframe and experience significant reductions in operational inefficiencies and greater adherence to their strategic IT architecture.

Furthermore, the reduced requirement for skills from a diminishing, and therefore increasingly expensive, resource pool adds to overall benefits from both a cost and risk perspective. Additional cost savings, as well as improved environmental performance, can also be achieved through the consolidation of an organisation’s mid-range server sprawl. These savings can then be used to deliver value to other strategic objectives that the company may have.

The movement of valuable applications to the consolidated platform can at first appear complex and costly. However, through the use of specialist automation tools and services to assist in the code and data conversion, the move can be carried out in a low risk, highly optimised manner. One financial services organisation was able to complete their platform workload modernisation project three months early through the use of such services and combined savings on the project reached in excess of $80 million.

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Through a combination of advances in platform technology and application tooling, opportunities for CIOS to showcase IT innovation to make dramatic productivity improvements continue to present themselves and as an outcome, reductions in IT costs continue to be realised.

Individually, they represent crucial elements in the battle against shrinking budgets and the onward creep of complexity. But when combined as part of a strategic approach to IT modernisation, and when used in conjunction with careful portfolio planning, these elements will enable the IT department to liberate vital resources for new development work, innovation and increased levels of business growth and alignment.

Sourced fom Derek Britton, Director, Micro Focus

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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