2019: Nine elements of profitability when updating legacy systems
It is very difficult for IT departments to get rid of legacy systems and infrastructure. It is expensive, incredibly difficult and it is often impossible to prove using traditional model of the cost efficiency comparing costs from 
On the other hand, accumulation of applications, sets of technologies and strictly programmed solutions turns computing environment into Frankenstein. Functioning of such environments costs much. They are subject to failures, do not give in to complete understanding, do not meet the requirements for the speed of work, flexibility and speed of reaction to changes of the external environment. From the point of view of technical specialists such systems distract from the daily work necessary for maintenance of the major strategy of business and use of the available opportunities.
Certainly, many creatively, it is perspective the conceiving CIO achieved progress in "enclosing" of legacy systems, creation of connectors to new digital interfaces, extraction and replication of the major data. Thanks to their efforts deserving admiration business continues to function, but these efforts it can already appear insufficiently.
When the legacy technology interferes with digital transformation
Today for customer acquisition of the company should provide it attractive digital services. The difficult legacy technology becomes a considerable obstacle for digital transformation. There are signs that the companies begin to see in it serious threat and start shift.
According to Gartner, operating expenses grew from 67% of IT budgets in 2013 to 71% in 2017 whereas budgets were reduced by digital transformation. But now, according to the same Gartner, IT departments spend more for the applications allowing to profit by digital channels of business and transition to remote platforms, including cloud services, software as service, an integration framework as service (integration platform as a service, iPaaS) and the platform of applications as service (application platform as a service, aPaaS).
We, perhaps, approach a change point when the load of legacy IT systems becomes intolerable, and upgrade vital. If so, then technical specialists who expect the future shocks provide the strategic management, support and resources, need expanded model of the cost efficiency reflecting all effects of lag in the field of digital transformation.
Nine factors of cost efficiency which should be considered in relation to legacy technologies Developing justification of the project which will compete, say, with investments into a new product, take the following into account:
- the old systems are "murderers" of the budget. If you spend 70-80% of the IT budget for operation and service of legacy systems, you have very few means to use new opportunities and to develop business. And expenses on the outdated systems will grow in process of their obsolescence and the increasing unreliability;
- all new is created in clouds. All new technologies are created using cloud computing architectures and approaches. The quantity of the options available to monolithic legacy systems continues to be reduced. What long-term value of use of new best technology for your business and your clients;
- impossibility to completely use technology potential. According to a recent research of Deloitte, the major factor stimulating updating of legacy systems is the technology adequacy: "Legacy solutions have no flexibility and are backward technically because of outdated languages, DBMS and architecture. This backwardness does not allow many organizations to improve and support analytics, transaction in real time and digital service";
- the shortage of talented employees creates risk. It is harder and harder to find specialists who will operate and support legacy technologies. Eventually, nobody studies mainframes, COBOL and Fortran any more. Employees grow old, retire and what then? And how today to attract talented youth which is necessary for prosperity during a digital era, having computing environment which does not bear comparison with what competitors have;
- clients expect digital service. Such services which are provided by the companies which are initially digital. Those step by step enter improvements according to the results of monitoring of customer interaction and as reaction to a feedback. Legacy computing environments seldom allow similar improvements. The new model of cost efficiency should consider how updating of systems will affect customer service;
- fast entry into the market. During the survey of the company conducted by Deloitte reported that improvement of support of strategy and the purposes of release of new products was the main cause of updating of IT. In other words, faster exit with them to the market. There passed times when releases were issued quarterly, and projects were developed from 18 to 24 months. Competitive advantage is provided by speed;
- risk of security. Though security of cloud solutions requires attention, it is clear that their monitoring is more difficult to control, conduct old technologies and to provide their protection as paradigms and solutions in the field of protection are developed. What risk is represented by low technologies;
- data management and confidentiality. There are more and more requirements of the regulators and the politician concerning data. It is difficult to observe them if information is scattered on numerous legacy systems, and data are replicated in myriads of storages. In such environments observance acting and future the politician is very complicated. At what moment customer confidence and regulators will be lost and control is lost;
- new markets and ecosystems. The enterprises use possibilities of an entry into the new markets, involvement of clients and satisfaction of their requirements, reconsideration of business models using digital platforms and technically equipped ecosystems more and more widely. It is difficult or it is impossible if your intellectual property is immured in the unique old systems.
2018: Legacy technologies interfere with digital transformation
According to the results of the research Cloud Industry Forum published in March, 2018, nine of ten companies consider legacy technologies (legacy technologies) as an obstacle in a way to digital transformation of business.
As society masters new technologies, its requests promptly grow. Therefore for obtaining competitive advantages the companies need to adapt to market changes quickly. However, as consider in TmaxSoft, transformation of many enterprises is slowed down by legacy key technologies based on which their IT infrastructure is constructed. Because of it also their business and, as a result, all economy loses.
Experts of TmaxSoft drew such conclusion on the basis of results of the last research of the forum Cloud Industry Forum (CIF) which revealed the scale of problems. During the research conducted at the end of 2017 by the Vanson Bourne agency by request of CIF 200 heads of IT departments of the enterprises from the different countries in which more than 500 people work were polled. 89% of respondents consider that the legacy technology is an obstacle for successful digital transformation of their companies.
The main reason of this problem respondents called risk of interruption of the main business processes at any change of legacy system (46%) and heavy expenses on its change (40%). Besides, 30% answered that they do not have trained personnel for service of legacy infrastructure, and 27% indicated lack of the precise plan of migration of business and critical applications.
| ||Commenting on results of a research, the chief executive of the Russian department of TmaxSoft Andrey Reva said: "Problems of legacy technologies are well-known, and practically all companies face them. The vast majority of the enterprises invested considerable means in IT earlier and therefore cannot start the digital transformation with a clean slate. It is obvious that legacy technologies turned into a problem, crucial for business, as in many IT infrastructure companies it is still constructed on the platform of mainframes. The legacy architecture of mainframes is not capable to satisfy new requirements of economy of an era of digital transformation that creates serious problems for those companies which want to save competitiveness and dynamism".|| |
According to him, the research also revealed a staff shortage problem for service of mainframes which many companies as the old personnel retires against the background of lack of inflow of new specialists face, and this deficit becomes aggravated from year to year.
| ||"It becomes at some point obvious that cardinal changes as further use of inefficient technology turns business into the hostage of outdated infrastructure of mainframes which has no due support are necessary, and eventually this problem will become aggravated even more. If your company is ready to upgrade the architecture, but there is a risk of interruption of business processes, and complete rewriting of old applications requires big costs of time and means, then there is an option of their rekhosting on the new platform" — Reva concluded.|| |
Mainframes turn into a low technology
Implementation of artificial intelligence (Artificial Intelligence, AI), machine learning and Internet of Things (Internet of Things, IoT) requires from the companies to unroll quicker new services and to process data therefore in 2018 to the companies, still using mainframes, it will be necessary to decide what next to do with these outdated computers. The developer of the system software TmaxSoft company considers that mainframes prevent implementation of AI, machine learning and IoT, and as a result of their owners it is difficult to sustain the growing competition during an era of digital transformation of business.
Data of Dynatrace
Survey conducted by Dynatrace company in the USA, Europe and Australia shows that the organizations face performance concerns of the digital systems each business week. As a result employees IT and business divisions waste about 25% of working time for problem solving which can negatively influence consumer experience and revenues of the company.
Poll of 1239 IT specialists, software developers, e-commerce and customer service specialists, showed that because of falling of performance they lose from 9 to 12.5 hours a week. The biggest dead times are observed at e-commerce specialists and software developers – 652 and 548 hours a year respectively. Because of it highly-skilled employees lack time for more important, strategic tasks.
According to poll, 48% of respondents believe that the problem with performance of systems interferes with successful digital transformation. Three quarters of respondents emphasized that they are not sure of own opportunities to solve performance concerns of systems.
Data of Fujitsu Fit for Digital
According to a research , infrastructure based on the outdate technologies is a basic reason on which public institutions cannot take advantage of digital transformation. Nevertheless, heads of the companies of public sector look forward rather optimistically.
So, more than a half of heads (55%) considers that their companies will not be able to exist in the previous form in the next 4 years, and 82% of respondents believe that cardinal changes are inevitable since digital technologies radically will transform the main business processes in all sectors of economy.
93% of survey participants said that their companies will be forced to be transformed for ensuring successful work in the future, and practically all heads of the companies (96%) are sure that they will manage it. Only 14% are concerned by the changes connected with digital transformation that is the lowest indicator among the companies of all sectors of economy which participated in poll. This confidence in success in the future is based that more than 26% of heads of state companies believe that they take the leading positions on indicators of implementation of digital technologies - it is the highest percent among respondents from all sectors of economy.
Unlike other industries in which digital transformation is caused by the aspiration to save competitive positions in public sector the main driving force of implementation of new technologies are clients who want to use digital services and to receive higher quality of service. Besides, on a question of the one who stimulates digital transformation in their industry most often the answer was: "the known companies which entered their market", such as Google and Amazon (33%) that says that most the companies of public sector even more often consider the possibility of implementation of online services.
In spite of the fact that digital transformation provides a set of advantages, not all budget companies believe that they will be able to use them to the maximum. Many heads consider that the pacing restraining factor are the outdate technologies and infrastructures (50%) here that is the highest rate among all sectors of economy. 43% called corporate culture and fear of conversions as the main obstacles whereas too big difficulties connected with changes were mentioned only by every third respondent (32%).
Despite difficulties, the companies of public sector undertake measures for implementation of digital technologies and upgrade of the infrastructure. Two thirds (66%) already invested means in purchase of new technologies, approximately the same number of respondents (65%) changed the strategy of business, and a little more than a half (51%) is engaged in optimization of the workflows. At assessment of what is most of all necessary for success in conditions of digital transformation nearly a half (49%) called "investments into innovations".
According to opinion of 71% of respondents, orientation to advanced technologies is the cornerstone of success of state companies in the future. Approximately the same number (70%) of survey participants considers that cooperation with experts in IT will be of great importance and will allow them to react jointly to changes in the industry, 43% already began to adjust important strategic relationship. Despite a certain progress, changes occur too slowly at the most part of respondents: 72% say that they would like that their companies moved forward quicker.
Hugo Lerias, the head of department on development of services for vertical branches of the economy, public sector and automotive industry of Fujitsu company in EMEIA region, told: "It is obvious that the European public sector moves on the way of digital transformation. It, mostly, is defined by desire of clients to pass to online services. Nevertheless, process of implementation of digital technologies restrains outdated IT infrastructure of the state organizations. As the companies start review of the principles of provision of services, heads even more often understand that they need to address partners who could support them in the course of digital transformation. Digital transformation in public sector will provide to suppliers of technologies and their partners new opportunities for business development".
Data of Pierre Audoin Consultants and Fujitsu
- At 57% of respondents IT infrastructure is exposed to a heavy load in connection with implementation of digital technologies
- In the next 3 years the number of cloud projects will increase twice. Besides, in 2017 technologies of automation of robotic processes and Oracle application and SAP will actively develop
- Not all companies took all advantage of completely integrated tools to joint work and maintenance of its productivity
According to the research conducted by the research organization of Pierre Audoin Consultants (PAC) and published at the beginning of 2017 by Fujitsu company, low technologies are a basic reason on which the European companies cannot take all advantage of digital transformation. Among more than 500 Chief information officers and leading employees of the large companies which participated in poll more than a half of respondents (57%) was recognized that their IT infrastructure is exposed to a heavy load in connection with implementation of new digital technologies.
 it was carried out by request of Fujitsu with the purpose to define trends in the field of use of IT services and business applications in the European countries. Special attention was paid to technology difficulties which customers when implementing projects of digital transformation face: future trends and strategy connected with investment of means into a SAP software and Oracle, methods of conversion of outdated infrastructure and optimization of productivity of employees.
During the research the high level of unpreparedness of the companies was revealed – in spite of the fact that digital transformation gives a set of opportunities for business development, active implementation of digital technologies did not become the main priority for the companies. Fujitsu and PAC found out that only 10% of the companies consider themselves leaders in the field of digital transformation, and only 17% believe that implementation of digital technologies is a matter of life and death for business; 42% of survey participants consider that though new technologies are of great importance, other questions, including economic, have are much more important.
Ravi Krishnamoorthi, the senior vice president, the head of department of services and business applications of Fujitsu company in EMEIA region, says: "It is surprising that such small amount of the companies at the moment takes all advantages of digital transformation. Encourages only that in the next 1-3 years the situation will change. We expect that the companies will transfer more and more actively workloads and applications to cloud environments and will take the corresponding steps to increase not only dynamism of work, but also efficiency of the IT budgets. Meanwhile, many organizations continue to work, using the software, developed decades ago which is not capable to cope with modern tasks any more".
Nick Mayes, the director of research of PAC company, added: "The problem most of which the large organizations faces is that they were not created for work during a digital era. Many companies took the corresponding steps to correct a situation, but they continue to face the competition from the new companies which just entered the market, but treat to "digital generation". For preserving of competitiveness it is required to transform the technology infrastructure, beginning with servers, finishing with corporate and office applications. But Chief information officers often do not know what technologies are more effective than others. And case is not limited to deployment of the "correct" infrastructure; many companies begin to understand that until employees are not involved in transformation process, they will not be helped even by the best strategy".
Transformation of applications
Technology and culturological questions head the list of the factors which are slowing down digital transformation: the outdate technologies and infrastructures, complexity of integration of digital solutions into the traditional systems and difficulties connected with changes of culture. According to respondents, traditional applications are considered as the "burden" having a negative impact on dynamism of business. Also as the braking factors the shortage of the IT budget for support of implementation of innovations is called.
Nevertheless, the research revealed significant changes which will occur in the next three years. At the moment only 20% of survey participants transferred more than a half of the applications to cloud environments; however, this digit will increase more than twice in the next three years. Automation of robotic processes, most likely, will accelerate in 2017 that will allow to increase the speed and reliability of work.
Increase in productivity
When implementing projects of digital transformation of the company paid the main attention only to technologies. However, if in the company there is no relevant structure or culture for satisfaction of the developing requirements of the market, success from implementation of the most advanced technologies will be short. And most of respondents well understand it. Nevertheless, at the moment only 6% of the companies deployed completely integrated tools for joint work and maintenance of productivity, and their employees can effectively use the technologies implemented by the companies. Most the companies will be able to use all potential of these tools only in the future. The companies are going to offer first of all these tools to the employees working with customers. It can guarantee that their projects of digital transformation are focused only on customers needs.
- ↑ a dokhodamiyesla you postpone upgrade of IT because of their complexity and cost, think of elements of profitability of legacy systems,  Beth Devin, the managing director and the head Innovation Network & Emerging Technology writes to Citi Ventures on the Enterprisers Project portal.
- ↑ of Fujitsukolichestvennoye company research "Fit for Digital: Co-creation in the Age of Disruption" was carried out in September, 2016 by independent research company Censuswide. 1180 heads of the companies of small and large business from public sector, the financial sector, the sector of retail and production, including 250 respondents from public sector participated in a research. The companies from the USA (210 companies), Great Britain (156 companies), Australia (152 companies), Germany (152 companies), Spain (150 companies), France (150 companies), Italy (150 companies), Finland (30 companies) and Sweden (30 companies). participated in a research
- ↑ The research Research was conducted by PAC company in November, 2016 500 respondents from Finland, Germany, Spain, Sweden, Great Britain and Ireland were polled. A half of survey participants is connected with execution of business functions in the companies, and other half is responsible for information technologies in the companies with the state more than 500 employees. Survey participants represent the companies from different sectors of economy, including production, retail, services, health care and banking services.