Modernizing Legacy Systems for Future Business Agility

Organizations are increasingly recognizing the need to modernize their legacy systems to remain competitive. This article advocates for the modernization of legacy systems, particularly those built on non-future-proof technologies such as mainframes , AS400 systems, to solve operational inefficiencies and reveal new opportunities. Let’s delve into the compelling reasons for this transition and explore the strategic approaches that can facilitate this crucial transformation.

The Imperative for Modernization

Legacy systems, while reliable over decades, have become a significant hurdle in the path of innovation and operational efficiency. Four major factors are pushing for the modernization of these systems:

1. Operational Cost: Legacy systems are large and complex, requiring substantial investment in maintenance, including hardware, software, and personnel. These costs are significantly higher compared to modern cloud-based systems.
2. Business Agility: In today’s fast-paced market, agility is paramount. Mainframes, being monolithic and complex, are slow to adapt to business changes, thereby impeding an organization’s ability to stay ahead of the competition.
3. Maintainability: Legacy systems often consume more time and resources on troubleshooting and maintenance, diverting focus from innovation. Additionally, transforming these systems to become cloud-ready is a daunting task.
4. Operational Excellence: Many legacy systems are outdated, forcing businesses to operate around their limitations. Modernization offers an opportunity to reevaluate and redesign business processes for greater efficiency and alignment with current objectives.

Solving the Problem: Strategic Approaches to Modernization

To overcome the challenges posed by legacy systems and unlock new opportunities, organizations can adopt several strategic approaches:

1. Managing Data Consumption: Identifying and integrating relevant data from legacy systems into new cloud or hybrid applications can significantly reduce costs and improve data management.
2. Leveraging Technology Developments: Upskilling the workforce to handle modern IT platforms is crucial. Embracing new technologies can enhance operational capabilities and business outcomes.
3. Gaining Agility and Cost Savings: Using high-velocity, agile, and flexible delivery models supported by DevOps and APIs can streamline operations and improve time-to-market.
4. Reducing Code Complexity: Addressing mobility issues with omnichannel support and enhanced usability can simplify operations and improve user experience.
5. Improving Integration and Eliminating Repetitiveness: Modernization can increase reliability by preventing data loss and system downtimes, thereby ensuring smoother and more efficient operations.

Blueprint for Modernization: Proven Patterns and Techniques

PwC’s approach to legacy modernization is designed to provide accelerated and sustained business value. The process involves a comprehensive assessment of the current state and a clear roadmap to the future state. Here are the key patterns and techniques employed:

1. COTS (Commercial Off-The-Shelf): This involves mapping non-differentiating legacy capabilities to commercial products and platforms, offering a quicker path to modernization without the need for extensive custom development.
2. Transcoding: Automated tools analyze and convert legacy codebases into modern application stacks. This approach not only converts code but also refactors it to align with modern engineering patterns and cloud-native tooling.
3. Redesign: This involves engaging stakeholders to design and build new systems that leverage modern technologies, replacing outdated legacy systems over time.
4. Emulation: This pattern allows legacy applications to run on modern platforms through an emulation middleware layer, enabling gradual modernization of system dependencies.

Rigorous and Transparent Methodology

The modernization journey must be rigorous and transparent, embodying the same level of research and accuracy found in academic and government reports. PwC’s methodology is structured into three phases:

1. Learn: Discover the current state architecture, map dependencies, assess code complexity, and identify business capabilities to build the modernization business case.
2. Ideate: Define the solution approach, make key architecture decisions, and create a detailed roadmap with prioritized initiatives for modular and progressive migration.
3. Plan and Execute: Develop the detailed solution design and architecture, create the product backlog, and execute the plan using agile methodologies to build and modernize foundational capabilities.

Real-World Success Stories

Several organizations have successfully navigated the modernization journey with PwC’s guidance. Here are a few examples:

1. Global Financial Institution: The client faced high costs and decreasing agility with their legacy systems. PwC’s approach enabled them to migrate 80% of their legacy applications to a modernized platform, significantly reducing operational risks and costs.
2. US-Based Life Insurance Company: PwC helped the client develop a phased modernization plan that included a detailed future state architecture and roadmap, unlocking business value and achieving cost savings.
3. US-Based Global Airline: The airline faced multiple challenges with its legacy PSS system. PwC’s incremental approach to modernization enabled the airline to migrate critical components to the cloud, accelerating innovation and reducing risks.
4. Natural Foods Distributor: The client’s legacy mainframe inhibited business agility. PwC’s cloud-first strategy and actionable modernization plan helped the client save over $28M/year while enhancing operational efficiency.
5. Personal Lines Insurance Carrier: PwC developed a holistic data strategy and roadmap, enabling the client to transform their data and analytics capabilities, support core transformations, and meet evolving market demands.

Modernizing legacy systems is no longer a choice but a necessity for businesses aiming to thrive in the digital age. By adopting strategic approaches and leveraging proven patterns and techniques, organizations can overcome the challenges of legacy systems and unlock new opportunities for innovation and growth. PwC’s rigorous and transparent methodology ensures a seamless transition, delivering sustained business value and operational excellence.

As the digital landscape continues to evolve, the importance of modernizing legacy systems will only grow. By embracing this transformation, organizations can ensure they are well-equipped to meet future challenges and seize new opportunities, driving long-term success and competitiveness in their respective industries.

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