Defusing the legacy bomb

João Simões Abreu, March 05, 2021

The business world requires software more than ever. The COVID-19 pandemic brought a shining light to the importance digital channels have on numerous business models. Companies in which plans to adopt digital mediums were never on the table had to implement them quickly – this either enabled them to survive or thrive during these turbulent times.

“Every business is a software business”

Said Watts Humphrey, software engineering pioneer and dubbed the “father of software quality”, nearly 20 years ago. Regrettably, only recently, decision-makers from various fields realized this. The rush to embrace digital channels without proper planning or strategy might have cut short its impact on businesses. But more than operating systems, companies need modern and agile core systems – the ones that allow them to swiftly pivot their strategy and make technology capabilities not a barrier but an enabler for transformation, and to quickly launch new products and services as well as comply with the new regulation.
The reality among big corporations is the technology used is often outdated. Organizations that were once earlyadopters on enabling tech on their operations are now using legacy systems to control their businesses.

WHAT IS A LEGACY SYSTEM?

According to Gartner, a legacy system is an information system that may be based on outdated technologies but is critical to day-to-day operations. Replacing legacy applications and systems with systems based on new and different technologies is one of the information systems professional’s most significant challenges.

The legacy trouble

The existing large software systems were never built to cope with the current business requirements and its natural evolution, one of the challenging issues in today’s competitive environment. These computer programs are not flexible enough to continually evolve and eventually undermine companies’ growth strategies.
To compete side-by-side with the top industry performers and attract and retain customers, leaders must adopt platforms that enable rapid innovation for their digital business initiatives. Otherwise, more agile competitors will launch products and services and devour incumbents’ market share.
Modern applications that can potentially disrupt and grow businesses require new technologies and architectures such as cloud, mobile, in-memory computing, web-scale, microservices, hybrid IT, and Application Programming Interfaces. This, by itself, is a challenge to traditional and legacy systems that do not support or run cloud-native applications, for example. Moreover, business leaders who intend to keep their legacy systems up and running will face barriers that will only rise as the years pass.

The following three are just the tip of the iceberg of an endless list of problems companies are bound to face when sticking to legacy systems.

1. Skilled human resources
Skilled human resources who can work with obsolete platforms will only get harder and harder to hire. Most of the programming languages used in legacy systems are outdated, so much that university students are not taught how to operate them. Consequently, companies working with obsolete systems often have to rely on the few skilled human resources who can navigate their way in these ancient computer programs. This is a problem for two main reasons: they will not be able to bring new and fresh-minded programmers to work for them, and the skilled programmers that can operate the system will only get more and more expensive.

2. The absence of up-to-date documentation
The absence of up-to-date documentation makes the problem mentioned above even harder. Newcomers who joined the IT force will have to rely on the team members who already know how to cope with the system.

3. Lack of integration
Lack of integration is also a big part of the legacy challenge. The absence of interfaces and integration services carries a great difficulty to integrate with other systems. In turn, this means companies who want to innovate will most likely not be able to so.

All in all, this adds up to costly maintenance of legacy system software since fault detection is expensive and time-consuming – due to improper documentation and consequent lack of knowledge about functionalities of the system (also the reason why these kinds of systems are standing still most of the time).

According to Cybera, the average retailer spends 58% of the IT budget on maintaining legacy systems. And although the largest percentage of the budget goes to maintaining it, the system’s evolution to provide new functionalities is nearly impossible, leaving little to no room for other innovative projects in the pipeline.

A natural evolution?

An Avanade study indicates that 80% of senior IT decision-makers believe that not modernizing IT systems will negatively impact their organization’s long-term growth. Around two-thirds note that conventional systems and approaches typically used are not fit for solving digital businesses’ emerging requirements.
On the opposite side of the spectrum, they also consider the modernization of core systems has the potential to boost annual revenue by over 14%.
Additionally, business operating costs can benefit as well: respondents anticipate that business operating costs can be reduced by 13% with updated core systems. Nine in ten believe modern software engineering approaches and process automation technologies are vital to addressing emerging digital business requirements.
With all this in mind, why are companies stuck to systems that not only are costly but are also dragging them behind their competition?
They may be unaware. Leaders can be behind without acknowledging it, which is the worst-case scenario since dramatic changes to their businesses can happen unexpectedly. It can also occur that previous systems implementations took so long decisionmakers are afraid the next update will also be interminable. Furthermore, there are often fears that prevent people from migrating to another platform. Data loss when migrating, high costs involved in the transition, and the lack of flexibility of the new system are among the mental barriers business leaders face when deciding on sticking to the same platform or updating it.

A pratical case

New era businesses outpace legacy businesses at grander scale and speed, resulting in lower costs, faster delivery, and more significant technology usage. Traditional risk assessment approaches are too slow, too siloed, and unscalable to accommodate digital business deliverables.
The Banking industry is still one of the business fields that still relies heavily on old core systems. In the ’60s and ’70s, banks were the early-adopters of platforms that enabled them to report, centralize information about their clients, and access files. The most common programming language available was COBOL – it was created in 1959.
Here is the problem: since then, banks started to add business capabilities on top of these systems. Processes were developed to cope with the available mechanisms, and from that point forward, the whole operation relied on it. COBOL was undeniably the state-of-the-art technology to use when
The Beatles were still touring around the world, but more agile platforms appeared since then. The industry seemed to ignore or be unaware of this until new and swift competitors started appearing with better user experience and customer support, and seamless control over assets.
Revolut, for instance, is a fine example of where this happened. Ever since the business was found in 2015, the London-based fintech scaled its operation worldwide while promising customers better and additional services, account tracking, and the ability to trade currencies at a minimal cost. Fast forward to today, the more than 12 million users are now able to trade cryptocurrencies and stock over a mobile app.
The laggards will struggle to keep their systems operating and continuously lag if nothing is done. They can always keep up with their old weapons, but the implementation speed is far slower due to their legacy systems. But even if the new players have the technology upper hand, they must follow a continuous innovation approach and adopt new technologies. Otherwise, the path taken will be identical to that of incumbent banks.

Moving forward ingeniously

It can be hard to find a platform that enables continuous innovation. The exercise of keeping updating technologies can be, among many other aspects, hard to accept by decision-makers, prone to losing data in the transition, and expensive. This is why we believe we have the best solution in the market to update legacy systems. One that promotes continuous and everlasting innovation.

Quidgest’s principles and vision are based on software engineering that uses a model-driven approach propelled by Genio.

This means that we use patterns instead of code, which grants us (and our clients) technology independence – code languages are ephemeral, but patterns are forever. We address every single fear that organizations may have when retiring their systems. That is the case with data loss. As stated previously, business leaders are often terrorized by the potential of losing information. To make sure this does not happen, our team lists all the essential data needed for the system to operate, and – with close collaboration with the client – we migrate everything from the old program to the new solution.
Additional to the maintenance costs and the revenue boost new core solutions provide, Quidgest has a state-of-the-art solution for a fraction of our competitors’ price. We charge no bills for annual licenses, the number of users, the volume of data stored, or by the number of functionalities used – to name a few examples of what is usually charged by most IT providers.

Updating your core system with GENIO

AI-driven: 98% of the code is automated
Thorough: 1/10 of the resources
Swift: 1/10 of the time
Flexible: automatic integration
Adaptable: the solution adapts to the business and not the way around

Quidgest has its own controlled process of automatic development that creates the conditions for the rapid technological evolution of information systems – UPTO (Updating Obsolete Technological Platforms).

This process overcomes the usual restrictions and constraints in this type of transition, which are estimated to be responsible for losses of millions of euros: in arrears, in data loss, in the inadequacy of the system, in reduced productivity, periods of inactivity, and in hidden costs.
Click here for more information.

CAPEX and OPEX friendly

As seen above, a great part of the IT budget is still captured by the operation and maintenance cost (OPEX) of old systems. This prevents capital expenditure (CAPEX) on benefits that will guarantee a growing and innovative operation.
The operation and maintenance costs are up to 10 times more economical in new systems. Through our methodology, with a small CAPEX investment, obsolete management software applications are converted into new solutions which are already equipped with the latest technologies.
In practice, we migrate technologically obsolete solutions, recreating them with all their features in the most modern technologies, architectures, programming languages, and development methodologies proven to be more efficient. Technology is essential, but the way businesses operate should not depend on strict technology rules.

Gartner states that business leaders should “focus on the application of technology and not on application technology”. That is the mindset that must prevail among organizations’ leaders to achieve tremendous success and deeply understand where and how technology can generate real value.

Information systems have become the cornerstone to manage organizations effectively. However, such efficiency is frequently jeopardized by old and heavy software.

Decision-makers face a dilemma: investing time and money in an obsolete system that most likely had to be updated years ago or updating it with a new one.

To discuss these topics, Quidgest held a Meetup event: “UPDATING COSTLY AND HEAVY OLD CORE SYSTEMS“. This MeetUp debunked some wrong assumptions regarding updating legacy systems and showcased how this process can be swift and uncomplicated via Genio. Watch the video.

ABOUT

Quidgest is a global technology company headquartered in Lisbon and a pioneer in intelligent software modeling and generation. Through its unique generative AI platform, Genio, develops complex, urgent, and specific systems, ready to evolve continuously, flexible, and scalable for various technologies and platforms. Partners and large organizations such as governments, multinational companies, and global multilateral institutions use Quidgest’s solutions to achieve their digital strategies.