Deloitte says we must reimagine our core systems

Published on the 09/03/2016 | Written by Clare Coulson

Deloitte core systems

With digital transformation high on many business agendas, legacy systems are often seen as the largest constraint holding the business back. Deloitte’s latest Tech Trends report provides “5 R’s” as a guideline to revitalisation…

The latest release of Deloitte’s annual ‘Tech Trends’ report provides an almanac of insights, advice, case studies and opinion on matters affecting business IT. Inside the 135 pages of the 2016 report are sections covering, for example, augmented reality, the internet of things and industrialised analytics. While you’d expect these hot tech topics to be covered, the coal-face challenge for many businesses is modernising legacy systems. In this year’s report Deloitte has dedicated a section to uncovering innovative ways to reinvigorate the foundational IT systems in your business, as summarised below:

IT’s legacy is intertwined with the core systems that often bear the same name. In a way, the modern IT department’s raison d’être can be traced to the origins of what is now dubbed “legacy” – those heart-of-the-business, foundation-of-the-mission systems that run back-, mid-, and front-office processes. Some include large-scale custom solutions whose reach and complexity have sprawled over the decades. Others have undergone ERP transformation programs designed to customise and extend their capabilities to meet specific business needs. Unfortunately, the net result of such efforts is often a tangle of complexity and dependency that is daunting to try to comprehend, much less unwind.

Meanwhile, core upkeep and legacy modernisation lay claim to inordinate amounts of IT budget. Deloitte’s 2015 global CIO survey found that core-related expenditures are the single biggest line item in IT investment dollars. This leads to an internal PR problem for the core: High cost is seen as low value. When asked to rank the technology investments they think will have significant impacts on their business, survey respondents cited analytics, digital, and cloud.

Clearly, it’s easy to overlook the fact that these and other emerging technologies are highly dependent on the underlying data and processes the core enables.

Approach re-imagining the core with a transformational lens – it is, after all, a chance to modernise much more than the underlying technology. Challenge the business to imagine how functions and processes should and could operate based on today’s realities, not yesterday’s constraints. Core modernisation can provide a path toward much more than re-engineering; it may ultimately help the business reinvent itself.

The five Rs
Roadmaps for reimagining the core should reflect business imperatives and technical realities, balancing business priorities, opportunities, and implementation complexity. They will likely involve one or more of the following categories of activities:

  • Replatform: Upgrade platforms
  • Revitalise: Layer on new capabilities to enhance stable underlying core processes and data.
  • Remediate: Address internal complexities of existing core implementations.
  • Replace: Introduce new solutions for parts of the core.
  • Retrench: Do nothing – which can be strategic as long as it is an intentional choice.

Where do you start?
Core modernisation is already on many IT leaders’ radar. In a recent Forrester survey of software decision makers, 74 percent listed updating/modernising key legacy applications as critical or high priority. The challenge many of these leaders face will be to move from an acknowledged need to an actionable plan with a supporting business case and roadmap. Reimagining the core could involve gearing up for a sustained campaign of massive scope and possible risk, potentially one that business leaders might not be able to understand or willing to fully support. Yet, the fact is that CIOs no longer have a choice. In the same way that the core drives the business, it also drives the IT agenda. Consider this: What if that same legacy footprint could become the foundation for innovation and growth and help fuel broader transformation efforts? The following considerations may help bring this vision more clearly into focus:

  • It’s a business decision: There should be a clear business case for modernising core systems. Historically, business case analysis has tended to focus primarily on cost avoidance, thus rendering many proposed initiatives uneconomical. It’s hard to justify rewriting a poorly understood, complex core legacy application based only on the prospect of avoiding costs. However, when companies frame the business case in terms of lost business opportunities and lack of agility, the real costs of technical debt become more apparent. Even then, however, it is important to be realistic when projecting the extent of hidden complexity, and how much work and budget will be required to meet the challenges that surround this complexity.
  • Tools for the trade: Until recently, the process of moving off ERP customisations and rewriting millions of lines of custom logic has been resource-intensive and issue-prone to the point of being costprohibitive. Why migrate that old COBOL application when it’s cheaper to train a few folks to maintain it? Increasingly, however, new technologies are making core modernisation much more affordable. For example, conversion technologies can achieve close to 100 percent automated conversion of old mainframe programs to Java and modern scripting languages. New tools are being developed to automate the scanning and analysis of ERP customisations, which allows engineers and others to focus their efforts on value-added tasks such as reinventing business processes and user interactions.
  • Shoes for the cobbler’s children: Leading CIOs caution against approaching core modernisation as a project with a beginning and an end. Instead, consider anchoring efforts in a broader programmatic agenda. Keep in mind that core modernisation efforts shouldn’t be limited to data and applications – they should also revisit underlying infrastructure. As IT workloads migrate to higher levels of abstraction, the infrastructure will require deep analysis. Shifting simultaneously to software-defined environments and autonomic platforms can amplify application and data efforts. Similarly, higher-level IT organisation, delivery, and interaction models will need to evolve along with the refreshed core. Consider undertaking parts of the rightspeed IT model in conjunction with core modernisation efforts.
  • Honor thy legacy: Reimagining the core has everything to do with legacy. That legacy is entangled in a history of investment decisions, long hours, and careers across the organisation. A portion of your workforce’s job history (not to mention job security) is embedded in the existing footprint. As such, decisions concerning the core can be fraught with emotional and political baggage. As you reimagine core systems, respect your company’s technology heritage without becoming beholden to it. Sidestep subjective debates by focusing on fact-based, data-driven discussions about pressing business needs.

This article is an excerpt of the 2016 Tech Trends report by Deloitte. The re-imagining core systems section was written by Deloitte systems integration director Scott Buchholz and technology principals Ben Jones and Pavel Krumkachev. The report also includes chapters on:

  • Right-speed IT
  • Augmented and virtual reality go to work
  • Internet of Things: From sensing to doing
  • Reimagining core systems
  • Autonomic platforms
  • Blockchain: Democratized trust
  • Industrialized analytics
  • Social impact of exponential technologies

Download the full Deloitte 2016 Tech Trends report.


Tech Trends 2016


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