Application Decommissioning – Business Benefits

Recently we’ve been doing quite a bit of work in an application space we refer to as Application Decommissioning. I’d like to share with you some of our experiences and the great ROI that our customers are seeing using our solution.

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Studies by industry trade groups show that in Fortune 1000 companies 70% of every IT dollar is spent on application maintenance. Imagine – 70 cents of every dollar is spent to simply maintain the existing status quo. No new application development, no improvements in business processes, agility, value in the market or improved competitiveness. 70% of your time spent just treading water. That’s a painful graphic to defend if you’re a CIO or CFO. What’s the reason for this? We’ve found that there are a few business events that can really drive up the operational cost of IT organizations:

  • Mergers and acquisitions. Typically these business events result in redundant systems that need to be maintained for some period of time. Paradoxically, attempts to improve business efficiencies through mergers can result in a reduction in business efficiency because of the need to maintain disparate technologies to satisfy a single business requirement.
  • Audit and regulatory requirements. In verticals such as financial services, insurance and health care, recent changes in federal law and public policy have resulted in new requirements for data retention to satisfy audit requirements. Failure to respond to audit and discovery requests can result in severe financial penalties.
  • Technology platform changes. There have been several large scale changes in the computing landscape – most notably cloud based computing, pervasive broadband connectivity and smart phones and tablet devices – that have dramatically changed the technology stacks used in application development. These changes mean that applications developed today frequently use a very separate set of tooling from those used only a few years ago. IT sunk costs for software licenses, staff training and platform tooling are in many cases not leveraged in new application development.

So we see a real problem with very obvious business impacts. The operational cost to maintain old systems is high yet the need to access the data is real and the risk (and cost) of not providing access to legacy data is substantial. If we could reduce the cost of ownership we could really increase the value that IT gives to the business without asking for additional IT spend.

Our solution was to develop an integrated consulting and software solution that addresses the problem in this way:

  • Eliminate the ‘Tower of Babel’ by consolidating multiple legacy applications into a single, lightweight, standards based technology stack
  • Migrate legacy data into an industry standard, future proof format (XML) that is vendor independent, application neutral and stable.
  • Leverage advances in virtualization and cloud computing. These technologies typically deliver orders of magnitude improvement in the price for hosting, elastic computing and storage capabilities compared to legacy technology stacks.
  • Provide a consistent application framework that is used to consolidate dozens to hundreds of legacy applications into a single technology stack. This consolidation enables the outsourcing of these legacy application access requirements and greatly lowers the overall TCO of the solution.
  • In conjunction with the customer, develop a program governance model for application retirement that can be executed over a period time by the customer and their IT providers. The program includes ROI and TCO calculators, knowledge transfer for acquiring technical competency and a prebuilt software framework that can be configured for disparate application retirement without requiring significant incremental investment in software customization.

We’ve been doing this work for the past 18 months and it’s been an interesting set of projects to date. Our customers are experiencing really significant ROIs – turning off mainframes, retiring legacy databases and consolidating data centers. The big challenges in the projects have been:

  • Overcoming organizational inertia. In many cases the existing applications work, don’t require any active maintenance and are rarely used. Individual departments frequently are of the mindset that it isn’t obviously broken so don’t spend any time changing it. At the C level of organizations the cost to this thinking is very obvious but it can be difficult to overcome at the departmental level.
  • Locating and engaging staff to guide the requirements of retirement. Understanding the requirements to insure business continuity of these applications can be difficult. Frequently staff that knew the application may no longer be at the company so we sometimes face a bit of an archaeology expedition to unearth reporting capabilities of the existing application and articulate a go-forward strategy for moving these applications into retirement.

It’s interesting to note that the two challenges I’ve listed above aren’t technical – they’re more cultural or social in nature. But they are real issues so we’ve developed programs and engagement strategies to overcome these pain points, in conjunction with the software solution.

For example, at the start of every engagement, we coach the customer to develop a methodology for identifying high value application targets for retirement. Initially, we classify the projects by looking at usage patterns:

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We then categorize the applications using criteria we’ve found useful for modeling the ROI of an application decommissioning effort. Applications that meet certain criteria are good candidates. Other applications may be better suited to a refactoring or simply to maintain in the existing application maintenance mode. In the graphic below, we define a matrix to model the functional and technical characteristics of an existing application. By placing applications into this matrix, we determine the appropriate strategy – refactor with new technologies, keep in maintenance mode or move into application decommissioning.

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For applications that satisfy the requirements, we move them through an application decommissioning process that follows this general pattern:

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At the end of an application decommissioning engagement, a few things have happened:

  • We’ve migrated a few applications into retirement
  • Developed and deployed a scalable solution
  • Trained the IT organization on how to manage and execute an app retirement program
  • Demonstrated significant hard dollar ROI savings that the business can easily identify

In summary, we’re finding that application decommissioning is a really valuable, relatively straightforward project that provides quantifiable ROI to the business. It takes some of that 70% spend on existing applications and frees it up to fund more valuable IT projects.

In a future blog I’ll provide a more detailed, technical review of the solution we’ve developed.