Author: Marc Borkowsky, Business Analyst, and Benjamin Walther, joint CEO, aviationexpertsSubscribe
The ever increasing speed of new technology developments thus leaves business leaders and IT specialists facing the question of whether to modernize legacy systems or to develop and introduce completely new systems. Weighing off the costs and benefits of both options can be rather challenging. In this paper you’ll discover the advantages and risks of both approaches and learn how several companies were able to considerably reduce costs and improve performance by overhauling their legacy applications.
Both sides of the business case
‘Never touch a running system’; it’s a statement that is well-established within IT departments. Yet, legacy systems entail considerable maintenance costs while lacking agility and adaptability. But today’s companies are often stretched to make the difficult comparison and assessment of the trade-offs of either recycling legacy systems to pave the way for state-of-the-art software or, in contrast, modernizing current applications.
If done right, companies can realize substantial cost savings by following the example of the City of Fort Worth in the State of Texas. By modernizing its legacy applications, the city is saving $850,000 of ongoing costs for these applications each year. The Irish Life Group, Ireland‘s leading life and pensions company, may serve as another great example: it found that an 80% reduction in operating expenses could be achieved through an application modernization program. Productivity gains and improved agility of its systems for future innovations were an additional benefit.
The key question, of course, does not come out of the blue: the ever increasing speed of change in today’s business environment calls for adaptive, lean, and yet efficient IT applications that are customized to the functionality required for the respective industry. However, the reality in many companies provides for a very different picture. The portfolio of applications used today is in many cases outdated and lacks flexibility which, in turn, results in a hindering of operational efficiency. But today more than ever, companies need a strong basis for differentiation, responsiveness, and agility to win customers. This naturally includes an up-to-date portfolio of applications that enables companies to create even more value with what they have. Otherwise, there are many competitors gladly willing to overtake you and put you out of the picture.
Legacy applications are so yesterday
Yet, these legacy applications have been supporting a multitude of processes of companies for years now, while providing insights and important information for employees. But the fact remains; they can hinder a company from exploiting its full potential due to their high complexity and integration. Another implied risk with legacy applications is that they are bound to hide processes or functions that are overlapping one another. The term ‘lean’ certainly describes something else. Of course, one of the downsides you also need to keep in mind is that a large legacy portfolio is constantly demanding of extensive and thus costly maintenance efforts, amplifying its inefficiency. And we hardly need to mention that all of this may well be happening at the expense of innovation.
Legacy systems get old, too. In the case of information technology, it is the changing environment that makes applications and software become a legacy. Interfaces to neighboring applications and databases are out-of-date and user interfaces do not correspond to today’s standards with regard to graphics and guidance. In addition, maintenance costs are further increased because extensive software testing is necessary even when only small extensions or functionalities are to be added.
Get the most out of existing application portfolios and prepare for future challenges
The challenging task now is to find the right strategy aiming at upgrading your existing application portfolio to meet future demands. When done in the right manner, costs can be reduced while simultaneously improving performance, reliability, and efficiency.
But why should one focus on the modernization of legacy applications instead of buying new software which is currently state-of-the-art?
Fair enough. The aviation industry has always kept pace with if not pioneered technological developments. Hence, while legacy applications may not be state-of-the-art anymore, in many cases they comprise an inconceivable number of customized and perfectly tailored functions which have been developed over years. Replacing these applications with completely new systems may often be a trade-off between increasing usability and decreasing functionality.
In light of the above, we have created an approach in which replacing legacy, but well-proven and highly customized systems, is not the only option for achieving state-of-the-art performance. In fact, with regards to finance and processes, the modernization of applications is often found to be more efficient. Nevertheless, we believe that it is of crucial importance to choose a holistic approach considering the three core topics of each application modernization: usability, data integration and storage, and new functionality.
- Usability. Legacy systems often lack a state-of-the-art user interface, resulting in complex and time-consuming processes. Replacing these by choosing the latest graphic frameworks, leads to enormous improvements and savings.
- Data Integration and Storage. Since the availability of data has rapidly increased during the last few years, the integration and storage of information is an inevitable part of every application modernization. Thus, it is possible to further enhance and accelerate processes by providing the right information at the right time.
- New Functionality. Due to modern technologies, the opportunity to develop and implement new functionality is available. In addition, new architectural concepts allow a simplified approach for integrating improvements.
The devil is in the detail
But how does an application modernization work? Initially, the present legacy system and its applications need to be analyzed and assessed for functionality, efficiency, and adaptability. This evaluation serves as a basis for specifying the desired functions of the to-be-modernized application. Furthermore, additional interfaces with other (future) systems need to be allowed for. The next step is the actual design and modernization of the existing application, which is implemented by using a multitude of different techniques. Test automation, code cleaning, re-engineering, migration, and extraction of legacy functions to new systems are only some of these techniques. Ultimately, the modernized application is released and can continue its operation.
Creating true value
To once more illustrate the possible benefits of a legacy system modernization: one of our recent projects included the modernization of an Operations Control System of a major European carrier. As a result, the carrier was confronted with considerably less expenses because the modernization incurred only 25% of the costs compared to the development of an entirely new system. Furthermore, a new development would only have included standard functions, missing all the priceless customized functions that have been added over the years.
Regain competitive advantage
Marc Borkowsky is a Business Analyst at aviationexperts and works on projects with airline clients on topics such as fuel excellence, process optimization and legal compliance. Marc graduated with a Master’s degree in International Business & Law from the Management Center Innsbruck and holds a Bachelor’s degree in Management from the California International Business University in San Diego (USA).
Benjamin Walther is one of the two CEOs of aviationexperts. As a recognized specialist for aviation IT and operations, he delivered projects to airlines and airports around the globe, specializing in the implementation and execution of long-term strategies. With his deep expertise, the international project delivery experience and leadership personality, Benjamin exemplifies aviationexperts’ commitment to change the client’s business. Benjamin graduated in Business Information Systems from University of Applied Sciences in Frankfurt.
aviationexperts is an international technology and consulting company in the aviation industry. Since being founded in 2009 it advises more than 15 customers in 10 countries. With a team of almost 20 consultants at offices in Frankfurt and Abu Dhabi the company generated sustainable profits from annual revenues of more than 1million euros. The business analyzes and assesses current portfolios in order to advise the best possible solution for current challenges, taking into account costs, efficiency, and adaptability.