The legacy challenge and the new drivers for change

Barriers to application cloud migration

Legacy applications play a vital role in supporting critical business processes in organisations across all industry sectors. Consider the case of one of Europe’s largest insurance carriers, which continues to use a green-screen system that was developed more than 30 years ago to support key policy administration functions.

And also consider that the core system that sits at the heart of controlling the 7,000 aircraft that are in flight at any time over the US was developed during the 1970s.
In both cases, these systems are still sufficiently robust to perform their essential tasks. But they are no longer able to support the new demands of the business and to enable them to fully take advantage of the tech advances that have been made in terms of mobility, user experience, integration with digital services, security etc. Change is needed. The extent of the legacy challenge was underlined by some recent research by PAC, which surveyed senior business and IT executives at more than 500 large enterprises and public sector organisations in the EMEA region.

The study found that 70% of participants believed that less than half of their current applications are fit and able to support the future digital strategy of their organization. This is a very high level and suggests that we are entering into a major wave of applications modernization programmes. Interestingly, these initiatives will not necessarily be driven by cost. A key part of the case for investment will be based on the need to improve the responsiveness of the business – with 57% of study participants stating that legacy applications are making their organisations less agile. This was slightly ahead of the 56% who stated that legacy applications were a drain on budget that could be put to better use in driving innovation.

Agility is a major challenge across all markets

Deutsche Bank, for example, reckons that as much as 80% of its 7,000 enterprise applications were designed and developed in silos. This means that integration has been limited, with the bank’s CEO describing the applications landscape as “cumbersome” and “incompatible.”
One of the main paths to modernizing legacy applications is to migrate them to a cloud delivery platform. This can include public cloud environments (from providers such as Amazon, Microsoft and Google), private clouds (a platform dedicated to a single customer) or a hybrid combination of the two.

The PAC study found that organisations in the EMEA region have been relatively cautious in moving their applications to cloud platforms, with 80% having migrated less than half of their enterprise software to date. However, the next three years will see a significant shift, with 44% expecting to have re-platformed more than 50% of their enterprise applications in the cloud (public, private or hybrid) by 2019.
The financial services look set to lead the charge, with 56% of banks and insurers planning to run more than half their applications in the cloud within the next three years. Indeed, Deutsche Bank expects by 2020 to have quadrupled its use of private cloud systems to 80% and to increase application virtualization to 95% from 46%.
Cloud is of course only one answer to the legacy modernization challenge. Applying business process management wrappers, implementing packaged systems or undertaking data migration initiatives are all options. But doing nothing is not an option if the business is to support the evolving strategy of the business in the digital era. PAC recently discussed the key findings of the research, as well as the practical steps that organisations can take to rapidly take some of the pain out of their legacy burden on a webinar, which can be accessed here.

A recording of our webinar can be found here

A white paper from PAC and Fujitsu about the findings of our EMEA-wide survey can be downloaded from here.

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