Applications Modernization and the cost of doing nothing

Technology evolves at an ever increasing pace and even the latest equipment can soon become obsolete. This is true for everything in the IT field, including software, processes, methodologies, and frameworks.  Rapid change has caused many companies to hesitate before investing in modernization. This blog is focused on two key challenges facing organizations today:  the need to modernize just to keep up with technology (and the competition), and conversely, the cost of doing nothing.

Let’s compare the two extremes relative to technology: organizations that are early adopters of new technology and organizations that simply do not bother to upgrade technologically.  The early adopters believe that by investing early, they will be better prepared to understand and capitalize on the benefits of new technology in the future, even if it does not deliver an immediate ROI.  Those that wait might save money in the short term, but may be saddled with a dated, under-performing IT infrastructure that is increasingly more expensive to maintain.  In short, the difference is the degree to which an organization decides to take a long-term perspective toward investment in technology.

This is equally true for applications as it is for hardware, maybe even more.  There is no way to talk about Applications Modernization without talking about legacy applications. Over time, legacy applications (many mission-critical) become complex, rigid, and poorly documented, thus making maintenance increasingly complicated and expensive.  Finding resources that understand and can maintain outdated applications becomes very difficult.  As the IT budget is increasingly spent on maintaining legacy applications, less money is available for innovation and modernization.

In the long term, doing nothing is very expensive.  The difficulty (and cost) is compounded when attempting to integrate legacy applications with new applications, platforms, changes in standards, and so on.   Companies have found themselves literally stuck with old applications, unable to purchase and install modern solutions because they cannot be integrated with their current IT architecture.  (Suppliers share some of the responsibility as they reduce product lifecycles and support for discontinued versions.)  Waiting is clearly not the best strategy.

Applications Modernization must always be part of a company’s IT business plan.  To stay competitive, IT needs to stay current with changes and developments in the industry. Many companies budget for Applications Modernization only when a situation becomes critical or mandatory (for example when a vendor discontinues support). By this time it may be too late.  The business case for investing in Applications Modernization can be justified using detailed analysis of the company's IT architecture, identification of critical legacy applications, market and competitive demands, an analysis and review of supplier offerings, and the company’s future  IT plans. The business case should also include the impact and cost of not being able to modernize in a timely manner due to factors mentioned earlier.  This is a very dangerous situation; where a company is trapped for an extended period of time with an outdated IT infrastructure and the inability to integrate with other critical application solutions.

The issue is not just the cost directly associated with Applications Modernization.  When IT fails to meet business requirements, the company falls behind the competition, misses its revenue goals, loses customers and consequently loses money. This loss of revenue is the ultimate cost of doing nothing.