Lowering costs requires weighing the pros and cons of updating antiquated systems or replacing them.
As the budget debate rages on across government, every agency CIO faces the inevitable challenge of significant budget cuts in IT and the systems and programs IT supports. Although there is no easy fix to eliminate the trillions of dollars required to get the U.S. out of debt, the federal technology community must take a stand by embracing real, tangible cost savings initiatives. Dealing with legacy systems and applications is a potential solution, but the decision to modernize versus replace must be carefully weighed.
It is clear that CIOs are going to have to seriously consider replacing or modernizing legacy systems – but how do they decide? What criteria should be considered? And, most importantly, what effect will the decision have on the agency and the mission? The most important task for any CIO is to determine the cost and the risk associated with replacing or modernizing legacy systems and applications.
In the current economic environment, cost has to be the top consideration for CIOs. The cost associated with a decision to modernize, replace, or simply do nothing can vary significantly. Doing nothing is often simply too risky and the continued operation and maintenance costs do not help cut spending. In my experience, a complete replacement runs six times to 10 times higher than the current system costs, while a rewrite/rehost runs is closer to triple or quadruple the cost. A modernization effort typically runs two times higher, but generally provides about a 50 percent decrease in those carrying costs – O&M – post modernization … leading to real cost savings.
In addition, the CIO must consider the myriad of risks associated with keeping legacy systems and applications intact, including:
1. The system or application is no longer supported by the vendor. In the ever advancing world of technology, this scenario is all too common. The functionality or process is still working, but lack of future vendor support exposes serious risk to the system or application and business process it supports. This quite often also leads to a major cost increase for the agency.
2. The system or application is incompatible with future environments. This is a major concern especially if the system or application is frequently used or if it is associated with a mission-critical component of the agency.
3. The system or application could cause harmful operational disruptions. This often occurs when the technology or business function it supports becomes more complex than the legacy platform intended. The old system or application is unable to run appropriately and causes significant disruption.
4. The system or application is expensive and slow to operate. This is an issue when the system or application still meets its desired business functions, but is sitting on an expensive platform and has a very antiquated development environment that is too slow to introduce required updates.
5. The business process has changed. The system or application no longer effectively meets the requirements for which it was developed as the business process has fundamentally changed or advanced, making the system or application obsolete.
Agency CIOs have an unenviable task on their hands as they attempt to maintain operational efficiencies and keep pace with technology developments, all under the watchful eye of the White House, Congress, and other budget “enforcers.” Proper assessments of current legacy systems and applications – including cost structure and mission impact – are steps these CIOs need to take. As the budget debate rages on, so too will the debate within the CIO community. If only we had a crystal ball …
Mary Nugent is VP of Solutions Consulting at Micro Focus where she helps customers understand how to improve the value of their applications and how to accelerate the return-on-investment.
NEXT STORY: Gov 2.0: Now the real work begins