It is becoming more and more obvious that the software risks and complexity that face today's legacy systems is a growing problem for many IT organizations. Are these legacy applications “Ever going to be replaced or retired? Are they “Too Big to Fail”? Added concern around many of these applications involves their size and architectural interconnectivity whereby their failure would prove disastrous to the entire business. There are few industries where this is more evident than the insurance industry. At our recent IT Executive Dinner with stakeholders from the Insurance industry, conversations were centered around application modernization, legacy application rationalization, and the funding mechanisms Insurance IT organizations use to improve their application assets.
3 Key Take Aways:
- The issues and challenges with legacy systems are pretty similar for everyone involved.
- The funding model for modernization, however, is not consistent among firms – some have an “ongoing improvement” approach and some think of it as part of a “transformation program”
- Non sequitur to the discussion, but there seemed to be consensus that Agile works pretty well with offshore.
- Application Modernization - "the complexities on reducing cost and overall legacy applications continues to be a challenge, and we are looking for ways to manage this better" Saad Ayub
- Legacy Application Rationalizaton = "rationalizing the portfolio is a continued challenge, and we are looking for efficiencies here " David Joy
- Reusable assets or application components - "reusable assets and application components in the insurance industry are a 10x ROI" Billy McCarter
- Sourcing and Vendor Management = "we need to move the needle and find SLAs that truly help drive cost and effectiveness" Bill Martorelli
All attendees agreed that portfolio rationalization and core application modernization is an ongoing journey. Legacy complexities were categorized by the group as coming from mainframe applications, customized packages or inter-application connections. Transformation programs offer an opportunity to improve the core application portfolio. Technical debt came up as a serious issue that, left unmanaged, can stall the ability of IT to continue to deliver for the business.
Erik Oltmans, an Associate Partner from EY, Netherlands, spoke at the Software Intelligence Forum on how the consulting behemoth uses Software Intelligence in its Transaction Advisory services.
Erik describes the changing landscape of M & A. Besides the financial and commercial aspects, PE firms now equally value technical assessments, especially for targets with significant software assets. He goes on to detail how CAST Highlight makes these assessments possible with limited access to the targetâ€™s systems, customized quality metrics, and liability implications of open source components - all three that are critical for an M&A due diligence.