Analysts backtrack on rip and replace

Businesses are operating in an environment in which they can either modernise or die, says Gary de Menezes, Country General Manager for sub-Saharan Africa at Micro Focus.

Johannesburg, 04 Mar 2019
Read time 7min 40sec
Gary de Menezes, country GM for sub-Saharan Africa, Micro Focus.
Gary de Menezes, country GM for sub-Saharan Africa, Micro Focus.

For the past 20 years, analysts have been telling businesses that rip and replace was the route to take on their digital transformation journey. Now, in a complete about-face, both Gartner and IDC are saying that continuous modernisation of legacy applications is the way forward.

Gary de Menezes, country GM for sub-Saharan Africa at Micro Focus, says: "Digital transformation is being forced on business at a rapid rate, outpacing the abilities of most IT departments. Enterprise architects are struggling to deliver results fast enough to meet business requirements."

He points to local financial institutions, saying the successful operations are those that are able to be agile and that are using digital transformation as a business advantage, compared to more archaic operations with legacy structures and thought processes that are actually going backwards in their technology offering to customers and that are unable to compete in a digitally transforming world.

"If you consider the latest entrants into the banking sector, as an example, we're seeing digital players demonstrating the agility that customers are demanding. This phenomenon isn't unique to South Africa by any means; it's impacting the global banking sector."

Seph Robbertse, Senior Presales Solutions Architect at Micro Focus, cites the example of a large insurance firm that acquired a start-up that was able to settle insurance claims in three seconds. "They'd developed a solution that was able to reach out to 18 different systems in the space of three seconds to carry out all of the necessary checks required to decide whether or not to settle a claim. That level of speed and flexibility is what customers want and are increasingly expecting."

De Menezes points out: "The biggest inhibitor in the financial sector, as well also other sectors, is definitely the architecture of legacy applications, legacy application portfolios and attitudes towards that legacy architecture. Businesses that might have been reluctant to rip and replace applications, processes and infrastructure might be more open to modernising it instead."

The good news is that, after two decades of advising the corporate market to rip and replace, analysts have done a 180-degree turnaround and have publicly endorsed a continuous modernisation strategy to build digital platforms from legacy applications.

He goes on to outline some of key challenges to going the rip and replace route: "Firstly, if you're using it as a modernisation tactic, you need to be cognisant of the cost and time implications. Today's business simply can't afford to stand still while you rip and replace."

Robbertse refers to a report by the Standish Group stating that modernisation has a higher chance of success and a lower chance of failure when compared to either rewriting an application or buying a new package. "The report indicates that the majority of rip and replace projects run over both budget and timelines, and sometimes they just fail altogether."

Another challenge faced by businesses is a diminishing skills pool in addition to the evolution of entirely new skills requirements for new environments. Jorge Borralho, Account Executive at Micro Focus, says: "Educational institutions just aren't training people quickly enough to keep pace with demand as well as the explosion of new technologies that require new skills. There's a global shortage of IT skills that we're seeing emulated in South Africa. In addition to the higher education system not creating the necessary skills in the technology sector, there's a growing number of people leaving the industry altogether."

Finally, a serious threat to businesses running on legacy applications, as mentioned previously, is more agile competition entering the marketplace. "The advent of the digital bank, for example, has revolutionised that business channel," says De Menezes.

One thing is clear; digital transformation is not a nice to have, it's a have to have for business continuity and business growth, otherwise the business will become irrelevant to its customers. This poses a major challenge to large corporates who sit with the majority of their business running on legacy architecture. The obvious thing for them to do is to turn to analysts to uncover which strategy they should invest in going forward. And, until recently, that advice has been to rip and replace.

De Menezes says: "For the past 20 years, we've been telling our customers that they need to modernise their existing application architecture, which, for a long time, has been in direct contrast to the advice that businesses were receiving from analysts. Finally, we're aligned in our message and, as a result, we're seeing a surge in interest in embarking on a modernisation journey because it's a new path for businesses that have been investigating rip and replace strategies and technologies for the past 20 years. Now they're looking for partners and technologies that can assist them on their application modernisation journey. Architects are having to relearn how to architect their environment."

One of the first steps in the modernisation journey is to invest in the right skills and technology that will help you map out your core application assets and, more importantly, map out the interdependencies and business functions within the environment. Today, this is often not known by the business, as rip and replace strategies didn't require this information, says Borralho.

Justin Agar, Territory Manager, Application Modernisation and Connectivity Portfolio at Micro Focus, goes on to talk about the disconnect between the mainframe and legacy core application world and what he calls the 'new world', which includes the likes of cloud, distributed platforms, robotics and intelligent platforms, with very little actually closing the gap between the two worlds. He says: "When you embark on the analysts' strategy of continuous modernisation, it's crucial that you marry these two worlds. Customers will soon appreciate the ease of legacy application modernisation and how that can open up a new world of DevSecOps, of incorporating the cloud into your delivery platforms, of incorporating the new age digital world into your existing legacy platforms."

Robbertse adds: "Businesses need to focus on the things that are most prevalent today, and to this end, there are four key areas that the modernisation journey needs to tie into. These are security, which is a concern for everyone; in addition, we're living in a hybrid IT world that is moving to the cloud, but retaining legacy on mainframes; then there's DevOps, the agility to be able to change fast; and finally, we need to bring predictive analytics to the mainframe. These four critical areas must be included in any roadmap of legacy application modernisation."

"For a business to modernise itself and to stay relevant against the competition, it must find new channels to market and new customers. You can't do this if your IT doesn't become flexible and bring the business's legacy assets into this new world of computing. If you do so using the four areas mentioned above, you'll successfully migrate your applications in a continuous evolution as opposed to a revolution. Which brings less risk, more skills, improved quality and reduced cost," says De Menezes.

The technology and services for the modernisation of legacy applications and platforms is well established. SYSPRO, a South African software company, has been a forerunner in embarking on the application modernisation journey as put forward by the analysts.

Russell Hollick, Chief Software Architect at SYSPRO, says: "Our modernisation journey has provided us with the flexibility to access new channels that become available with ease. It has provided access to new markets globally and allowed us to expand business operations from South Africa to become a truly global operation. None of this would have been possible had we not embarked on an application modernisation journey.

"ERP is a very competitive landscape with a mix of traditional players and born-in-the-cloud contenders," says Hollick. "One of SYSPROs key strategies over its 40-year history has been continuous modernisation of technology and business features, providing a clear upgrade path for existing customers and anticipating new market requirements."

"The longer a company stays in its legacy mode with no modernisation roadmap, the more customers and business they lose, the worse their financial results become, then they downsize to match costs to revenue, it becomes a downward spiral that doesn't end well for anyone," concludes De Menezes.

For more information download the Gartner report on continuous modernisation.