Going Modern

After rationalizing the IT application portfolio and deciding which older legacy applications to retire, replace, migrate or re-write, we see a common cause for delay or cost-overruns when it comes to executing the plan:

Poorly understood legacy code.

This is the first blog post in a 4-part series of articles on the importance of understanding the intelligence trapped in legacy code and how to alleviate the risks involved with the process.

Read the rest of this entry »

In a 30-minute webcast this past Tuesday, Nexaweb SVP Software & Services, Rob Gagne, explained why gaining a detailed understanding of legacy system functionality is a critical first step down the path of a) integrating legacy apps into an SOA, b) replacing legacy apps with new commercial software (COTS or SaaS) solutions, c) retiring legacy systems or d) re-writing them to make them web/mobile accessible, less costly to maintain, or to make them compliant with new regulatory changes, etc.

The webinar concluded with Rob Gagne demonstrating system documentation generated by the Nexaweb Legacy Code Analyzer for a 5,000-line sample PowerBuilder project.

To hear more from Adam & Rob, you can listen to the webinar recording and download the presentation slides.

To view or download the sample Nexaweb Legacy Code Analyzer reports Rob demonstrated, click here.

This is the third in my blog series on application modernization by industry, and it turned out to be a bit more involved than I had expected, because the logistics industry has a lower profile than the banking and insurance companies we have examined here previously.

The hot topics of the logistics industry are hand-held devices, radio-frequency identification (RFID) and global positioning systems (GPS). So naturally the families of software that the industry uses revolve around these technologies. In general, most logistics companies have built separate systems for the various activities that are involved in an end-to-end process in the industry. For example, there are applications for tracking vehicles based on GPS, alerting emergency services with GPS, actuarial and risk analysis tools for hazard analysis, GPS information analysis, shipment tracking etc. These are on top of the standardized EDI transaction sets. What this leads to is heavy dependence on people to connect the dots between these various systems. You might think this could lead to issues and challenges of various degrees. But most logistics companies have optimized their core processes to prevent anomalies ranging from lost truck to a shipment not arriving on time. Because if these happen often enough, they erode profit margins, break down the good will and trust that a company has established over a long period, creating unhappy customers, lost opportunities and weak companies unable to survive in the marketplace.

It’s also true that the industry operates on very thin margins. Hence, they use technology solutions only when it is an absolute must-have. This seems counter-intuitive, since you would think it makes more sense to use technology judiciously to automate non-value adding tasks and hence improve the bottom line profits and margin. Also, as I mentioned earlier, the few places where they are using technology, the applications are discrete and written back in the 70s (mainframes), 80s and 90s (client/server technology). So these systems are inherently islands. They synchronize with each other periodically. But, in this day and age, the speed of business is approaching the speed of light. Mobility, real-time integration, updates, media-less distribution via web, cloud computing, infrastructure virtualization, unified communications platforms via mobile phones are the new norms. Changes that the business wants are usually what they have been wanting for years but did not get because the legacy systems do not either permit these kinds of changes, or they push the cost of implementation to prohibitive limits wherein the returns do not justify the investment. But when the core systems and applications are moved from the legacy platforms to modern platforms, suddenly they become capable of the modern functionality, features and benefits described above. For example, the hand held device, GPS, tracking, scheduling and notification could all be done with just one smart phone device as against having multiple devices each being a focused solution not adaptable to other uses. But again the key is that the backing applications need to be on a platform that can enable these use cases.

So that’s the overview. In my next post, I will provide a deeper understanding of the technological and business challenges. In the meantime, please feel free to check out what we do at Nexaweb to enable companies move their business from legacy applications to a more agile platform that fosters innovation and growth in various industries @ http://www.nexaweb.com/

- Dheeraj Remella, Solutions Architect, Nexaweb

After demonstrating FX Accelerator for a banking analyst at a leading research firm during a call last week, our conversation turned to the latest market trends, specifically in wealth management and private banking. We’ve been hearing from a number of customers and prospects that they need to deploy more self-service applications and services to meet increasing demand from their clients – and wanted to get the analyst’s perspective.

He agreed completely. His take is that high-net-worth individuals are looking for a more “holistic” approach to wealth management and private banking, one that gives them an aggregated view of their consolidated positions. He said high-net-worth individuals are not looking to abandon their wealth management or private banking account managers – but prefer online access for simple transactions, and want consolidated access to their savings, brokerage, funds and asset management accounts.

He also noted that bringing the internal groups together and bringing the products together won’t be easy – but the long-term trend toward more strategic, comprehensive services and richer online applications focused on the client’s long-term goals cannot be stopped.

What’s your take?  Do you think commercial banks should create new applications and expose internal applications to meet the self-service needs of their wealth management clients?

- Bart Res, Area Manager, Nexaweb Europe

Had an interesting conversation recently with an analyst at the industry’s leading research firm. He’s been covering legacy application modernization for more than a dozen years, and knows the customer needs, technologies and solutions provider landscape very well.

We’ve talked with this analyst a few times over the last several months and I noticed he was using a new term in this conversation to describe the fastest-growing segment of the modernization market. What he had talked about previously as “new legacy” and “old legacy” to distinguish between client/server and mainframe applications — he was now describing as “distributed” and “hosted.” I like this refinement. More accurate and far easier to parse, as long as “hosted” is paired with “legacy,” to avoid any possible confusion with SaaS.

We’re looking forward to seeing his upcoming research on “distributed application modernization” later in 2011, and will continue to provide any insights into Nexaweb’s experience and access to our partners and customers that are helpful.

What’s your take? Do you think the distinction is clear? Do you find it necessary?

- Chris

2011 will be the year for cloud computing, mobile computing, new government regulations, the rise of tablets, smartphones and death of netbooks. These drivers are motivating change across all industries, but especially banking. Social media has reset the expectations of consumers regarding the ways to interact and the speed to transact with their banks. Smartphones have blurred the lines between transacting with a business and interacting within the personal circle. The current generation of customers is about being connected all the time. They want to know what is going on now, act upon the information now and get confirmation of the action now. They want to transact based on fresh data. They want to have a better experience managing their accounts and doing transactions, be it on their desktop/laptop or their smartphone. They want their banks to listen to them, wherever they speak, be it to the call center specialist, or be it on Facebook or be it some 140 character message on Twitter. These capabilities need integration – of people, process and technology. Banks need to think of their operations as one process with goal to serve their customer (and to make money) where the data flows from one end to another creating meaning and values at different stages for different constituents in different forms.

As Bank Systems and Technology pointed out in their February issue, these e wholesale changes will require modern thinking, techniques, processes and systems. Banks, if not already, must recognize and appreciate the reliance of their business on technology and the IT folks should recognize that the role of IT is to ensure that the business goals are achieved in a cost-effective manner at a desired speed to market to maintain relevance. It is prime time for the banks to liberate themselves from the shackles of legacy systems and prepare to move their capabilities to a platform that would lend itself to cross-organizational integration (of process, information and trust levels). If the business invests now in migrating its capabilities from its current ‘unable-to-integrate’ and ‘hard-and-expensive-to-integrate’ systems onto platforms that foster growth and innovation at the speed of business, this is beneficial for the business in the long run. This could lay the foundation for a mode of operation that could differentiate one bank from another. The current applications portfolio could be rationalized toward modernization and the applications that are tailor-made for a bank for non-commodity capabilities should be targeted for migration to a modern platform that is robust yet flexible enough to allow IT to cater to the business with a certain degree of agility.

Single source of truth and one way of doing things across the organization could lead to operational efficiency due to increased trust levels, customer satisfaction and performance consistency across all employees. In addition, by consolidating capabilities from various applications into a single web-based application, banks could decrease a new employee on-ramp training, which in turn would lead to better performance and lesser turn-over, in instances like customer service representatives. When the functional consistency is achieved, incorporating the various regulations based auditing and implementing the various balance and checks would be considerably manageable as compared to implementing such instrumentation across multiple, disparate applications.

Banks should start thinking of the need for modernization beyond the standard fare of thinking in terms of reducing operational costs only. Operational cost reduction will only stop the bleeding. But to increase revenues and increase profit margins, banks have to start thinking about the opportunities lost because their legacy systems are making implementation of new products expensive and hence cutting into profit margins. By addressing the modernization needs of the IT infrastructure, banks could start realizing growth avenues that were considered not cost effective due to thin to no margins.

Learn how Nexaweb can help with the modernization needs of banks and other organizations with similar requirements of growth and efficiency by clicking here.

– Dheeraj Remella , Nexaweb Solutions Architect

The respected industry analyst firm Aite has just issued a report on its Top 10 Trends in Life and Health Insurance 2011. As I mentioned in my earlier blog on application modernization in the insurance industry, Aite also cites external regulatory changes as one of the primary drivers of this change and highlights the need to modernize legacy systems:

“On the whole, life insurance and health insurance will continue to react to secular changes to their operating environments, driven to differing extents by regulatory changes,” says Clark Troy, research director with Aite Group and co-author of this report. “Carriers, distributors, and vendors in each market will continue to work hard to break through process silos and let information flow more smoothly between industry participants. Both verticals must overcome strong legacy platform overhangs; through concerted, coordinated, and informed effort, participants will help ring in positive changes for 2011.”

Should be an interesting year!

- Dheeraj

As we start the New Year, I’ve been thinking a lot lately about the evolution of our company and industry – and keep coming back to the question of what it means to be a software company today.

Part of my thinking has been shaped by Michael Cusumano’s seminal work on the topic, “The Changing Software Business: From Products to Services and Other New Business Models, published by MIT. Cusumano analyzed the revenue of hundreds of software companies over 10 years and concluded that as software markets mature, product revenue inevitably declines and maintenance/services revenue increases.  Simple enough. But he also showed that if a software company doesn’t reach critical mass before hitting this “crisscross point,” it can no longer support the costs required to be a software company, such as product development and marketing, and the whole thing collapses. I’d rather avoid that.

My read of Cusumano’s research — combined with my own experience at Nexaweb and other software companies — leads me to conclude that this “classic” software model was the optimal solution for a certain time, meaning pre-internet/cloud, and in green-field markets for horizontal applications. As Cusumano foresaw even in 2008, SaaS and free/open-source alternatives for commodity/productivity applications have crippled the traditional software-licensing model.

Which is one of the reasons I agree with his conclusion that software and services are a requirement for success today and in the future. Of course, it may take a while for others in our industry to let go of their old way of looking at things.

Two cases in point. A recent conversation with a major industry analyst firm about one of our solutions got completely sidetracked by questions about whether we were a “software company” or a “services company.” It was frustrating to spend more time on our business model than whether or not Nexaweb is solving problems for its customers.

We are what today’s software companies have evolved into. Roughly two-thirds of the revenue from Nexaweb’s typical engagement comes from software. But application modernization is just too complex to be solved by software alone. (You can get there with pure services, but that can be too expensive and take too long for most companies.)

Of course, as CEO of a growing and profitable private company, I’ve also been challenged to explain how a business model based on software and services can have a positive impact on valuation. MIT’s Cusumano has been consulting with the world’s leading technology companies for more than 20 years, and his conclusion is that the only guaranteed revenues for new “software companies” may be services and maintenance revenues. The game has changed forever.

- Chris