ViewPoint. Win in the flat world. Legacy Modernization. Legacy Modernization is part of the Infosys Catalytic IT Solution Suite

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1 Win in the flat world Legacy Modernization Peethamber and Karthik Venkatachalam Legacy Modernization is part of the Infosys Catalytic IT Solution Suite ViewPoint January 2006 Abstract According to industry estimates, over seventy percent of of the world s data still resides on mainframes. CIOs and IT Managers handling mainframe-based enterprise applications constantly face challenges such as: High costs associated with maintaining and upgrading expensive systems Risks associated with running potentially unsupported hardware and software Lack of uniformity and flexibility to add new products and services that contemporary platforms offer Lack of integration and web capabilities for different business applications This paper demystifies Legacy Modernization and offers a comprehensive insight into Infosys position on the current state of legacy applications and business imperatives to look at modernization strategies. This paper analyzes various legacy modernization techniques along with their pros and cons, and explores why organizations prefer a suite of modernization techniques over a single technique.

2 The need to transform legacy Today, organizations are looking at leveraging IT to be proactive to changes in their business environment. However, they are facing issues. Retail companies that have their store data on legacy systems are finding it difficult to adopt the newer generation tools like floor planning and dynamic inventory. Financial services companies are finding it difficult to make the legacy data available to newer generation analytics engines and product configurators. Telecom service providers are finding it difficult to adapt to service bundling concepts due to archaic billing systems. Manufacturing organizations with legacy MRPs are finding it difficult to create seamless supply chain integration across vendors, suppliers and distributors. The list goes on. In order to be proactive, enterprises need a flexible IT architecture for their business processes to respond to market needs and gain competitive advantage. It was in the 1940s that businesses realized the potential of information technology. The insurance industry was an early adopter of mainframe computers and COBOL-based software for billing, policy administration, claims, accounting, statistical reporting and other informationprocessing operations. The enormous initial investment in mainframe systems led organizations to update their systems gradually over the years rather than replace them. This resulted in huge legacy systems that required expertise to handle the multiple systems. Maintaining connections among these multiple systems, as well as to the outside world, is now proving to be difficult. Life Insurance organizations spend 80% of their IT budgets and 85% of their technological efforts in maintaining legacy systems (a). With the insurance sector evolving over the years, these legacy systems had to be continuously updated. The problems associated with legacy systems gradually outweighed their value to the enterprise. Apart from the business imperatives to increase flexibility and reduce high maintenance costs of IT systems, there are more reasons to migrate and modernize legacy applications. Rationale for legacy modernization Most of the mainframes applications have existed for decades and need continuous upgrades to meet the changing business needs. Monolithic mainframe applications are increasingly unable to keep pace with and respond quickly to the dynamic business demands. Increasing number of companies want to upgrade their systems by leveraging existing IT assets (business rules, data and personnel), minimizing cost and reducing time. In our experience, some of the important reasons why companies consider legacy modernization are: High cost of maintenance Systems and applications need maintenance in a changing business environment. Resulting changes to the source code and general application architecture reduce modularity and complicate the application structure. Several mainframe legacy applications need continuous maintenance, resulting in highly complex and unstructured source code, which in turn exhausts valuable resources of time and money. Lack of flexibility and integration Traditional mainframe and client-server applications usually have a structure, which typically uses a client component that controls a graphical user interface (GUI) and communicates with a server process. The server process contains business rules and logic to access a relational database. Client and server components are written in a variety of code types still considered as active languages. Along with non-standardized client-server modules, mainframe legacy applications compound difficulties in getting a complete set of applications to work with in an integrated environment. Shrinking workforce Advanced programmers and systems administrators who understand mainframe legacy applications have retired or quit their jobs. Retired personnel continue to provide support for old systems. The workforce for maintenance of legacy systems is increasingly on the decline. Risk and complexity Large companies have several applications, usually built by different departments over time. Complex systems, which are excessively difficult to maintain, are often the result of creating linkages and integrating dissimilar applications of various departments. Legacy Modernization and Migration of applications focus on increasing business competitiveness and IT flexibility,

3 why customers are migrating off the mainframe 1. High cost of mainframe operations and upgrades 2. Lack of flexibility and agility 3. Increased time-to-market for new products 4. Shrinking mainframe labor pool 5. Vendor roadmaps forcing tough decisions Source: Mainframe Migration Alliance (b) at a lower total cost of ownership (TCO). Apart from improved ROI, increasing business competitiveness means: 1. Increase in product and service innovation through shorter product lifecycles, integrated product offerings. 2. Strong customer intimacy through multi-channel access, rich and consistent information. 3. Faster business process integration resulting from M&A activity, business process re-engineering initiatives. 4. Measurable business process efficiency, managed and optimized through enterprise and business unit dashboards, information analytics. 5. Enhanced business user effectiveness through implementation of desired changes to existing IT systems, service oriented architecture. Embarking on a modernization project One approach to partially modernize legacy applications has been to add on modules using contemporary technologies. The most common example of this process is to add a webbased user interface to an existing legacy application. This approach is most suitable in situations where the legacy platform is still viable. However, it does not address the complexity in maintaining legacy applications. While web modules improve the application s look and feel and provide a false sense of security about enhanced system functionality, they add to the system complexity and maintenance cost. Businesses need to have a holistic perspective of legacy modernization, and before initiating a modernization project, they must know about the appropriate legacy modernization techniques, their risks & benefits, as well as the processes and tools available that can assure a successful implementation. Challenges encountered in legacy modernization: 1. considerations: The cost of migrating from the legacy system should not be underestimated. 2. Change administration: Users need to understand new systems; they must be re-trained and equipped to use the new applications and platforms effectively. 3. Coexistence of legacy and new systems: Coexistence during migration provides business coverage and sometimes implies overlapping functionality and data duplication. 4. Business Continuity: Migration must be planned and executed effectively to ensure business continuity. 5. Business Logic Extraction: Accurate and complete extraction of business logic is vital to its replication in the new system. Framework for analyzing Legacy Modernization Before defining the legacy modernization techniques, let us analyze the parameters used to assess the techniques using the Risk vs. Benefits Framework. of Migration: This refers to the total cost incurred (hardware, software and professional service charges) of migrating the legacy using a given technique. for Migration: This is the effort involved (internal to the client and the professional services effort) in migrating the legacy using a given technique. Elapsed for Migration: This is the time taken from the beginning of the program to the implementation of the migrated applications using a given technique. post- migration: The amount of business knowledge embedded in the applications that gets documented and understood by the client organization, which was not available, using a given technique.

4 reduction post-migration: The projected reduction in the annual operational cost for the portfolio including hardware maintenance, licensing cost and software maintenance, using a given technique. Ease of technology adoption post-migration: The level to which the portfolio is flexible to seamlessly integrate with new technology. Benefits These six parameters are plotted on a star-chart. The right half indicates the risks to the project and the left half indicates the benefits. The star-chart indicates that benefits of the solution outweigh risks and that the solution is a good Catalytic IT (c) prescription. reduction and modern technology adoption would help foster business competitiveness. Legacy Modernization Techniques 1. Re-hosting of portfolio Figure 1 Risks Re-hosting implies taking the existing application portfolio on mainframe legacy systems and hosting it on a different platform. It is possible to achieve the execution of mainframe applications within a new environment with a high degree of automation (80%). Typically, re-hosting addresses the higher costs of maintenance of outdated platforms. However, it does not address the challenges related to application code. The process of re-hosting applications involves shifting system inventory from mainframe to a new platform. This is followed by building a specific reference of the application, removing proprietary language dependencies, re-compilation and execution on the new platform. Re-hosting a portfolio reduces the TCO /Opex and leads to a simplified, standardized and more cost-effective operating environment. The new distributed environment increases the ease of adding new components and integration with other systems. Catalytic IT imperatives of increased flexibility and operational efficiency can thus be achieved by re-hosting. 2. Re-engineering Re-hosting Re-engineering is an ideal way to capture hidden organization knowledge and migrate it to a new platform. It is a process of understanding the business rules of legacy applications, and creating viable design models, followed by building the new application. By leveraging the target platform, re-engineering is a means to revitalize business competitiveness. Reengineering is a two-step process: the first step comprises reverse engineering design and code artifacts using tools; the second step is forward engineering to a new platform and architecture incorporating new business rules and requirements. Although re-engineering a portfolio is suitable for high business value applications and assures lower TCO over longer periods, complete re-engineering leads to higher elapsed time and entails higher risks. Re-engineering a portfolio, like re-hosting, reduces Opex by moving applications to a more standardized and cost-effective operating environment. of modern technology through re-engineering leads

5 Customer Intimacy, a key Catalytic IT imperative to enhance business competitiveness. Re-engineering 4. Web Enabling Web-enabling typically involves writing wrappers on the back-end so that HTML screens can interact with it. In situations where the legacy platform is still viable, it is possible to expose its capabilities through web services without rewriting the application. While webenabling is a quick way for legacy investments to interact with new applications, it does not address the elimination of legacy from the portfolio. to increased agility and flexibility. Re-engineering is a Catalytic IT prescription that can enhance the ability of enterprises to respond quickly and adequately to changes in the business environment brought about by competition or regulatory requirements. 3. Package Implementation or New Development This approach implies abandoning legacy applications and replacing them with new custom applications or off-the-shelf packages. This option focuses on building a portfolio with the best tools and packages available. However, the reuse of existing business logic is not possible with this approach. Customizing packages and rewriting business logic would be required. Web-enabling Web-enabling adds a new channel to access data/ information; user experience and customer intimacy can be improved. Connecting with customers through multiple channels and providing a personalized experience is an important Catalytic IT imperative. 5. Re-factoring This approach involves restructuring existing legacy New Development or Package Implementation Package implementation/ New Development approach provides the same benefits of re-engineering Opex reduction and modern technology adoption. Increased operational efficiency can be achieved; implementation of packages for CRM can improve Re-factoring

6 code to remove redundancies breaking large programs into smaller, reusable modules, and wrapping each module. This exposes the interface that can be accessed by new technology applications. Refactoring is a good phase-1 for re-engineering and web-enabling techniques. Re-factoring can help business IT systems move towards implementing functionally enhanced systems using web services/soa. Re-factoring is a good example of a Catalytic IT prescription to achieve partner integration and collaboration. Strategy for legacy modernization Organizations need to meet their objective by selecting different modernization techniques. The key parameters that affect this decision need to be plowed into a business case and the value on investment (in terms of time, effort and other resources) needs to be measured. Infosys Legacy Modernization Solution involves 5 phases as shown in Figure 2: 1. A detailed, tool-aided means of collecting metrics on the existing portfolio 2. A decision-making framework, based on the collected metrics and the key objectives that drive the organization, on choosing the right vitalization technique 3. A complete, tool-assisted service of defining the future-state architecture. 4. Developing a business case with established metrics for modernization 5. Implementing the transformation plan with a dashboard to monitor key metrics Benefits of Legacy Modernization Solution: 1. Improved flexibility, with better design guidelines and software blocks enabling separate presentation, business logic and data, and support for automation of business processes 2. Reduced costs of maintenance 3. Standards-based technologies to enable easier connectivity and integration, and the creation of service-oriented architecture based on open standards 4. Better support for prototype-driven, agile development methodologies due to innovation in developer productivity tools 5. Vendor support Business Process Assessment Size Assessment Vendor Status Assessment IT Portfolio Assessment Process maps Dataflow Diagrams ER Diagrams Use Cases Business Value Duration Phase 1 Phase 3 Diagnostics Identify Metrics to Measure measure IT Phase 2 Document AS - IS Business Case Development Phase 4 OK? Define Enterprise Architecture Phase 5 Influx TM Transformation Planning & Execution Figure 2 STOP Methodologies Tools Risk Management Solution Techniques - Re-host - Re-engineer - Web-enable - Re-factor - Implement package

7 Impact of legacy modernization techniques Technique Pros Cons Re-hosting Re-engineering Package Implementation / New Development Web Enabling Re-factoring Better structuring of infrastructure Easy integration with other systems in operations expense Modern technology adoption Complete knowledge insourced Robust enterprise architecture in operational expenses Good percentage of requirements mined from existing applications Modern technology adoption Complete knowledge in-sourced Robust enterprise architecture in operational expenses Better look and feel New channel addition Better structuring of legacy code Easy integration with other systems Application knowledge in-sourced No knowledge mined from existing applications No change in legacy code Little or no help in technology adoptions Correctness of extracted business rules could be suspect Many business rules embedded in the legacy code may be missed out Data migration will be a key challenge No improvements in operations expense No migration off legacy platforms No knowledge mined from existing applications No help in technology adoptions Minor improvements in operations expense No migration off legacy platforms Minor help in technology adoptions Conclusion Legacy modernization requires meticulous planning and program management. The effort involved in shifting workloads out of mainframe legacy systems should not be underestimated. Businesses have a need to enlist the services of a solution provider with expertise in consulting, technology and management. The web-enabling and re-hosting options focus on managing the existing portfolios better to contain the mounting operational expenses. These typically take lesser time and effort to implement. The Re-factoring and re-engineering options focus on transforming the portfolio. While they provide benefits in controlling operational costs, they also provide an architectural overhaul to the portfolio, increasing the portfolio life. They provide a foundation to build the future state architecture on it. The new development (either custom application or package implementation) option focuses on retiring aging legacy application and builds a future looking portfolio. Depending on the objectives of the organization, different options need to be chosen. The key parameters that affect this decision need to be plowed into a business case and the value on investment needs to be measured. References a) Practical Strategies for Dealing with Legacy Systems - Gavin Lavelle. Risk Management. New York: Feb b) Mainframe Migration Alliance: top 5 reasons cited by mainframe customers to MMA ( mainframemigration.org) c) Catalytic IT to create a Competitive Enterprise Prasad Joshi and Sohrab Kakalia: Aug About the Authors: Peethamber (Peet) heads the Legacy Modernization Solution at Infosys. He drives the vision and roadmap for the solution. He has over 13 years of experience in the software industry and has been with Infosys for the last 10 years. He has spent a significant part of his career leading and driving similar initiatives in the market place in the capacity of a relationship manager for Infosys. Karthik Venkatachalam leads Legacy Modernization Solution tracks within the Microsoft Center at Infosys. He has over 9 years of experience in the IT industry. As a Project Manager at Infosys, he has led many large end-to-end projects in the areas of legacy transformation and application integration.

8 Infosys Technologies Ltd. (NASDAQ: INFY) defines, designs and delivers IT-enabled business solutions that help Global 2000 companies win in a flat world. These solutions focus on providing strategic differentiation and operational superiority to clients. Infosys creates these solutions for its clients by leveraging its domain and business expertise along with a complete range of services. With Infosys, clients are assured of a transparent business partner, world-class processes, speed of execution and the power to stretch their IT budget by leveraging the Global Delivery Model that Infosys pioneered. For more information, contact catalyticit@infosys.com Infosys Technologies Limited, Bangalore, India. Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of the trademarks and product names of other companies mentioned in this document.