Fernando Fischmann

Legacy Technology Dilemma

21 April, 2022 / Articles

Recommended article from Forbes

Companies are migrating applications to the cloud, looking to reduce or shutter their legacy data centers. Many soon realize they have a portfolio of legacy applications that are just too expensive and too risky to move to the cloud. However, they have unrealistic expectations regarding the possibilities for those applications, and that leads to a dilemma in deciding how to handle them.

Flawed thinking

As companies contemplate what to do with their legacy estates that they decide not to move to the cloud, they expect that those applications will be short-lived and, in a few months or years, they will be modernized and moved to the cloud. They don’t expect the applications or the infrastructure on which they run to evolve, so they view them as frozen, like a block of ice.

However, they recognize the block of ice will melt, so they adopt a strategy of aggressively cutting the cost to operate these estates, including migrating the talent that supports them to a cloud environment. Think of this as a harvest strategy. They gather as much value as they can from those estates and transfer people and investments into more strategic cloud environments.

The problem is that their expectation that the legacy applications will be short-lived is based on an underlying flawed assumption. That realization often comes after a company makes several attempts to migrate the estates to the cloud and fails, or when detailed plans for migration expose the cost and risk. Once they recognize that the cost and risk are too great to warrant migration, their view on the likely duration of the estates evolves.

The reality is legacy estates can persist for decades. To fully appreciate this reality, you need look no further than previous migrations of computing architecture. After migrating their compute environment from mainframe to client server decades ago, some companies still utilize legacy estates on IBM and Unisys mainframes for critical work.

Because companies need to access data in their legacy applications, the applications need to evolve over time – not at the same pace as newer applications, but they must evolve with organizational operations and digital applications that access their data. 

The reality

Once companies recognize their legacy estates generate and house vital data, and they serve vital and often mission-critical functions, it causes them to shift their view on how to manage the legacy estates. Since these estates will need to evolve with other technology as business needs evolve, companies realize they cannot put the legacy estates into a deep-freeze state.

This, in turn, challenges the harvest strategy of transferring resources and talent away from legacy into the cloud. Instead, companies need to undertake an investment strategy for their legacy estates.

To be clear, the posture of investment in legacy is modest when compared to investing in new cloud environments. However, it quickly becomes apparent that they must undertake ongoing investment in the legacy estates because of numerous factors, which range from ever-evolving security threats to the ongoing need to access vital data and evolve critical functionality.

As reality sets in regarding the need to adopt an investment view and strategy, it becomes apparent that the shift of legacy talent into cloud environments sets up the threat of a death spiral for the legacy estates.

Death spiral threat

The challenge for companies in adopting and sustaining an investment posture for legacy is the talent. It is no surprise that IT professionals seek interesting, rewarding, well-compensated careers. Hence, many IT professionals supporting legacy estates wish to move to the more interesting and higher-compensated cloud environments. Attempting to reverse this dynamic is like denying the force of gravity.

Talented IT people always have career options, including the ability to transfer inside the company or leave the company for more attractive opportunities elsewhere. Unfortunately, today’s extremely tight labor market now exacerbates this situation, leaving companies facing a looming cliff of exiting seasoned IT professionals that supported their legacy environments.

Over time, and often much faster than anticipated, companies struggle to keep quality talent in place to support their legacy estates. That struggle places them in an unacceptable position because the risk of failure in mission-critical applications rises to an unacceptable level. The most obvious and frequent examples of failure are in the security arena. However, the inability or frustration in extracting timely data and the need to evolve critical functionality take an increasing toll over time.

The inevitability

Over time, the twin drivers of the necessity to increase institutional focus on the fast-paced cloud environments, combined with the death by a thousand cuts of the death spiral from loss of legacy talent, causes companies to outsource their legacy estates.

This transfer of legacy estates to third-party service providers has been happening for years. But it will accelerate as companies move further into their cloud and modernization strategies.

Companies’ thinking is that by transferring these estates to a third-party provider that specializes in legacy applications and infrastructure, the companies then can devote their internal energies and investments to the digital or modern estates that are their “future.” At the same time, the thinking is that they may be able to save money and reduce the risk to operate the legacy estates.

However, it is not that simple. Selecting a third-party service provider for legacy estates now involves tactical and strategic issues. Third-party options have changed, and assessing providers is now more complicated than it was historically.

First, because of the need to modernize and transform the legacy estate, a company must find a service provider with the knowledge and expertise to take the journey to the cloud. By that, I mean find a firm that has the capability of transforming the legacy estate but one that also is willing to partner to achieve the desired outcome. This is key, and it also will be prudent to incentivize the service provider to achieve that outcome. Many cloud migrations fail – meaning the cost goes above budget and the migration takes much longer than planned – because of lack of understanding the details of the desired outcome. Well-documented expectations and incentives will avoid potential failure.

In addition, the provider-selection process is more complicated now than in the past because there are now two different types of legacy service providers. In my next blog, I’ll explain the differences between the two types, how those differences affect their clients, and how to choose a provider with the necessary capability (and willingness) to transform the legacy estate.

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