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Foreword |
High-value, high-risk systems present the CIO and the business with special problems. There are no easy answers to the questions of whether, when and how to migrate or upgrade these systems.
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In most cases, legacy systems and the infrastructure of people and processes required to support them become less flexible over time, and more difficult and costly to maintain compared to newer technology. The result is operational and even strategic constraints on the business and IT.
Upgrading or replacing a complex system that is supporting a critical piece of a business is neither easy nor cheap. Business and IT change are involved, and the trade-offs are complex.
This report addresses the question, How should CIOs manage technology portfolios to get maximum value from legacy assets, with minimum risk?
High Value, High Risk: Managing the Legacy Portfolio was written by the Gartner EXP research team led by Richard Hunter (group vice president and Gartner fellow) and assisted by Dave Aron (vice president and research director).
Many organizations and individuals contributed to the research, including:
- Contributors to our interviews and case studies: Rob Pyne, Amcor; Yves Jourdes, Arcelor Systems; Nick Wilkinson, CSC; Pierre Sabourin and Gaston Barban, Foreign Affairs and International Trade Canada; Andre Greyling, Hong Kong Hospital Authority; Mike Nauman, OSF Healthcare; Gint Dargis, Richardson Electronics; Varun Jha, Tata Steel; and Lisa Schlosser, U.S. Department of Housing and Urban Development (HUD).
- Other members of the Gartner EXP research team: Robert Akerley, Chris Germann, Jean-Marc Lejeune, Barbara McNurlin, Tina Nunno and Chuck Tucker.
- Other Gartner colleagues: Kimberly Harris-Ferrante, Frank Schlier, Michael Smith and Dale Vecchio.
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Executive summary |
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High-value, high-risk legacy systems create the most difficult portfolio trade-offs for CIOs. Management strategies must be based on business value, business risk and architecture.
Focus on high-value, high-risk legacy systems
As one of our members says, "A legacy system is a hindrance that fills a business need—so you can't just get rid of it." Not all legacy systems are equal in terms of the difficult choices they represent to the business. Systems with low business value can easily be eliminated when they have high risk, and easily be tolerated when they don't. Systems that have high business value and low risk are every business's goal, and the decision to maintain them is also easy.
Systems that have high value and high risk are tough to live with and tough to live without. These systems demand special attention from the CIO.
Because stakes are high and choices are neither easy nor simple, the CIO's legacy strategy must focus on high-value, high-risk systems. The strategy has two parts. The first focuses on whether, when and how to migrate from legacy systems. The second focuses on preventing new high-value, high-risk systems from entering the portfolio, and on preventing unnecessarily high risk in current high-value systems.
Assess the application portfolio to determine whether and when to migrate
The first step in building a business case for migration of high-value, high-risk legacy applications is to create an inventory of IT assets. With assets identified and assessed, the next step is to estimate business value, process by process, as far into the future as is reasonably possible. Applications can then be cross-referenced to processes and their risk assessed, application by application.
The resulting map of value and risk shows when and why the business must plan to migrate from its legacy systems. Consultants are frequently used to add weight to such assessments and validate the business case.
High-risk, high-value systems offer hard choices for CIOs
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Migrate legacy systems selectively
CIOs have multiple options for migration strategy. They can extend the useful life of a legacy application, adding functionality by using newer tools and technologies, a tactical approach that leaves core legacy functionality in place. Or they can replace core legacy functionality with modern technology. Options here include installing packages, replacing the legacy application with an external service, custom-coding a replacement using newer technology, or a combination of these approaches. Regardless of the approach, enterprise architecture is essential to guide choices and avoid creating new high-risk legacy systems.
Few legacy migrations arrive without advance warning, so there is usually time for the CIO and the business to prepare. When technologies change, so must the skills and roles of the IS team. On the business side, change is always difficult, especially when generations of employees have used a legacy system to do their jobs—even when the system has obvious weaknesses and shortcomings. An increasing number of enterprises are building expert teams to manage and deploy change expertise, project after project.
Exclude new high-risk legacy systems
Annual reviews of the portfolio are essential to measure and communicate value and risk over time. A total-cost-of-ownership (TCO) view helps the business understand that any application will reach a point of diminishing returns where further investment will neither reduce risk nor add value.
An emerging best practice is to proactively allocate a portion of the annual IT budget for legacy systems renewal or replacement. This approach helps business managers over the hurdle of funding for replacement of their legacy applications. Continuing attention to architecture helps the CIO avoid choices that would create new high-risk legacy "sinkholes."
By assessing the application portfolio regularly, focusing on high-value, high-risk systems, migrating selectively to reduce risk and enhance value, and looking forward via architecture and ongoing reinvestment, CIOs can significantly reduce the burden of legacy systems. The payoff is a business that is less constrained by accidents and history, and a more satisfying role for the CIO and the IS team.
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