Modernization Facts: The Path to Digital Transformation

A Changing Normality

The worldwide pandemic of 2020 is forcing rapid change for entire organizations—even industries. The ability for organizations to transform into digital-first entities is key to survival. IDC predicts that 60 percent of global GDP will be digitized by 2022. So what does an organization with significant investments in current IT systems do to move quickly down the path toward digital innovation? How can they transform while remaining nimble and ahead of competitors?

A Measured Approach to DX

In 2018 McKinsey reported that the success rate for large-scale digital transformations was consistently low—less than 30 percent. In 2019 they published an article about why “all-in” is a way to achieve successful digital transformation. But that approach is also high risk—especially when organizations have large investments in existing technology. Many organizations do not have an appetite for that. Now many leading researchers (including Harvard Business Review, Tech Republic) are calling for a more measured approach.

Modernization—leveraging and extending the value of investments made in incumbent core business systems—can be a lower-risk approach to achieving successful digital transformation. Companies like Deloitte, and publications like CIO.com recognize that the modernization route may be a better fit for some organizations.

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Presenting the Evidence

We can see great examples of this by looking at organizations that use COBOL. Micro Focus commissioned analysts at Vanson Bourne to poll the global COBOL community and found 70 percent consider modernization the best option for business change. Why? Because 92 percent of the respondents see their COBOL applications as strategic. For example, COBOL currently handles 95 percent of all ATM card swipes, and handles $3 trillion in daily commerce. When you look at the potential financial impacts versus the magnitude of the risk in working to replace it all at once, it’s easy to see why modernization of COBOL-based systems could be a smart choice.

Market commentators also know a thing or two about modernization, and work closely with Micro Focus and our customer communities. An IDC InfoBrief* sponsored by Micro Focus identifies the foundational nature of an enterprise’s systems of record (SORs). These SORs contain a wealth of business logic and data that is vital to transformation, yet it is “locked up and difficult to leverage.” In short, they believe “organizations must focus on reinvigorating and extending existing application assets through modernization.” IDC includes a list of best practices that cover mainframes, applications, and process modernizations.

How do organizations decide to embark on the modernization path to transformation rather than a “rip and replace” strategy? Again, Vanson Bourne shows in their Enterprise IT survey that 91 percent of respondents see the level of innovation in an IT department as a key indicator of business success. Other drivers include efficiency and security. So if legacy systems can be modernized—applications, processes, and infrastructure—so that they enhance an organization’s ability to deliver innovation, efficiency, and security, they could be a candidate for a modernization approach.

For organizations who are ready to begin building their business case for modernization**, Gartner has an extremely useful report. Per our understanding, their in-depth study has four key recommendations that cover:

– Critical sections of your business case—problem statement, technology migration, project description, and cost-benefit analysis.
– Business-led analysis of IT assets that are critical for modernization.
– Using business process value to prioritize work into “smaller waves” that have a modest funding burn rate.
– Recommendation of a “continuous modernization” philosophy ensuring all modernized applications are kept current.

Summary

It’s a lot to evaluate. To help, be sure to check your facts:

Modernization: Reimagining COBOL systems for the digital age (Vanson Bourne)
Modernization Strategies as a Foundation for Digital Transformation (IDC)
Building a Multiplatform Application Modernization Business Case (Gartner)

Ready to embark upon the road to modernization? After all, modernization matters—the evidence is clear. With over 30 years’ experience, Micro Focus can help. www.microfocus.com/amc

Citations

*IDC InfoBrief, sponsored by Micro Focus, Modernization Strategies as a Foundation for Digital Transformation (DX), April 2020
** Gartner, Building a Multiplatform Application Modernization Business Case, Thomas Klinect, Stefan Van Der Zijden, 11 November 2019

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