CIO's Dilemma -- Balancing Costs and Innovation

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Throwing out the ‘baby with the bathwater’ is no longer necessary when it comes time to upgrade your infrastructure.

In 2004, according to Gartner, ”CIOs and other IT executives will have to spend the next 12 months holding down costs while innovating for the future.” This is the CIO’s dilemma — to achieve a balance between managing short-term issues of cost and complexity, while at the same time investing in the future.

One of the key items is to decide which legacy systems should be replaced and which should have their life extended. Legacy systems play a critical role in IT infrastructure; yet they drain precious resources.

Conventional wisdom tells us that new is better than old. New hardware is better, cheaper and faster than ever before. Likewise, the Internet is better than old proprietary networks. Windows XP is richer in function than DOS, and so on.

While legacy hardware may need replacing, what is to be done about the applications running on that platform? After all, it is the applications that fuel the business, touch customers and help deliver products and services to new markets. Are COBOL business processes — the most widely used in the world — obsolete simply because they can be re-written in Java? Probably not.

The business procedures written down and captured may be relevant for many decades, or even for centuries. For example, in the city of Massri treasurers used double-entry accounting (implemented by all major financial packages today) as early as 1340 AD.

Unlocking Value

So can IT unlock an application containing valuable business processes from a legacy platform that restricts the CIO’s ability to reduce cost and to innovate for an agile future? Absolutely.

Core business applications can be preserved as hardware and software environments are upgraded. For example, the software environment for COBOL applications is readily available on contemporary Linux and Windows platforms, and fully integrated with the latest technology features from these platforms.

Fierce competition between platform vendors has driven new server technology to ‘enterprise scale’ with prices the mainframe cannot match. Moving applications to low-cost Linux or Windows platforms can reduce or remove mainframe operating costs currently locked up in IT infrastructure budgets.

ROI can often be achieved within a few months, redirecting funds to new value-enabling projects. The move may also avoid serious risk as hardware vendors withdraw support for many older mainframes. Software is preserved, and business continuity is no more disturbed than a conventional mainframe upgrade.

New technology makes it possible to unlock the value of legacy while at the same time innovate for an agile future by:

Re-using and extending COBOL applications in service oriented architectures (SOA);
Deploying COBOL applications in Microsoft’s .NET framework, and
Integrating COBOL applications with the Internet, Web services and J2EE.
Mainframe IT staff now can team up with the Java, Linux and .NET developer communities. Traditional applications can be developed and extended using Visual Studio, bringing unrivaled ease-of-use features to help IT become more agile. COBOL developer teams can enjoy the productivity of new paradigms of development including UML and model-driven architecture, bringing together best practices for rapid innovation and rigorous processes across the IT organization. New user communities (such as Web clients) can now access the same business logic and traditional data via the Internet, XML and Web services.

To understand the value locked up in legacy applications, simply estimate the cost of doing business without them. Alternatively, estimate how much it would cost to rebuild that legacy from scratch. The risks associated with such large-scale projects are well documented. Few CIOs would put their jobs on the line for such projects, and fewer CFOs would sanction the costs in the current economy.

This article was first published on CIOupdate.com. To read the full article, click here.