Apps Should Create Value For Your Business

1971 - ICL 7500. Pic by  @docubyte

1971 - ICL 7500. Pic by @docubyte

It’s understandable that businesses want to keep their legacy applications running, especially those that have become central to operations. However, it only makes sense while they still provide business value. As applications age, they start to become costly to maintain and can begin to hinder business growth. At some point, a turning point needs to be reached where they are either replaced or modernised so they can integrate with modern processes and systems. While change can be difficult to accept at times, it’s vital for applications to create business value.

Why Applications Need to be Modernised

With today’s rate of technological change, even relatively modern applications can quickly become outdated. It matters less what language the code is written in or how old the software package is. What is important is whether an application can be sustained, supported and maintained. 

There are common signs that suggest that applications need to be modernised:

  • Rising costs - over time, highly-customised systems can become challenging to maintain. Simple changes can be extremely time-consuming and problems impossible to resolve in-house. 

  • Lowered productivity - today’s workforce and consumers are increasingly mobile. Everyone expects to be able to access data whenever and wherever they are. If an application doesn’t fit around workflows and user behaviours, it can begin to stand in the way of business opportunities. 

  • Inability to integrate - when applications integrate, better workflows result. If applications require custom coding to deliver integration, they hinder improved ways of working and data sharing. 

  • Lack of scalability - older applications often have a substantial amount of code that isn’t relevant, which slows down operations. The solutions aren’t able to scale to meet customer demand. 

  • Reduced speed - legacy systems can become incredibly slow and clunky. Data can’t be delivered as quickly as it's needed, and rigid change procedures stand in the way of business development.  

  • Cancelled support - when vendors stop supporting applications, it can be difficult to find the talent needed to make changes and fix problems. At best, support becomes increasingly expensive. 

Generally, the older the application, the higher the risk. Newer applications are more likely to still have some level of support, whereas legacy applications will become obsolete. Once an application hits its manufacturer end-of-life, keeping it running becomes increasingly complicated. 

Businesses need sound solutions to their problems to create competitive advantage, something that legacy systems will struggle to deliver. Sooner or later, application modernisation becomes a necessity. The trick, of course, is getting ahead of the problem, starting modernisation at the right time and empowering digital transformation. 

What is the Cost of an Application?

While many business owners realise that they should begin application modernisation, the difficult decision can be deciding on when. Ultimately, modernisation should be considered when any of the common signs become apparent. However, one way to justify the process of change is to determine the total cost of ownership (TCO) of existing applications. If the TCO is too high compared to the cost of modernisation, then it makes sound business sense to make a change. 

The TCO for applications is the sum of all the direct and indirect costs that are incurred. TCO will include the following areas:

Startup costs:

  • Software - upfront costs plus user licences.

  • Hardware - servers and storage, backup and disaster recovery.

  • Implementation - configuring and testing software.

  • Data migration - moving all data and including format changes.

  • User licenses - named users and simultaneous users.

  • Training - ensuring end-users, helpdesk and system admins can use the system.

  • Customisation - changes made to the software to fit with individual company needs.

  • Integration - interfaces between enterprise systems.

Operational costs:

  • Maintenance and support - often around 20-25% of the total purchase price per year. 

  • Patches - applying security and bug-fix patches.

  • User licences - the more users, the more licences need to be purchased. 

  • Training - new users will need to be trained as the company grows and additional training will be required as enhancements are delivered.

  • Enhancements - the cost of development to provide additional functionality, including project management costs. 

  • User and admin support - the cost of helpdesk and system admins.

  • Disaster recovery - backups and regular testing.

  • Data centre - power, cooling and floor space for software or the monthly cost of running hardware.

  • Downtime - business cost in the event of unavailability of the system.

  • Upgrades - these are often substantial, expensive, time-consuming and risky business projects.

  • Security - the cost of keeping an application secure.

These costs can be used to help estimate a realistic TCO for the lifetime of an application and then compared against the cost of modernisation. There are many expenses involved in off-the-shelf applications that aren’t relevant to cloud-based applications. In addition, the business benefits of mobility, agility and scalability offered by the cloud need to be weighed up against existing systems. 

How App Modernisation Adds Value

As we’ve touched on, as well as calculating the TCO of applications, business benefits need to be factored in. When legacy applications become difficult to use and integrate with other systems, a lot of time and money can be wasted. 

App modernisation can deliver value in many ways:

  • Engage customers - the cloud can provide more personalised experiences, more quickly by using flexible resources.

  • Drive productivity - modern apps offer more user-friendly and intuitive experiences.

  • Increase relevance - new features can make old apps meet business needs.

  • Improve availability - cloud-based applications can be accessed from any device at any time, supporting business growth.

  • Enable employees - teams can try out different business models and workflows, iterate quickly and deliver innovation.

  • Optimise operations - resource usage can be easily changed to meet demands without concerns around capacity planning.

  • Inform business decision - data is simpler and faster to access, reports can be easily generated and informed decisions made quickly.

  • Improve workflows - integrating old applications with essential business systems.

 

The Journey To App Modernisation

Whether due to circumstances or astronomical maintenance fees, once it has been decided to modernise an application, the next question is how. Ultimately, modernisation aims to derive new business value from old applications. Fortunately, there are many methods that can be used to deliver value and quickly.

Applications don’t always need to be rewritten from scratch; many can be modernised without being entirely overhauled. Depending on business requirements, applications can be migrated to a new cloud-based infrastructure, optimised without changing features and functions or entirely re-architectured to offer new capabilities. 

The journey to app modernisation is different for every organisation and, often, every application. The key is to ensure that applications are creating business value, if they aren’t, then a change is going to do your business good. 


Drew Alexander