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techniques, and business
cases to drive your
modernization strategy
techniques, and business
cases to drive your
modernization strategy
- Reengineer costs, project funding models, and the desired outcomes associated with their core (and, potentially, data center) modernization use cases by focusing on third-party platform management services. These services feature nontraditional funding arrangements and operate-to-transform approaches that combine modernization and innovation investments. Trend participants can also lift-and-shift big, custom-coded transactional systems to hyperscaler cloud platforms.
- Explore opportunities to accelerate the discovery of the internals of black-box legacy systems to facilitate modernization. In addition, leaders will explore ways to use technologies such as PaaS low-code and no-code platforms to perform traditionally complex tasks and integrations via point-and-click, rather than by writing new code.
- Support a platform-first strategy by deploying leading-edge system analysis tools to identify redundant or extraneous code within legacy ERP systems, and either move this code to another platform or delete it altogether. The ultimate goal of this approach is to remove technical debt that accrued over years of using ERP as a development environment and, in doing so, return ERP assets back to a baseline state. Then, going forward, CIOs and their teams will make key decisions about whether to develop mission-critical capabilities in the ERP system itself or on alternate platforms.
- Operate and transform. Organizations are exploring other creative operate-to-transform agreements with implementation partners, holding them accountable for migrating and/or upgrading systems, and utilizing powerful tools. While these agreements will inevitably vary in detail and scope, many arrangements are designed to minimize capital-intensive efforts. In fact, some organizations are able to secure agreements whereby their systems will be modernized to cloud-native platforms in a few years, while organizational operating expenses stay neutral.
- More bang for fewer bucks. During the last few years, vendors have made significant improvements in proprietary tools that support transition to the cloud. By simplifying the process, these tools are giving rise to some compelling business cases in which migrations can be cost-neutral or lead to cost savings.
- System rationalization—how less is more. In many organizations, systems have sprung up over time to work around other limitations, leaving burdens of technical debt, outdated applications, and workarounds. Transitioning collections of systems to the cloud may enable (or force) the long-overdue process of rationalizing redundant systems, eliminating unnecessary dependencies, and modernizing capabilities. Modernizing a collection of related systems—or retiring some of them altogether—can lower care-and-feeding costs, increase efficiencies, and enhance system performance, all of which may lower cost allocations across the stack and bolster your business case for a core revival initiative.
- Improved low-code platforms. Low-code (LC) platforms are dramatically more capable than even a few years ago. Some enterprise technologists may harbor doubts about LC scalability and performance, but the list of industry-specific LC platform opportunities continues to grow. Using LC offerings from Appian, OutSystems, Salesforce, ServiceNow, or other vendors, systems designers can carry out complex tasks and integrations through point-and-click rather than having to write code. Moreover, LC vendors are racing to integrate advanced AI/machine learning (ML) capabilities into their platforms to help augment the user experience. Finally, “case” and contact management are a core function of many of the LC platforms—and often an area of great need for agility in legacy platforms. As such, the impact that LC platforms can have on core modernization efforts cannot be overstated, a fact not lost on tech leaders and developers. Grand View Research valued the global low-code application development market at US$11.45 billion in 2019, and expects the market to grow 22.7% annually until 2027.4
- Modernized business rule extraction. Traditionally, the process of identifying and extracting business rules from custom code in legacy applications has required an extensive, manual effort and an army of specialized resources. Today, improved mining technologies and approaches make it possible to peer inside legacy code—regardless of language—and extract its business logic with less effort and higher fidelity. By scanning the code of an application that is a candidate for modernization, you can quickly identify essential business logic, as well as hot spots where a system issue is taking place, and either refactor the code in question, remove it, or perhaps replace the application itself with a microservice. In the context of core modernization, this represents a game-changing breakthrough: Not only can existing business logic fuel requirements or LC development—the tools are improving as tool developers apply AI/ML to increasingly automate aspects of the code extraction process.
- Improved incremental modernization. Another novel approach to application modernization involves a process known as core mapping. Using a set of increasingly sophisticated mapping tools, legacy systems can be visualized as a connected graph of constituent parts. A map of connected code modules works similarly to a social network graph on Facebook, in which lines and dots represent connected people. By identifying logical subgroupings, system engineers can identify and sever legacy interfaces, replacing the interfaces with modern API and service-based techniques. Over time, these services can then be modernized individually as needed in a more predictable, consistent way.
- Is that all there is? In the current economic climate, organizations with significant long-term investments in ERP assets have begun questioning the wisdom of spending seven or eight figures on a major ERP upgrade. Will these expensive, complex undertakings deliver lasting material benefit to the organization? Will enhanced ERP assets then support ongoing innovation and enable long-term business strategy? Or will ERP upgrades ultimately be just another cost of doing business? New approaches to modernizing legacy ERP systems represent a welcome evolution in approach to upgrading legacy ERP assets.
- Refactor, remove, or replatform. In the preplatform era, some companies used ERP as a development environment. Today, the residue of outdated requirements and governance, useless nice-to-have applications, workarounds and fixes, and customized code often lives on in a tangle of complexity that confounds system engineers and stymies digital transformation efforts. In the face of such complexity, the process of upgrading an entire legacy ERP system to the latest release can be extremely expensive and time-consuming. But what if you could identify the ERP components that would make the biggest impact on your strategy or bottom line—for example, a proprietary pricing algorithm—and upgrade only those? Using advanced tools, you may be able to recode critical targeted capabilities—whether they be custom code or something like Java—while leaving them operating within your existing ERP system. Or you can move non-ERP capabilities to platforms on which they can create competitive advantage, thus monetizing your technical debt. Either way, reducing complexity and getting rid of technical debt can increase operational and strategic agility and, in turn, enhance the business’s ability to evolve.
Lessons from the front lines
Read insights from thought leaders and success stories from leading organizations.
Albemarle takes on the core and more
Specialty chemical company Albemarle has completed its journey to one consolidated ERP system—a journey that in many ways exemplifies the art of the possible for core modernization.Albemarle takes on the core and more
Specialty chemical company Albemarle has completed its journey to one consolidated ERP system—a journey that in many ways exemplifies the art of the possible for core modernization.
After a series of multibillion-dollar acquisitions, this global leader of lithium, bromine, and catalyst solutions found itself with a stable of far-flung business units. Albemarle needed to integrate
these acquired units, create a shared service center, and establish common best practices as soon as possible. But a major obstacle stood in the way: The business units in question did not share a common
ERP platform. “Creating a single ERP platform was going to be essential to that business integration initiative,” says Albemarle CIO Patrick Thompson. “Not only would it support our shared services model—it
would eliminate the technical debt from more than 3,500 customizations that had been made to the two platforms.”5
Albemarle
spent almost a year vetting the business case for consolidation, refining the ROI metrics, and aligning on how to reduce their existing technical debt. Upon finalizing a detailed consolidation plan, the
company kicked off its business transformation journey in mid-2017. During the next 18 months, the Albemarle team executed a series of four ERP deployments, resulting in a single ERP platform that serves
the entire global enterprise with common processes and best practices. Along the way, Thompson and his IT team migrated the global operation from Lotus Notes to MS Office 365. (This latter step is no small
feat in an organization with operations ranging from remote mining locations in Chile and Western Australia to manufacturing facilities in the Americas and China.)6
Albemarle’s next step is notable: Once Thompson and his team had everyone operating on a single ERP platform, they executed a “big bang” version upgrade to the global ERP instance in a mere six months. How
did this group of technologists achieve what may be a speed record for ERP upgrades? First, they eliminated their technical debt by electing to make no code changes or customizations to the global instance
they deployed—it was basically out of the box, dramatically simplifying software upgrades. “We did create 70 extensions, but they were outside the code, and we used APIs for those,” Thompson says. “We also
had really good methodology and talent. Over the course of this project, we have put a lot of work into developing the foundational framework and the talent that we need to execute upgrades. Going forward,
we will be able to flex this muscle up and down as needed for upgrades.”
As of January 2020, Thompson had completed the consolidation and upgrades, and began shifting his focus toward broad digital
transformation. The company is accelerating its work on IT/OT convergence, particularly in its manufacturing operations. In the back office, Albemarle will be using robotic process automation and business
process mining tools to elevate its first pass yield and rework process performance. And, on the customer side, the company is exploring opportunities to extend to customers some self-service ordering and
track-and-trace.
“The work we did consolidating and modernizing our foundational platforms makes digital enhancements like these possible,” Thompson says. “We no longer have to spend money on technical debt and
customizations. Instead, we can invest those resources to make leapfrog progress with digital technologies that can transform our company.”
Centuries-old tradition meets a low-code future
In a family-owned company like Sogrape that embodies the painstaking traditions of Portuguese winemaking, the immediate benefits of modern technology’s speed and agility aren’t easy to see—after all, the journey from vineyard to bottle can never be rushed.Centuries-old tradition meets a low-code future
In a family-owned company like Sogrape that embodies the painstaking traditions of Portuguese winemaking, the immediate benefits of modern technology’s speed and agility aren’t easy to see—after all, the journey from vineyard to bottle can never be rushed.
Consumers in more than 120 countries prize Sogrape’s traditional approach to winemaking; over the years, public figures such as Jimi Hendrix, Queen Elizabeth, and Steve Jobs have savored the vintner’s unique
signature brand, Mateus Rosé.7
But when, in 2017, the company found itself
with a burning legacy platform that could no longer support its needs, Sogrape head of IT Carlos Alves began looking for a way to harness core modernization in the service of methodical, artisanal winemaking.
“We needed a consolidated platform that could connect all the functional steps in our winemaking process,” he says. “At the same time, we—as a global organization operating in the 21st century—needed speed
and agility.”8
Alves considered upgrading Sogrape’s in-house core systems to cloud-based offerings by the same vendors
but instead chose to go with the OutSystems low-code platform. “We considered three factors: time to delivery, cost, and training time required to use the new technologies,” he says. “In each area, low-code
worked best for us.”
Using OutSystems low-code technology, Alves and his team built “Wine Connection,” an integrated platform that offers on-site process control and real-time information-sharing
to functional groups across Portugal, including viticulture, wineries, bottling, registration, contracts, and others. Users can access the platform via desktop, tablet, or mobile phone.
Alves says
the Wine Connection platform has delivered several welcome outcomes. “We have been surprised by the increased efficiency and decreasing costs.” He adds that low-code technology—coupled with Sogrape’s recent
embrace of Agile development methodology—is having a surprising impact on IT’s ability to take new products to market. “We recently developed a digital platform for our restaurant customers in just three
weeks,” he says. “That same project using waterfall would have taken much longer.”
The company’s success using low-code and Agile in tandem has led to fundamental changes in the way IT operates.
IT has developed a formal Agile methodology for low-code projects. Using this template, Alves and his team are standardizing the process that departments across the enterprise will use to create new products.
“For example,” he says, “we are starting a new three-phase project for human resources to develop a platform-based portal for employees to choose company benefits. This portal will be completely integrated
with our ERP system.”
Sogrape’s embrace of low-code technology has also fueled ongoing digital transformation efforts. For example, winemaking containers are now connected directly to company systems through embedded
sensors, making it possible for winemakers to control wine temperature more consistently. In another application, field sensors embedded within containers used to store harvested grapes can gauge the density
of the fruit in individual containers. Sogrape’s integrated low-code platform collects and analyzes sensor data. Understanding the precise density of specific harvest batches can help winemakers control
the fermentation process.
Says Alves, “Wine Connection strikes the perfect balance between innovation and tradition.”
GM Financial uses PaaS to build stronger systems for customers
GM Financial, the captive finance arm of General Motors, is in the early stages of modernizing a legacy loan origination system on which it relies to provide auto financing solutions to customers in North America.GM Financial uses PaaS to build stronger systems for customers
GM Financial, the captive finance arm of General Motors, is in the early stages of modernizing a legacy loan origination system on which it relies to provide auto financing solutions to customers in North America.
9 For this core asset, the organization considered several approaches for addressing challenging architectural
complexity and manageability issues, including outsourcing the system to a third-party hosted platform. In fact, IT and business leaders took advantage of public cloud providers’ analysis of alternative
resources to make key decisions about the organization’s future architecture. But in the end, says Bill Livesey, GM Financial’s senior vice president of digital software solutions, the most compelling business
case called for using cloud platform-as-a-service, when possible, to modernize legacy systems already in place.
10
“It came down to controlling our destiny. We want to maintain our competitive advantage using core
systems that we own and control,” Livesey explains. “We’ve invested so much of our intellectual property in these platforms for so many years, it just doesn’t make sense to give away that IP to others.”
The business case for cloud and PaaS also included cost-related elements that Livesey could not ignore. “With PaaS, we could keep developing the products and services our business partners need right now.
We wouldn’t have stopped everything and shifted all of our energy toward migrating systems to a third-party platform.” Moreover, the ability to push the burden of managing some core capabilities to a cloud
provider was an attractive option, particularly for an IT team that had been gradually spending more and more time maintaining aging on-premises systems. Finally, business teams stood to benefit as well.
Over the course of the project, the business and IT would have an opportunity to forge a strong collaborative partnership that could deliver innovation opportunities, enhanced operational efficiency, and
more frequent deployments.
During the first leg of GM Financial’s modernization journey, Livesey and his team went through a process of determining which system components were candidates for moving to PaaS. As it turns out,
many were “very suitable” and will be migrated with few changes in the near future. Others, due to age or complexity, had no path to the cloud and will have to be refactored or deleted altogether.
IT undertook a similar process of careful analysis before deciding to migrate from a legacy on-premises database to a cloud-based alternative. “This was a big decision given the size of our loan
origination system and the sensitivity of the financial data contained in it,” Livesey says. “We ultimately became comfortable that a cloud-based solution could meet our standards for security and privacy.”
GM Financial has more work to do as it reimagines its legacy loan origination platform in the cloud. But even in this first leg of the journey, the project enjoys broad support from across the organization.
“Our partners in the business are excited about this effort,” Livesey says. “We’re taking a very large, sprawling architecture, and transforming it into a single, consolidated loan origination platform.
They get powerful, reliable tools to support their work, and IT will get a stable, manageable production environment that we can modernize on an ongoing basis with minimal effort. Everybody wins.”
Lessons from the front lines
Read insights from thought leaders and success stories from leading organizations.
Albemarle takes on the core and more
Specialty chemical company Albemarle has completed its journey to one consolidated ERP system—a journey that in many ways exemplifies the art of the possible for core modernization.Albemarle takes on the core and more
Specialty chemical company Albemarle has completed its journey to one consolidated ERP system—a journey that in many ways exemplifies the art of the possible for core modernization.
After a series of multibillion-dollar acquisitions, this global leader of lithium, bromine, and catalyst solutions found itself with a stable of far-flung business units. Albemarle needed to integrate
these acquired units, create a shared service center, and establish common best practices as soon as possible. But a major obstacle stood in the way: The business units in question did not share a common
ERP platform. “Creating a single ERP platform was going to be essential to that business integration initiative,” says Albemarle CIO Patrick Thompson. “Not only would it support our shared services model—it
would eliminate the technical debt from more than 3,500 customizations that had been made to the two platforms.”5
Albemarle
spent almost a year vetting the business case for consolidation, refining the ROI metrics, and aligning on how to reduce their existing technical debt. Upon finalizing a detailed consolidation plan, the
company kicked off its business transformation journey in mid-2017. During the next 18 months, the Albemarle team executed a series of four ERP deployments, resulting in a single ERP platform that serves
the entire global enterprise with common processes and best practices. Along the way, Thompson and his IT team migrated the global operation from Lotus Notes to MS Office 365. (This latter step is no small
feat in an organization with operations ranging from remote mining locations in Chile and Western Australia to manufacturing facilities in the Americas and China.)6
Albemarle’s next step is notable: Once Thompson and his team had everyone operating on a single ERP platform, they executed a “big bang” version upgrade to the global ERP instance in a mere six months. How
did this group of technologists achieve what may be a speed record for ERP upgrades? First, they eliminated their technical debt by electing to make no code changes or customizations to the global instance
they deployed—it was basically out of the box, dramatically simplifying software upgrades. “We did create 70 extensions, but they were outside the code, and we used APIs for those,” Thompson says. “We also
had really good methodology and talent. Over the course of this project, we have put a lot of work into developing the foundational framework and the talent that we need to execute upgrades. Going forward,
we will be able to flex this muscle up and down as needed for upgrades.”
As of January 2020, Thompson had completed the consolidation and upgrades, and began shifting his focus toward broad digital
transformation. The company is accelerating its work on IT/OT convergence, particularly in its manufacturing operations. In the back office, Albemarle will be using robotic process automation and business
process mining tools to elevate its first pass yield and rework process performance. And, on the customer side, the company is exploring opportunities to extend to customers some self-service ordering and
track-and-trace.
“The work we did consolidating and modernizing our foundational platforms makes digital enhancements like these possible,” Thompson says. “We no longer have to spend money on technical debt and
customizations. Instead, we can invest those resources to make leapfrog progress with digital technologies that can transform our company.”
Centuries-old tradition meets a low-code future
In a family-owned company like Sogrape that embodies the painstaking traditions of Portuguese winemaking, the immediate benefits of modern technology’s speed and agility aren’t easy to see—after all, the journey from vineyard to bottle can never be rushed.Centuries-old tradition meets a low-code future
In a family-owned company like Sogrape that embodies the painstaking traditions of Portuguese winemaking, the immediate benefits of modern technology’s speed and agility aren’t easy to see—after all, the journey from vineyard to bottle can never be rushed.
Consumers in more than 120 countries prize Sogrape’s traditional approach to winemaking; over the years, public figures such as Jimi Hendrix, Queen Elizabeth, and Steve Jobs have savored the vintner’s unique
signature brand, Mateus Rosé.7
But when, in 2017, the company found itself
with a burning legacy platform that could no longer support its needs, Sogrape head of IT Carlos Alves began looking for a way to harness core modernization in the service of methodical, artisanal winemaking.
“We needed a consolidated platform that could connect all the functional steps in our winemaking process,” he says. “At the same time, we—as a global organization operating in the 21st century—needed speed
and agility.”8
Alves considered upgrading Sogrape’s in-house core systems to cloud-based offerings by the same vendors
but instead chose to go with the OutSystems low-code platform. “We considered three factors: time to delivery, cost, and training time required to use the new technologies,” he says. “In each area, low-code
worked best for us.”
Using OutSystems low-code technology, Alves and his team built “Wine Connection,” an integrated platform that offers on-site process control and real-time information-sharing
to functional groups across Portugal, including viticulture, wineries, bottling, registration, contracts, and others. Users can access the platform via desktop, tablet, or mobile phone.
Alves says
the Wine Connection platform has delivered several welcome outcomes. “We have been surprised by the increased efficiency and decreasing costs.” He adds that low-code technology—coupled with Sogrape’s recent
embrace of Agile development methodology—is having a surprising impact on IT’s ability to take new products to market. “We recently developed a digital platform for our restaurant customers in just three
weeks,” he says. “That same project using waterfall would have taken much longer.”
The company’s success using low-code and Agile in tandem has led to fundamental changes in the way IT operates.
IT has developed a formal Agile methodology for low-code projects. Using this template, Alves and his team are standardizing the process that departments across the enterprise will use to create new products.
“For example,” he says, “we are starting a new three-phase project for human resources to develop a platform-based portal for employees to choose company benefits. This portal will be completely integrated
with our ERP system.”
Sogrape’s embrace of low-code technology has also fueled ongoing digital transformation efforts. For example, winemaking containers are now connected directly to company systems through embedded
sensors, making it possible for winemakers to control wine temperature more consistently. In another application, field sensors embedded within containers used to store harvested grapes can gauge the density
of the fruit in individual containers. Sogrape’s integrated low-code platform collects and analyzes sensor data. Understanding the precise density of specific harvest batches can help winemakers control
the fermentation process.
Says Alves, “Wine Connection strikes the perfect balance between innovation and tradition.”
GM Financial uses PaaS to build stronger systems for customers
GM Financial, the captive finance arm of General Motors, is in the early stages of modernizing a legacy loan origination system on which it relies to provide auto financing solutions to customers in North America.GM Financial uses PaaS to build stronger systems for customers
GM Financial, the captive finance arm of General Motors, is in the early stages of modernizing a legacy loan origination system on which it relies to provide auto financing solutions to customers in North America.
9 For this core asset, the organization considered several approaches for addressing challenging architectural complexity and
manageability issues, including outsourcing the system to a third-party hosted platform. In fact, IT and business leaders took advantage of public cloud providers’ analysis of alternative resources to make
key decisions about the organization’s future architecture. But in the end, says Bill Livesey, GM Financial’s senior vice president of digital software solutions, the most compelling business case called
for using cloud platform-as-a-service, when possible, to modernize legacy systems already in place.
10
“It came down to controlling our destiny. We want to maintain our competitive advantage using core systems that we
own and control,” Livesey explains. “We’ve invested so much of our intellectual property in these platforms for so many years, it just doesn’t make sense to give away that IP to others.”
The business
case for cloud and PaaS also included cost-related elements that Livesey could not ignore. “With PaaS, we could keep developing the products and services our business partners need right now. We wouldn’t
have stopped everything and shifted all of our energy toward migrating systems to a third-party platform.” Moreover, the ability to push the burden of managing some core capabilities to a cloud provider
was an attractive option, particularly for an IT team that had been gradually spending more and more time maintaining aging on-premises systems. Finally, business teams stood to benefit as well. Over the
course of the project, the business and IT would have an opportunity to forge a strong collaborative partnership that could deliver innovation opportunities, enhanced operational efficiency, and more frequent
deployments.
During the first leg of GM Financial’s modernization journey, Livesey and his team went through a process of determining which system components were candidates for moving to PaaS. As it turns out,
many were “very suitable” and will be migrated with few changes in the near future. Others, due to age or complexity, had no path to the cloud and will have to be refactored or deleted altogether.
IT undertook a similar process of careful analysis before deciding to migrate from a legacy on-premises database to a cloud-based alternative. “This was a big decision given the size of our loan
origination system and the sensitivity of the financial data contained in it,” Livesey says. “We ultimately became comfortable that a cloud-based solution could meet our standards for security and privacy.”
GM Financial has more work to do as it reimagines its legacy loan origination platform in the cloud. But even in this first leg of the journey, the project enjoys broad support from across the organization.
“Our partners in the business are excited about this effort,” Livesey says. “We’re taking a very large, sprawling architecture, and transforming it into a single, consolidated loan origination platform.
They get powerful, reliable tools to support their work, and IT will get a stable, manageable production environment that we can modernize on an ongoing basis with minimal effort. Everybody wins.”
Learn more
Download the trend to explore more insights, including the “Executive perspectives” where we illuminate the strategy, finance, and risk implications of each trend, and find thought-provoking “Are you ready?” questions to navigate the future boldly. And check out these links for related content on this trend:
- Deloitte on Cloud blog: Stay on top of the latest cloud news, views, and real-world insights.
- Are you low-code yet?: Gain insights on the benefits of low-code platforms and how it can enable greater agility to respond to business needs.
- Clean, connected, elegant: Explore a strategic approach to core modernization through clean ERP and reduced technical debt.
Next Trend:
Senior contributors
Thorsten Bernecker, Darwin Deano, Bjoern Langmack, Jeff Powrie, Madhu Thejomurthy, Franscisca Wahjudi, Miguel Amaro, Jason Cook, Ravindranath Gourisetti, Ryan Esposto, Matt Fisher, Anantha Ramadas, Thiago Sartorio, Nathan Shilling, and Gabriel Santos
Endnotes