Core revival: A new road map for your core modernization journey

A blog post by Scott Buchholz, managing director and CTO, Government and Public Services, Deloitte Consulting LLP and Amit Chaudhary, principal and Cloud Engineering Offering leader, Deloitte Consulting LLP.

In the face of uncertainty, a business’s ability to evolve through operational and strategic agility should not be undermined. As companies move toward unleashing their full digital potential, it is important for their legacy core systems to support agility, innovation, and new modes of working. Redefining core capabilities requires a new way of thinking, and to make the transition to the cloud more cost-neutral and operationally manageable, CIOs are exploring several ways to do so. Over the next 18 to 24 months, the following trends are expected: leveraging leading-edge technologies like low-code and no-code, intelligent ways to extract business logic, and core mapping. Reducing technical debt and leveraging non-enterprise resource planning (ERP) platforms in a more manageable and cost-effective way will also play an important role in an organization’s core revival strategy.

The business case revamp

With organizations still reeling from the economic consequences of the pandemic, financially reengineering the core modernization business case is inevitable. The details of it will vary depending on industry and need, but what will remain constant is that organizations can achieve their core modernization goals through the following:

• Rebuilding the past: New agreements are being designed between organizations and their implementation partners that will minimize capital-intensive efforts. In these creative operate-to-transform agreements, the organization’s systems will be modernized to cloud-native platforms in a few years while their operating expenses stay neutral.
• Value for money: Recently, the transition to the cloud has been supported by vendors’ simplifying and improving their proprietary tools. This has led to migrations becoming cost-neutral or cost-saving.
• System overhaul: Transitioning systems to the cloud can kick-start the process of rationalizing redundant systems, eliminating dependencies, and modernizing capabilities. Modernizing collections of systems that have been designed over time to work around limitations can accumulate to create technical debt, outdated applications, and workarounds. Therefore, modernizing these systems (or retiring them) can lower overall maintenance costs, increase efficiencies, and enhance system performances, all of which can contribute to lowering allocation costs and further support the business case for a core revival initiative.

Custom code metamorphosis

Replacing legacy systems with new and improved technologies can help organizations revitalize, spruce up, or retire core systems. Through the following advanced techniques, organizations can decide how to proceed with the core revival journey:

• Leveraging low-code platforms: Although many enterprise technologists may be skeptical about low-code (LC) scalability and performance, the list of industry-specific LC platforms continues to grow. LC platforms are significantly more capable than a few years ago. Today, system designers can carry out complex tasks and integrations through point-and-click rather than having to write code. Case and contact management are a core function of many LC platforms, which is often a need for agility in legacy platforms. The impact that these platforms can have on core modernization efforts has not gone unnoticed by tech leaders and developers. Grand View Research valued the global low-code application development market at $11.45 billion in 2019 and expects the market to grow 22.7% annually until 2027.¹
• Simplified inferences: Improved mining technologies and techniques make it possible to look into legacy code, regardless of the language, and extract business logic with less effort and higher fidelity. Regarding core modernization, this means not only that the existing business logic can fuel requirements or LC development, but also that tools are improving as tool developers apply AI/ML to automate aspects of the code extraction process.
• Step-by-step modernization: Core mapping is a new way to do application modernization. It uses a set of sophisticated mapping tools, wherein legacy systems can be visualized as a connected graph of constituent parts. System engineers can then identify and use these logical subgroupings to divide legacy interfaces, replacing them with modern APIs and service-based techniques. These services can then be modernized individually as and when required in a more predictable and consistent manner.

Reimagining legacy ERP systems

Deploying more efficient, cost-effective approaches for cleaning up nonessential code in ERP systems and addressing years of technical debt are just as important as financially reengineering business cases and transforming custom code. They all have a shared goal of advancing a platform-first strategy for the development of business-critical software designed to create a competitive advantage. They reduce technical debt, thereby increasing agility. Here are some things to keep in mind as you continue to revitalize your core assets, monetize technical debt, and move your existing legacy systems to cloud or low-code and no-code platforms:

• Is the transition worth it? Spending seven or eight figures on a major ERP upgrade seems excessive for many organizations, especially during the current economic climate. Some wonder whether it will have a lasting impact on the organization, or if these enhanced ERP assets will support ongoing innovation and long-term business strategy or will just be another cost of doing business? Although these questions are valid, the fresh approach undertaken to modernize ERP legacy systems is a welcome change.
• Out with the old: A business’s ability to evolve is directly linked to its strategic and operational agility and the ease with which it can reduce complexity and get rid of technical debt. Therefore, consider identifying the ERP components that would have the biggest impact on the organization’s bottom line, and upgrade only those.

Today, business leaders see technology not only as driving strategic change, but also as an integral part of their business journey. However, funding this digital transformation requires a certain level of investment, which needs to be more than mere improvements to legacy infrastructure. The process of modernizing core assets is a continuous process, not a one-time exercise, but if done right, it can fuel innovation, create competitive advantage, and reap both short- and long-term benefits.

This content was summarized from Tech Trends 2021: Core revival. Click here to read the full article.