How the modern CIO grapples with legacy IT

Sometimes compelling new features in a major upgrade provide a strong incentive to migrate, which was one reason why surfaces manufacturer Cosentino is moving to SAP’s S/4HANA. “In most cases, we make decisions based on strategic criteria to determine the right time to make a change,” says group CIO José Rodríguez. “This could be driven by our company’s strategy, technological advancements, user experience, or economic factors. The next migration to SAP S/4HANA addresses several of these factors.”

Cosentino performs roadmap reviews every six months. “The criteria for these decisions is always around alignment with the company strategy,” he says. And while many systems are refreshed on a regular schedule, IT infrastructure in the factories is replaced every 36 months. Even though that’s aggressive, he says, “we are a factory that runs 24/7. We can’t allow a single minute of downtime. With newer equipment, the probability of failure is less.”

Rodríguez has eight key criteria he uses when reviewing existing IT hardware, software and services:

1. Is it meeting the needs of the overall group, versus serving just the needs of a specific part of the company or a specific brand? “We prioritize global solutions over specific ones for specific markets,” he says.
2. Does it keep company know-how, such as key business processes, inside the business?
3. Is it keeping up with market trends?
4. Does it follow the latest standards?
5. Is it as fast and agile as competing products or services? (Sometimes speed and agility are more important than other factors.)
6. If it’s serving a standard business function, is it a standard market application?
7. Does it support the strategy of the company?
8. Does it fit into the company’s cloud-first strategy?

“To me, the most important criteria is business alignment,” he adds. “That means alignment with our strategy, market, costs, and technology.”

BSH Home Appliance

Vice president of digital platform services Berke Menekli takes an analytical approach to regular legacy technology assessments at BSH Home Appliance. “We record the business capabilities into our enterprise architecture platform for every tool so we can run a portfolio optimization process over those” to detect any overlap in capabilities, he says. “Any organization of our size has 1,000 to 2,000 applications registered,” he adds, so having that capability analysis is a key factor when deciding whether to retire or replace a technology.

He also considers alignment with current business strategy and where the product or service fits within the technology refreshment cycle. Factors include whether the product is at end of life, whether the asset is fully depreciated, and whether they’ve fully leveraged the value of the investment. Everything is on a schedule: laptops and data center equipment are replaced every four years, smartphones every three to four years, and data collection devices in the factory every seven years.

BSH Home Appliance

During the software review process, which takes place every two or three years, he considers the license contract, replacement cost, and ongoing, recurring costs. “We also look at IDC and Gartner research to understand the capabilities and costs of alternatives,” he says. There’s no standard timeline for replacement except for end of life announcements, he adds.

Menekli’s strategy for maximizing the value of IT investments has changed in recent years. “Previously we focused on optimizing yearly costs. Now we’re focused on the end game: reducing our overall cost position.” In some cases that’s meant accelerating implementations so the company can retire older investments in order to reduce costs. But it’s all about the finances, not bringing in the latest and greatest technology. “If it’s fine to go a couple more years with the technology, we do.”

That may be the case with Macbooks and Chromebooks, which Menekli says tend to have a longer lifespan than his Windows laptops. “We’re looking to see if we have a business case if we can keep them for seven years,” he says. “We’re always investigating whether there’s a better business case.”

The most important consideration when deciding to replace information technology or not is whether it’s still in alignment with the business strategy, says Rodríguez. Then look at what’s happening in the market, with costs, and with the state of the technology.

Every organization should review legacy technologies during annual planning and budget cycles, says Ivy-Rosser. That’s standard practice. “But every time you have to justify a CapEx or adjust an OpEx budget, you should do the review again…and make technical debt discussions a transparent part of the decision-making process,” she says.

Forrester

But cleaning up technical debt shouldn’t be your only consideration, says Menekli. You also need to consider the financials and whether a technical refresh is warranted.

Be careful before placing your bets on a replacement technology, and realize that the grass is not always greener, adds UC Riverside’s Gunkel. “All platforms have their problems, so be very intentional about what those problems are, and which ones your team can intentionally solve and can control through your staffing and team.” If the technology you have helps solve your organization’s weaknesses, holding on may be your best bet.

When it’s time to make a change, if you’ve done your homework up front and have a separation agreement, you’ll have an easier time of it, says Abernathy. Also, have a plan if the new technology falls short of expectations. “Decide early on how long you want to invest if the value is slow to come,” she says.