Legacy applications are one of the most difficult issues to face within IT. A rip-and-replace approach is expensive and thus difficult to justify; plus, it tends to interrupt operations. Meanwhile, the ageing software lingers in accounting's ledgers, overstays its welcome in sales and causes poor network performance throughout the organisation.
And it gets worse. An old mapping application in a transportation department, for instance, is a disaster waiting to happen. As the months and years go by, the application grows more outdated and the problem becomes harder to address.
In the examples below, each featuring a slightly different legacy application problem, the key to finding a solution involved business analysis. IT staffers helped figure out how the legacy app was being used, in what ways employees depended on it and how the company would be affected by a disruption in service if the software were to fail. Such failures, of course, typically lead to a loss of productivity that continues during the time needed to install new software and train employees to use it.
"A core element in all these cases is that the existing portfolio [of IT applications] ought to be continuously managed for its balance of delivered value to cost and risk," says Jim Duggan, a Gartner analyst who studies enterprise IT applications.
Of course, how these companies balanced the value of software against its cost and the risk of failure, and the factors that pushed them to finally make an upgrade, varied depending on the specific business need and the exact nature of the legacy app problem.
Hudson's Bay Company and Lord & Taylor
Hudson's Bay Company, established in 1670, is one of the oldest retail chains in Canada. The company also owns other popular chains including Home Outfitters and Zellers. In 2008, Hudson's Bay was purchased by NRDC Equity Partners, which owns Lord & Taylor, an upscale department store chain.
Together, the two companies employ about 75,000 people and generate more than $8 billion (£5 billion) in sales, so the merger presented some challenges. One was the fact that Hudson's Bay and Lord & Taylor were both happy with their respective ERP systems, which came from different vendors, but neither system could handle the needs of both organisations. The previous systems, which Hudson's Bay declined to name, ran on IBM mainframes.
One of the main purposes for which Hudson's Bay uses ERP is to manage deliveries to its stores. "When we order merchandise from a vendor, sometimes it comes in from Europe and we know about how many we need by store, but it might be months before it is delivered to our company," says Dan Smith, CIO of Hudson's Bay. The resulting delay, he adds, "may change how much you need for one store versus another". Store employees often have to wait until the merchandise arrives, open the containers and then route them to other stores as needed, he explains.
Hudson's Bay decided it needed to replace its older systems with one overarching ERP system for all stores. Executives knew they wanted to move away from their mainframe systems and instead use newer blade servers. The mainframes had many problems, including the headache of finding Cobol programmers to maintain the old ERP software. The company upgraded to supply chain management software from Manhattan Associates partly to gain the ability to determine exactly what was being delivered to stores and when it was arriving.
Some of the benefits that the upgrade yielded included process improvements, labour savings (which Smith chose not to detail) and the ability to consider future acquisitions that could be easily transitioned onto the existing supply chain software.
Of course, Smith says, the overall project presented challenges too, including the need to integrate the systems for the combined companies and the need to train staffers on the new process.
Julie Lockner, a data management analyst at Enterprise Strategy Group (ESG), says all mergers are complex, but they're especially complicated for retailers that will need to address compliance issues and figure out how old data sets will be maintained after moving to one companywide system.
If data is going to be merged into a single application, she says, companies should "[have] a plan for data retention and legacy application retirement at the outset" in order to minimise the chances that any application will become "a source of pain years later."
For his part, Gartner's Duggan says Hudson's Bay faced a very complex series of problems: legacy apps that mostly worked but didn't meet the needs of the newly merged company, a large scale implementation across multiple locations and the political concerns that typically arise when different corporate cultures come together. The main issue, he says, is that complexity leads to high costs, and IT has to make business continuity a priority.
"A major factor in mergers and acquisitions will be the attitude toward business process standardisation," says Duggan. "Political concerns often result in multiple processes where only one should exist. IT can federate some processes when that is needed, but using IT to mask an inability to enforce consistency can result in costly, unreliable operations."