Legacy systems can be difficult and expensive to scale, and organizations looking to modernize or migrate legacy systems often seek agility and ease that their current systems cannot provide.
Recent Deloitte investigation Among 300 industry leaders, we found that technology infrastructure challenges emerged as a key cost control hurdle for half of all companies. This is a significant increase from just a year ago.
This study highlights how legacy technology is having a negative impact on organizational agility and profitability, as organizations are stuck in outdated systems and struggle to adapt to evolving internal dynamics. .
To identify cost optimization opportunities, IT leaders must evaluate their legacy infrastructure and develop a step-by-step plan for updating, consolidating, or completely replacing it.
App stack inventory
Howard Weal Vice President Cockroach Research Instituteadvises organizations to start by taking a deep look at their current application stack to identify areas for improvement.
These systems should then be revisited over time, rather than trying to change everything at once. “Breaking down the modernization process into smaller, easier steps allows companies to continually advance and avoid business interruptions,” he said in an email interview.
Achieving impactful change requires buy-in from across the IT organization and support from other senior-level stakeholders.
Additionally, IT leaders must clearly communicate and manage the risks of these investments early and often. “This means working directly with the entire C-suite, in addition to the CEO, to align the right IT strategy for the organization,” Weale explains.
Scott Wheeler, Cloud Practice Lead Asperitas ConsultingAccording to , organizations should identify alternative options for the latest technology and calculate the estimated cost of migrating to the new technology, including maintenance costs.
He recommends evaluating alternative technologies in three dimensions, starting by calculating the business opportunities and risks of not replacing the legacy technology.
“Then we consider the difference in labor and software costs between maintaining the legacy technology and the latest technology, and then we consider the cost estimate for migrating away from the legacy technology,” he said in an email interview. I am.
Align IT with business goals
Ryan Downing, Vice President and CIO of Enterprise Business Solutions Major financial groupssays the company's approach to legacy system modernization is deeply rooted in aligning technology efforts with overarching business strategy.
“Taking a business-led approach ensures that our modernization efforts are not only strategic, but also seamlessly integrate with the evolving needs of the business,” he explained in an email. did.
Central to this strategy is the recognition that modernization is not just about updating technology, but an investment that positions the business for sustainable growth.
“While we strive to minimize disruption to our operations, we recognize that any modernization effort drives change and may result in some level of disruption,” Downing said. states.
Rather than creating a separate technology strategy, Principal Financial Group incorporates technology considerations into a comprehensive business strategy.
This allows organizations to consider strategic technology investment decisions alongside other investments they are making to grow their business.
“Once a strategic investment is identified and funded, we track its implementation and performance at the enterprise level to ensure appropriate value capture,” says Downing.
Benefits of using AI
Deloitte's research also found that four out of five companies are turning to generative AI and machine learning to increase efficiency and improve both customer and employee experiences.
Weal said he agrees that for some organizations, AI can be effective in determining exactly where spending is going and can help establish guardrails for certain operations.
“AI-driven automation can also significantly reduce the structural and operational complexity of data infrastructure. Choosing a system that can automate time-consuming manual tasks is critical,” he says. added.
Wheeler says organizations need to prioritize AI initiatives based on the potential value of AI and the feasibility of implementation.
“Consider cost, technical complexity, and availability of the required data and skills,” he says. “Prior to full-scale deployment, he will test and validate the AI solution by conducting a pilot project.”
He added that encouraging a culture open to innovation and continuous improvement could help foster an environment where cost optimization through AI is seen as a strategic enabler rather than just a cost-cutting measure. Ta.
Downing notes that the new capabilities brought by GenAI require organizations to look at cost optimization opportunities differently. “To reap the full benefits of this new technology, it is important to embed it throughout the enterprise,” he says.
Strong partnerships with key leaders such as CIOs and CFOs enable IT leaders to leverage fundamental understanding of business process performance.
A focus on collaboration provides the best opportunity for GenAI to deliver significant financial value.
According to Downing, Principal uses a “rigorous” prioritization mechanism to identify and focus on the most impactful use cases as GenAI continues to learn how to deploy the technology.
“This ensures that our investments in GenAI are closely aligned with our strategic objectives and deliver tangible value to the organization,” he explains.
