Companies running on legacy IT have been amassing technical debt for years, but the pandemic has accelerated and brought the acute business implications to the surface. Richard Blanford, CEO at Fordway, discusses the risks of operating with technical debt post-pandemic, and how to build a roadmap from debt to digitisation.
Technical debt – the cost of and issues arising from not keeping pace with technology – has been a regular topic of conversation among IT leaders in recent years. However, the business implications of not tackling the problem have been highlighted during the pandemic as organisations have had to pivot to new digital services and new ways of working. This has significantly changed the balance of the ‘live with it or change it’ equation.
Technical debt limits how quickly organisations can deliver digital transformation, with implications for the future success of the entire business. To develop new revenue streams, or gain value from the data provided by digital sensors, to give but two examples, they need to move away from outdated IT systems and become truly digital organisations.
One of the challenges has been that many CIOs were reluctant to discuss the scale of the problem, or to admit their organisation might be falling behind competitors. However, CEOs who have spent the last year wrestling with keeping their business going despite legacy IT will now have a much clearer understanding of the problem. Technical debt is not just a matter for the IT department – it affects the entire organisation.
The Risks of Operating with Technical Debt
Technical debt does three things: increases operating costs, leads to additional business risk, and acts as a brake on an organisation’s digital ambitions.
One quantifiable example of the costs is HMRC, where patching and maintaining legacy systems contributed more than £50 million to the additional costs incurred during the pandemic, according to a January 2021 report from the Public Accounts Committee.
This example also highlights some of the business risks. They range from reliance on ageing systems that are no longer supported by the vendors to use of unsanctioned and potentially insecure shadow IT, both of which bring an increased probability of security breaches. Older IT systems take an increased amount of time and resource to keep running and may be incompatible or unable to integrate with new applications. An inability to share data will create an incomplete picture of what is happening in the business, resulting in inaccurate reporting and poor market intelligence.
No organisation is immune. Netflix, the epitome of a digital business, recently announced that it has built a new media ingestion and distribution platform and expects to spend much of 2021 on migrating from its ‘large and complicated legacy system’.
And while the pandemic has accelerated digital transformation for many organisations, some were forced to accrue new technical debt to keep their business running or switch to new services. Analysts Gartner believes technical debt resulting from necessary solutions rolled out in haste will shadow CIOs through to 2023, causing financial stress, reducing their ability to recover and forcing cloud migrations.
Technical debt is not just a matter for the IT department – it affects the entire organisation.
Chief Executive Officer, Fordway
Tackling Technical Debt
There are two ways to tackle technical debt: live with it or change it. The solution will be different for each organisation and system. It is likely to involve a series of compromises, trading off the cost of change against the resulting benefits, and sometimes requiring interim steps as a pragmatic solution to keep a legacy application running while carefully managing cost and risk until a long-term solution is available.
Cloud can be part of the answer, as it enables new applications to be delivered more quickly and efficiently, but will not be the complete solution. For example, it is possible to ‘lift and shift’ a legacy application to cloud-based infrastructure as a service (IaaS), but it will still need to be patched, configured etc. Unless it has been upgraded or redeveloped, it is still the same legacy system in a new home, and will still be unable to integrate with other applications. In other words, this is not digital transformation. Additionally, there will be applications that simply cannot be moved without considerable work.
Ultimately, organisations need to reengineer what they do, or they will not achieve true digital transformation, but will simply push the problem further down the road.
Creating a Roadmap for Change
Whatever the situation, the roadmap for change is the same. The first step is to understand the risks that the technical debt creates for the business and ensure policies are in place to manage them while maintaining compliance with all required standards. It is important to review risks regularly. For example, the move to home working may mean that user devices in homes with poor security have become a much greater risk, so the organisation’s Risk Profile needs to be updated.
The next step is to understand the extent of the problem. We recommend a business and IT alignment review i.e. working out what IT services the business actually needs, remembering that IT is not an end in itself but is there to support the business and enable it to operate successfully.
With a clear picture of what their business requires, CIOs can then decide how best to provide those services, what systems need to be upgraded, and what can be consolidated, simplified or even turned off. This may require some degree of reengineering the business, such as changing a process to support new ways of working, leading to true digital transformation.
Ideally the legacy issue should be broken down into smaller elements that can be addressed separately as part of the transformation, reducing risk. A high profile example of the risk of large-scale change was TSB’s modernisation of its banking IT systems. This locked 1.9 million customers out of their accounts, cost an estimated £330 million and led to 80,000 customers closing their accounts. The application had been completely rewritten, but TSB had not tested all the functionality thoroughly and had migrated to the new system in one ‘big bang’ rather than in stages.
In an ideal world there will be some quick wins that will deliver benefits and prove progress whilst the more fundamental issues are addressed. Communication and clear expectation setting are also key.
Finally, even the most careful planning cannot solve every issue. Some vendor dependencies may need to be managed until they can be replaced as they will simply require too much work to eliminate. We have experienced this with some of our customers – sometimes, after examining every option, a particular piece of equipment or software has to remain in place. When the choice is between paying say £10,000 annually to host an application as it is, or £100,000 to redesign it for cloud, the balance of benefit versus reward is clear.
For further information visit www.fordway.com