Legacy applications are one of the most difficult issues to face within IT. A rip-and-replace approach is expensive, difficult to cost-justify and tends to interrupt business. Meanwhile, the legacy software lingers in accounting's ledgers, outlives its welcome in sales and causes poor network performance throughout the organization.
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 problem becomes more serious and 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 caused by a failure of the software. Application 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
Problem: A merger renders existing ERP systems obsolete
Solution: Wholesale ERP replacement to meet the needs of all divisions
Hudson's Bay Company is one of the oldest retail chains in Canada, having been established in 1670. The company also owns other popular chains, including Home Outfitters and Zellers. In 2008, Hudson's Bay was purchased by NRDC Equity Partners, the same company that owns Lord & Taylor, an upscale department store chain.
Together, the two companies employ about 75,000 people and generate more than $8 billion in sales, so the merger presented some challenges. One was that Hudson's Bay and Lord & Taylor were both happy with their respective enterprise resource planning systems, which came from different vendors, and neither company's system could handle the needs of both organizations. (The previous systems, which the company declined to name, ran on IBM mainframes.)
One of the main ways 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 one overarching ERP system for all stores to replace the older ones. Executives knew they wanted to move away from their older mainframe systems to use newer blade servers instead. One of the problems with the mainframes was finding Cobol programmers to maintain the old ERP software. The company upgraded to supply-chain management software from Manhattan Associates in part so it would know exactly what was being delivered to stores and when it was arriving.
Some of the benefits that the upgrade yielded included process improvements and labor savings, which Smith would not detail, and the ability to consider future acquisitions that could be parlayed more easily into the existing supply-chain software.
Of course, Smith says, the overall project presented several 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 minimize 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 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 standardization," 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."
Problem: Messaging platform is several versions old
Solution: A series of in-place upgrades to the latest version
At Flexcon, a Spencer, Mass.-based maker of pressure-coated films and adhesives for labels, a Lotus Notes messaging platform was becoming seriously outdated.
For Jeremiah Benjamin, the company's collaboration and tech support leader, the problem became a weekly support headache. For example, the system could not correctly render rich emails -- those that use complex graphics. The company also could not accommodate some add-ons for specific handheld devices because of the extra costs involved. Moreover, it took several days just to book a meeting room and match the size with the number of participants, says Benjamin.
"We had not done any upgrades in quite a while, and we patched [only] to fix specific problems. There were a lot of upgrades we had not done," Benjamin explains. "We needed to get things up to date."
Benjamin first started noticing problems a few years ago when the company's version of Lotus Notes failed to recognize some modern smartphones, including Android devices and Apple's iPhone. He also had trouble integrating new versions of applications, such as Microsoft Office, with Notes.
Because it had missed upgrades several upgrades, Flexcon undertook the fixes in steps, first going from Lotus Notes 4.6 to Notes 6.5. Then in 2009, the company upgraded IBM Lotus Notes and its Domino server from Version 6.5 to Version 7. The goal was to finish the upgrade before vendor support for the 6.5 release was cut off in 2010. Finally, in early 2010 Flexcon upgraded its Domino 7 server environment to Notes 8.5. Notes client upgrades were completed last year, and the company is now up to date on all of its Notes releases.