Leaving legacy systems behind is not a luxury decision

Siloed, inefficient and uneconomical

These terms are typically reserved for immobile legacy systems. But when cloud migration first started over a decade ago, it still resulted in siloed, inefficient and uneconomical processes. The problem here was not the cloud itself, but rather the purely financially-driven approach to the solution.

Moving away from a merely financial view, companies’ perspectives are shifting towards the idea that the cloud is an essential business driver. It opens up opportunities by making businesses more scalable, flexible and ultimately more digital.

As such, relying on traditional on-premise enterprise infrastructures is limiting the possibilities for organisations. These limitations illustrate that we’re at the end of an era – legacy systems really are on their last legs.

Legacy systems currently pose a few problems:

  • They’re complex, fragile, inflexible, and costly to maintain. They struggle to keep up with business demands for new services. These services are crucial to be able to deliver an exceptional customer experience around the clock.
  • Distributed and mobile workforces are putting pressure on existing applications, leading to problems that are increasingly difficult to resolve in a timely way.
  • The cost of maintaining these legacy systems is gradually shifting from application vendors to companies directly. This is due to a shift in focus of the major enterprise application vendors, including Microsoft, SAP and Oracle, as they are now focusing on research and investments in favour of their cloud portfolios.

These factors make traditional IT systems unsuitable for large-scale digital transformation. A public cloud environment, on the other hand, provides stability, flexibility and improved security. It also offers the agility to test and deploy new products and services built with innovative technologies.

The faster access to innovation, one of the cloud’s most significant benefits, is a key contributing factor in staying ahead in the Business 4.0 journey. Furthermore, companies can gain competitive differentiation and revenue from real-time technologies, which have the potential to transform the customer experience and even business models — including data analytics, AI/ML, Internet of Things and AR/VR. All of which require massive computing power, only available from public cloud vendors.

Yet as recently as 2016, according to Forrester’s Predictions 2018: Cloud Computing Accelerates Enterprise Transformation Everywhere, only one-third of companies in North America had adopted public cloud infrastructure platforms, 39% in Europe had adopted public cloud infrastructure platforms, while 45% had yet to deploy cloud-based software solutions. It means many companies still rely on their legacy systems and it’s slowing down their business potential.

Driving change

The benefits of moving enterprise infrastructure and applications to the public cloud are clear to executives when they consider the technological abilities needed to transform their business models.

A prime example is Netflix. It was among the first companies to turn to the cloud after launching its online streaming service in 2007. The company invested $40 million in the mid-2000s to build out its data centres and pay for the license fees to stream just 1% of its movie catalogue. Netflix executives quickly realised they wouldn’t have the money nor the data processing expertise to stream the remaining 99% of its movies to its growing customer base, and this was long before the company began offering original content. Today, Netflix has moved away from owning its own data centres, while its cloud-operated streaming service generated more than 90% of its revenue in 2017 – a true testament for the potential of the cloud.

Using the cloud, Norwegian company Auka built a powerful, resilient financial services platform that can accommodate ever-growing volume of mobile transactions, with extreme scaling capabilities. The company provides white label technology through its payments platform to benefit banks, merchants and private customers. Its home market of Norway saw well over 2 billion card transactions in 2016 alone – all powered by an easily scalable cloud solution.

More recently, Cox Automotive integrated its media brands – Autotrader and Kelly Blue Book – with a cloud-based real-time advertising and bidding platform that expands the reach of both brands. The company plans to close more than 40 data centres, reducing operating costs while investing the savings in new applications and services, such as an Alexa vehicle valuation skill, designed to appeal to vehicle buyers and sellers around the world.

A thoroughly analysed decision

These examples demonstrate that legacy systems will not be able to support the opportunities that are out there, they also illustrate that business context is critical. It’s not enough to merely shift applications and infrastructure to the cloud. By critically evaluating the options for the whole business, companies can benefit from opportunities to advance or extend their business models and stakeholder experiences. When executives emphasise business drivers in their decision-making to move away from legacy systems, it will open up cloud opportunities beyond cutting capital expenses, ending software maintenance contracts and reducing IT staff.

Once business leaders have identified the technologies that will create revenue and improve the customer experience, the cloud provides a platform for experimenting with new products and services and implementing the best solutions quickly. And that’s one of the key topics we’ll be discussing at Google Cloud Next ’18,  showcasing how enterprises can benefit from the cloud advantages and take their business to new heights.

About the Author

Suranjan Chatterjee is the Global Head of TCS’ Cloud Apps, Microservices and API unit under the Business and Technology Services umbrella. With 21 years of experience in IT services, he has held key leadership positions in functions spanning across consulting, pre-sales and delivery.

Suranjan is currently responsible for driving growth in Cloud business for TCS, focused on application modernisation /migration involving cloud-native application development, hybrid cloud integration, microservices design, API-fication and containerisation. As an added responsibility, Suranjan also leads some strategic initiatives to strengthen TCS’ capabilities in next-gen digital services.