There's good news and bad news on the application modernization front. The good news is, after modernization, 25% to 30% of organizations experienced less risk than they had feared,
The bad news is, organizations are dealing with a lot of applications that weren't designed for the Internet, mobile platforms and service orientation. Of the organizations surveyed, 10% have more than 2,000 applications, and 65% have 51 to 1,000 applications.
The Forrester study, which was commissioned by HP, also found that, while 78% of organizations would greatly benefit from application rationalization and consolidation efforts, only 56% are planning to do so. The top barriers for embarking on a strategic modernization journey, according to the study, are cost, risk, business buy-in, and subject matter expertise.
The key business driver to modernize is still cost reduction, which is "no surprise," said Larry Acklin, product marketing manager, Applications Modernization Services, HP Enterprise Services, with 54% citing it as the top driver for the next three years, vs. 55% citing it as the top driver over the last three years.
What is interesting, Acklin said, is that while functionality is still the number two driver, fewer respondents cited it as a driver for the next three years (40% vs. 52% over the past three years). And that is closely followed by the drivers of consolidation (37%), virtualization (39%), reducing the number of applications (31%) and transformation (25%).
"A few years ago companies needed to add functionality, and they took a technical approach," Acklin said. "Now they're recognizing that they can't go forward with functionality changes because the environment is so complex; they have to make changes to the core. You have to get control of what you have first to enable growth."
Indeed, according to another Forrester study, more than 50% of software budgets will go to maintenance and ongoing operations in 2010 ("The State of Enterprise Software and Emerging Trends: 2010").
In that same study, 67% of respondents said consolidating or rationalizing enterprise applications was very important or important in supporting their firm's current business goals, and 66% said updating/modernizing key legacy applications was very important or important.
Consolidating and rationalizing enterprise applications
So, how are organizations going about these tasks? In the past three years, 56% have migrated from legacy platforms, while 46% have modernized in place, according the HP-sponsored study.
Tom Hall, global offering manager, SOA and Integration Services, HP Enterprise Services, said clients that have made a significant investment in legacy applications may still be getting value from them, but come up against limitations. A lot of them use a service-oriented architecture approach to "modernize in place," he said. "It's less invasive and reduces risk vs. completely rewriting applications. One approach is to externalize in a business rules engine to change how programs process data, to make them more flexible."
Acklin said a move to an SOA "depends on the client's environment. Certain workloads are doing fine, and may not have a direct future that needs to migrate to services. We have modernization strategies that hit all different methods—changing the application, wrapping it in a service, keeping it intact and moving it to a new platform, or re-architecting to a service-oriented architecture."
HP does not advocate a big bang transformation to SOA, Hall said, but rather advises an organization to look at the pain points and "how a service-oriented approach might help drive value to the business. While SOA may not be the complete approach to modernization, in many aspects it's a component to be applied."
SOA is at the core of HP's agile application architecture, which it has been building internally, Hall said. "It's built on the core tenets of SOA and the enabling products that are the foundations to SOA, from ESB to a services registry and repository." He said HP has a transportation SOA platform. Moreover, HP and the Federal Aviation Administration (FAA) overhauled the National Airspace System (NAS) to one based on a service-oriented architecture.
A strategic modernization plan
So how can an organization embark on a strategic modernization plan, rather than a tactical one? The HP-sponsored study found that the number one accelerator is the ability to bring all parties to the table to reach an agreement (32%), followed by an increase in funding/staffing levels (25%) and the ability to make a proper business case (22%).
"If the discussion is more on the CIO side of the house, SOA is frequently part of their vocabulary," Hall said. "If it's more on the business side of house, it's more about how can we bring features/functions more quickly."
Bringing all sides together to assess and rationalize applications and infrastructure is key, Acklin said, and "understanding the business issues of why you're modernizing."