Infrastructure

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Paul Averna
Paul Averna
Commentary
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Why Your Existing IT Assets Hold the Key to Modernization

More often than not, the most prudent path to IT modernization does not lead to new systems, but to the better leveraging of existing IT assets and applications.

A thought-provoking recent Insurance & Technology article, The Rocky Road of Modernization, examines top challenges that insurance companies face today in replacing and modernizing existing core systems.

The analysis raises salient points around the importance of a customer-focused approach and operational efficiency to effective, modern IT strategy for insurance firms. The article outlines possible IT strategies for effective change, including the assertion that, “Systems produced today” are “better able to handle the modern … environment.”

This reflects popular opinions about older IT systems and the value they can deliver to insurance companies. But it may be a misperception. More often than not, the most prudent path to IT modernization does not lead to new systems, but to better leveraging existing IT assets and applications. For insurance companies embarking on IT modernization initiatives or evaluating whether it makes sense to do so, there are a handful of considerations to keep in mind. 

[The State Of Policy Admin Systems Modernization]

Don’t rush to rip and replace existing IT systems
When organizations set out to rip and replace their so-called legacy applications, removing a decades-old working system can be difficult. Even if the effort succeeds, a lot of money is spent for very little in return. What replaces it is -- fundamentally -- merely a like-for-like equivalent. Yet extensive budget, resources, and upheaval are consumed on this venture.

And in reality, the viability of system-wide replacement carries considerable risks that often exceed modernization of existing IT assets. Swapping out one system for another compels the organization to cope with significant changes, including functional equivalence, data integrity, user acceptance, training, hardware, and software commissioning, among others.

The new system is untested, the system being replaced is undocumented, and the possibilities for errors are huge. Studies undertaken by industry commentators and analysts talk about failure rates of between 40% and 70%, depending on the nature of the project, where implementations are excessively late, over budget or just never delivered.

So what motivates an organization to rip out perfectly good business applications and replace them with new code that may or may not do exactly the same job? It may be the result of a false assumption that sticking with the same systems will not enable the company to meet future needs, or a surface-level diagnosis of what the IT and business challenges are.

Before rushing to rip and replace existing IT systems that in most cases are highly capable and future-proofed, insurance company CIOs and IT decision-makers must gain a deeper understanding of the scope of the problem and employ a pragmatic approach to fixing processes -- without jeopardizing existing services or adding to the IT backlog. An optimal starting point is focusing on the backlog at a systemic level. Isolating and planning backlog busting projects is facilitated by new incarnations of application knowledge technology, and smarter tools for making application changes.

Understand the enduring value of COBOL
The I&T article notes that older systems are “expensive to operate” and rely on “outdated” skills, such as COBOL programming. True, COBOL is one of the oldest programming languages around, brought into the world by Grace Hopper in 1959 -- but it is far from outdated and one could argue more essential than ever in enabling insurance companies to innovate and modernize mainframes and existing enterprise applications. Even today, COBOL powers 70% of all business transactions -- everything from ATMs to point-of-sale systems and the filling of healthcare prescriptions. Currently, 250 billion lines of COBOL support today’s core business applications -- with 1.5 million new lines written every day.

Critical insurance applications running COBOL are, from a maintenance perspective, easier to understand and manage than equivalent languages. In terms of available skills, most developers in 2014 -- with their knowledge of Integrated Development Environments (IDEs) such as Eclipse or Visual Studio -- can easily pick up COBOL, the latest versions of which also work within these environments. Furthermore, today’s COBOL applications can be deployed onto modern architecture and platforms such as cloud, Web, and mobile without the risks and costs usually associated with rewriting applications.  

Beware of “hidden” technical debt
For insurance company CIOs and IT decision-makers evaluating the upfront and ongoing costs associated with modernization projects, it is easy to assume that systems produced today are less expensive to maintain due to the programming languages that power these systems.

Take Java, for example. While it performs well for mobility requirements, it can lead to higher “technical debt” -- the Gartner-coined term that defines the eventual consequences of poor system design, software architecture, or software development within a code base. According to CAST Software’s CRASH report, the estimated technical debt of Java is $5.42 per line of code, compared to $1.26 per line of COBOL.

Those planning to implement a modernization project should assess risk, cost, competitive advantage, and time to implement as key considerations. Reusing current working, trusted systems, then defining appropriate strategies to modify them, requires lower-scale change that delivers value improvements quickly, but without undue risk of assuming high technical debt. Interestingly, the same reuse strategy helps tackle issues around compliance and IT backlog, concerns which also weigh on the insurance sector.

Additionally, it is important to note that modern COBOL development tools enable organizations to address application performance gaps (in Web, mobile, and cloud) with lower enablement risk than alternative rewrites to Java or repackaging. 

The market expects insurers to be cost-efficient and -- naturally -- risk-averse. Embarking on a modernization strategy based on reuse is a low-risk route to better customer service and operational efficiency. Sticking with the programming language that has successfully underpinned the core application since it was created is not “outdated,” but forward-thinking and ultimately common sense.

Paul Averna is Vice President, Enterprise Solutions, at Micro Focus, a leading global provider of application modernization software. View Full Bio

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ccox_ee
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ccox_ee,
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5/2/2015 | 4:18:01 PM
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Paul Averna
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Paul Averna,
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1/9/2015 | 6:56:05 PM
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Jaypatadiya
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Jaypatadiya,
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12/23/2014 | 3:27:49 AM
Is it really cost effective to modernize your technology with Legacy Languages?
There is too much of discussions on net about the Death of the legacy programming languages like COBOL. Businesses need to think from multiple perspectives to adopt to new technologies or modernize their technologies. The first and foremost is to focus on the future rather than looking at the current business situations, current costs and time to implement. If you keep on using your old programming languages to modernize, would you be able to get the cost effective resources after 5 or 10 years down the line? 

I was reading through blog of Institute of Engineering & Technology with title as "Dearth of COBOL programmers threatens business" there was lot of comments and people were talking about the current education system adoption of new technologies. I even agree to fact that hardly any school or college would be teaching COBOL these days and even students wont prefer to make their career in the COBOL. How would you get 3 - 5 years experienced programmer for COBOL in the future? 

Hence, while thinking of adopting the new modernization strategy, CIOs and Technology Leaders should think of adopting latest technologies like .Net and PHP where you get abundance of resources at great cost-effective rates. CIOs should also focus on adopting architectures which includes Bootstrap, AngujarJS, HTML5, CSS3 with cloud based technologies and create scalable, next generation applications. I agree that it would seem costly at this point of time and will take time to implement but it gives peace of mind, and better management, maintenance & enhancement of the applications in time to come.

Personally from my perspective, if businesses adopt the latest technologies and shift their technologies while modernizing their systems, they would only require to compromise on time to implement as cost can be easily managed due to lot of experienced companies available with experience on Insurance Domain at offshore locations like India and China. 
BalakumaraaP414
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BalakumaraaP414,
User Rank: Apprentice
12/22/2014 | 4:56:42 AM
Re: How is technical debt measure for cloud & mobile?
Core Insurance systems should be able to cater the mordern day needs, that should able to support Client centric approach. Not only the technology of the outdated Legacy systems, but also the old Processes itself is obselete and need to be changed.

There is a need a complete system study, understand the Requirements and scope first. Then you should decide on the suitable technology. Using the same Technology and re-engineer the system is not a good solution. You have to think about the future and should able to compete with your compititors.  

Cloud SaaS solution would be most cost effective and Agile. Even you can leverage Big Data technology on top of the Core Application and have various Analytics, that would facilitate a complete Client centric approach.
GizmoxTS
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GizmoxTS,
User Rank: Apprentice
12/21/2014 | 4:35:26 AM
How is technical debt measure for cloud & mobile?
The technical debts using "language" or "environment" (i.e. COBOL, Java, C) are useful up to a point. What would be more useful to CIOs and technical "modernizers" are architecture related "cut" of the data. How will "batch" or "single user" (i.e. mainframe or client/server) system modernization to the mobile and cloud technologies used today measure with respect to modernizing (i.e. what is their technical debt)?
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