A common approach to maintaining mainframe or legacy systems has been, “If something isn’t broken, don’t fix it."
Although this may have been an acceptable approach in the past, enabling enterprises to avoid the challenges and risks of modernizing their systems, it isn’t wise today with ever-evolving technological advancements and the business benefits that come with them. If business and IT leaders in the banking industry consider modernizing mainframe systems to be a big risk, they should be aware of the even bigger risks of not modernizing them, that will have an inevitable impact on the business.
Legacy Mainframe Applications Pose Challenges
Mainframe-based applications and platforms lead to several challenges, such as a high total cost of operations (TCO), technical debt and complexity, skills shortages, data silos, regulatory and risk compliance, lack of agility and slower time to market. These pose clear impediments to business growth, especially when compared to a typical cloud-native application, which can promote innovation and agility while ensuring existing business process and practices aren’t lost or disrupted.
Despite all this, 44 of 50 of the world’s top banks run on mainframes.
It is a well-known fact that most of the top banks’ core banking business runs on mainframes, offering security and control benefits while posing challenges to business agility and innovation. With so much for banks to gain in the cloud, the best approach is not to avoid modernization but to approach it more strategically. By developing clear strategies for modernizing legacy mainframes into cloud-native applications, business and IT leaders can effectively “de-risk” the mainframe modernization, accessing the full benefits of the cloud with minimal disruptions to their banking business.
Modernization projects often fail to live up to the hype due to a lack of strategic planning. According to the 2021 Mainframe Modernization Business Barometer Report, 77% of respondents said they started but failed to complete at least one modernization program, and a lack of adequate planning was cited as the primary reason for those failures.
Modernization solution owners often think about application code, databases, and data, but they seldom consider the entire platform ecosystem – the interfaces, target operations, nonfunctional requirements (NFRs), architecture and the loss of knowledge. These oversights pose major risks to modernization initiatives, irrespective of which solution customers are trying to implement. Even seemingly simple lift-and-shift or rehosting projects require planning to prepare for potential effects across the entire ecosystem. While overlooked areas are often encountered in testing or worst-case analysis during production parallel, they can delay go-lives or halt them entirely, negatively impacting the brand, revenues, and timelines.
A Holistic De-Risking Strategy
The key to a successful modernization is detailed planning, which can identify potential risks and propose appropriate mitigation strategies. This kind of holistic de-risking strategy also accounts for various critical points such as:
- Determining the requirements
- Creating the relevant architecture
- Carefully navigating design phases, irrespective of the solution (such as automated migration or rehosting, rewriting, rearchitecting or reengineering, and replacing)
- Determining appropriate automation and deployment strategies
- Assembling the right talent and choosing the governance framework