How to Justify Legacy Application Modernization to your CFO – LANSA Blog

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“Our ERP system happens to run on IBM i, which is often and mistakenly earmarked as a legacy platform. Using LANSA and with a renewed focus on our existing ERP system, we have proven to be more flexible and productive than a packaged ERP like SAP ever could be.”

“Our ERP system happens to run on IBM i, which is often and mistakenly earmarked as a legacy platform. Using LANSA and with a renewed focus on our existing ERP system, we have proven to be more flexible and productive than a packaged ERP like SAP ever could be.”

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Justify Legacy Application Modernization to your CFO - Episode 1

How to Justify Legacy Application Modernization to your CFO

There is so much talk about legacy application modernization that you could be forgiven for thinking that every old 5250 app has already been dragged into the 21st century. But you and I know that’s not true. In fact, a typical reader of this blog will be running at least one of their core business applications in so-called legacy mode. So what is standing in the way of progress – apathy, fear, cost?

My experience from working as an advisor to many IBM shops (AS/400, iSeries, IBM i) has taught me that the major impediment to starting an application modernization project is cost or, more specifically, how to justify the total investment required and thereby secure the funding. This post is part of a series where I will share the tips and techniques that have been used successfully to present an application modernization project for budget approval. As with many things in life, it is often the way that you present and position something that makes all the difference on how it is perceived and received by others.

You understand that modernization has moved well beyond screen-scraping your legacy applications.

You understand that modernization has even moved beyond re-organizing functionality into an intuitive user-framework.

You understand that modernization now includes workflow optimization, process automation and integration that extends beyond your four walls.

 

You understand all that and more … but none of that matters as your CFO tuned out seconds after you started talking.

Here’s the thing. Your CFO does care about legacy application modernization, they just don’t realize it yet. Your job is to position it so they can embrace it – even if it becomes ‘their idea’ all along!

Let’s start with what you have:

  • A legacy application, homegrown, semi-monolithic, originally written in the 90s (by the recently departed CIO), maintained ever since, running your core business transactions.
  • A stable, scalable and generally misunderstood hardware platform.
  • 10 developers (well it used to be 10, now it’s 5, including you) that maintain your applications.
  • 1,000 customers that have always been the demanding type, but now the important ones want you to “partner” with them to streamline their business … or move aside.

Now let’s dream up what you want:

  • More than 3 rounds of golf per year.
  • Fewer than 3 cold dinners per week.
  • An application that your users brag to your top-brass about.
  • An application that lets your execs self-serve their own dashboard of reports, happily.
  • Agility to respond to the needs of the business, without putting the business at risk!

OK, now how do you get your CFO to fund this journey?

  • Don’t talk about modernization.
  • Don’t talk about the merits of .NET, XML, SOA, SaaS, blah, blah.
  • Talk cost-reduction.
  • Talk customer satisfaction.
  • Talk market-share.
  • Talk money!

But wait  a second … don’t walk into the CFO’s office just yet. You need a plan. Just follow these proven steps to success:

Step 1 – Find the right application modernization initiative

Don’t just listen to the business on a daily basis (reactive), instead coordinate periodic meetings to challenge current operations, policies, etc.  Become pro-active. Brainstorm from several perspectives: business objectives, market share, customer satisfaction, current operations, HR implications, financial risk, product or service innovation, etc. If you’re not already doing this, schedule your first monthly/quarterly sitting now … really.

Bring process engineering and technology to each issue/opportunity.  Ask “What if?”  Teach your business community to focus on inputs and outputs rather than how they work today.

Picture yourself there.  How would operations look?  Would you drive more revenue?  Open a new market?  Be more responsive? Reduce costs?  Improve PR?  Improve HR?

Picture it from the CFO’s perspective.  Be realistic bordering on pessimistic.  How much effort would it take?  How long would the benefits take to realize?  What could go wrong?  If it fails, can we recover?  Wouldn’t we be better off waiting another year to see if the market changes?  CFOs don’t want a naïve rose-colored sales pitch.

The right initiative is one that will help the organization further its mission and appears to be clearly justifiable – but more R&D work is needed to draw it out.

Step 2 – Start planting seeds early

No CFO will approve a significant project the first time they hear of it.

No CFO will approve a significant project coming from only one source.

Think of the initiative from the perspective of each department head.  Would the initiative be welcomed, dreaded, feared, slowed, stopped or stolen?

Gain preliminary support from all key areas of the organization by showing what’s in it for us all.  Be ready to make some reasonable adjustments to garner support.  It’s like passing a bill through Congress!

Partner with a Business Sponsor that is willing to support the objective and work with you to get there.

Inform the CFO of your early initiative, what you have done so far, and that it looks very promising, but there is lots of work to do before you are ready to gain the CFO’s valuable perspective and critical assistance (just add butter).  Don’t detail your R&D plan too much / too soon, but offer a milestone date by which you expect to be able to present it.

Step 3 – Do homework to justify a project scope

Interview business areas needed/impacted to ground the solution vision.  Meanwhile, capture support for the vision and garner willingness to assist in the sale and subsequent project stages.  You want to be able to show the CFO that Bill in Manufacturing and Jill in Marketing support this and will assist to make it so.  Ideally Bill and Jill are in the presentation to the CFO – but don’t gang up on the CFO.

Build a preliminary business case, but keep it simple and back it up with figures.  Don’t snow.

Step 4 – Gain CFO support for a deeper study / project scope / RFP

With the sponsor, co-present the business vision, business case and potential ROI sources.

Size and timeline the project’s estimated effort/costs and benefits/ROI.

Overview the work to date, information that is still needed, list the project scope deliverables, identify the project scope team (internal and external).

Size and timeline the project scope’s estimated effort/costs and benefits (i.e. decision-support information)

End by highlighting the desirable future-state and how it supports the organization’s mission.

Ask for the green light to proceed with the study and book a first exec/CFO update meeting.

These first steps will get you well on your way to securing the funding for an application modernization project. In my next post I will cover the follow-on steps like conducting the project scope, calculating the predicted ROI and how best to run an application modernization project  – they are different from regular application development projects.

Read Episode 2

Read Episode 3

 

Author:

Steve is a Director of Professional Services for LANSA in the Americas. With a solid academic background in mathematics and software engineering, Steve began his career as an application programmer using many different languages and platforms. In his 18 years with LANSA, Steve has played roles of architect, designer, project manager and quality manager on many large and innovative projects and actually prototyped LANSA’s very first web application. Steve is a regular speaker at LANSA user conferences, has presented at various seminars and has written technology and project management articles for industry publications.

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