Industry executives and experts share their predictions for 2023. Read them in this 15th annual VMblog.com series exclusive.
5 Predictions for Technology Modernization in 2023
By Miten Marfatia, CEO, EvolveWare
The past two years have been incredibly volatile due to the pandemic, making it difficult to accurately forecast the future of business spending. Initially organizations experienced surging customer demand and lower operational costs as the workforce began to work remotely. However, as the global supply chain hiccups escalated, raw material prices surged. This has resulted in soaring inflation and high interest rates, the likes of which we have not been seen in 20 years. The result over the last 6 months – drop-off in customer demand, strained capital availability and a sharp decrease in appetite for deal making.
All of these trends – and more – weigh heavily on the minds of C-suite leaders, who seek to more fully digitize their businesses, increase operational responsiveness, and become more profitable.
However, there are certain trends in spending that will be accelerated as a result of the current business environment and some others that will be accelerated in spite of it. Here are some predictions on how CIOs and their teams will develop IT strategies, allocate investments, and create flexible infrastructures to adapt to changing market dynamics.
Trend #1: Talent shortages will accelerate application modernization initiatives
Organizations are experiencing growing IT personnel shortages. The worldwide IT development personnel shortage will grow from 1.4 million to four million workers by 2025. This does not include the cybersecurity industry that currently lacks 3.4 million workers globally. The shortage is even worse for organizations trying to source talent with programming skills in legacy languages like COBOL. At EvolveWare, we’ve met with companies where the youngest COBOL programmer on staff was over 70 years old.
The shrinking legacy programming talent pool will only get worse as staff continue to retire, making it nearly impossible to maintain mission-critical but outdated systems, thereby increasing application maintenance costs, and creating the possibility for longer-term security gaps and business disruptions. There are 75 million Baby Boomers in the U.S., and 50.3 percent had already retired from the workforce by late 2021.
Time is of the essence. Rather than waiting until IT maintenance costs get out of control or business gets impaired, CIOs will proactively accelerate the modernization their legacy applications by investing in the latest automation technology, allowing a younger generation of personnel to take over maintenance of the modernized applications.
Trend #2: Automation will transform the calculus of application modernization
Application modernization initiatives used to be executed with non-standardized manual processes which made these initiatives unnecessarily risky and tortuous. Thankfully, technology has begun to catch up with business needs and next-generation application modernization platforms now allow defined, automated processes to be executed. This begins with documentation and analysis followed by extraction of business rules from the source meta-data or optimizing and transforming the same to modern code.
Automation significantly speeds up modernization projects and enables organizations to overcome skills gaps, create repeatable and reliable processes, reduce risks and save money.
Intelligent algorithms will continue to drive automation, making it easier to modernize applications and portfolios at speed and scale. As a result, we will hear more modernization success stories, inspiring others to move forward.
Trend #3: The drive for digital experiences will increase appetite for modernization
All consumers, organizations or individuals, relish digital experiences: from elegant interfaces to streamlined processes and personalized product offers and services. These experiences rely on integrated data and processes, enabling predictive analytics and just-in-time recommendations. However, many legacy applications that support digital experiences, such as customer relationship management (CRM) and enterprise resource planning (ERP) tools, are heavily customized and self-contained. As a result, they’re not easily integrated with cloud services, thereby creating data silos.
CIOs and IT teams will make the difficult decisions to support demands to improve customer experience with modernizing their applications. They are not likely to delay this initiative because, according to a well-known study, organizations that have begun executing on this initiative have generated returns 3.4X higher than laggards over a 12-year period, and the gap grows wider every year.
Trend #4: IT teams will leverage COTS products to speed up modernization
Gartner offers seven options for modernizing applications. One approach is to leverage next-generation platforms and use artificial intelligence and machine learning to automate processes and transform code. Another is to migrate legacy applications to commercial-off-the-shelf (COTS) products. Using COTS products enables organizations to exit the time-consuming business of developing and maintaining code, relying instead on out-of-the-box applications. Organizations win by accelerating the modernization process and focusing more on their core competency of growing their business.
Relying on COTS products will gain more traction as modern platforms using standard business rules and workflows are developed to meet organizational requirements. However, not all COTS products are of equal value. The key to successfully implementing this approach is to determine whether an available COTS product can successfully meet the target application needs. IT teams can accomplish this goal by thoroughly assessing the original application and extracting its existing business rules. Then, they can export the “delta” rules from the existing applications and export them into these COTS products, speeding the path to deploying new capabilities and achieving a high ROI.
Trend #5: To navigate a challenging economy some organizations will focus on planning by assessing their applications
The economic outlook has been darkening for some time. In the U.S., Bloomberg Economics is predicting a 100 percent probability of a recession in 2023. CFOs globally are tightening their belts by laying off staff, cancelling large capital investments, and stockpiling cash. A recession after three difficult years of pandemic-related business challenges is just another hardship for organizations to navigate.
While CFOs’ defensive actions are understandable, the C-suite will continue to plan to optimize and modernize their business with technology. Their two top priorities will be security and modernization as success in both initiatives will mean business efficiencies leading to lower operational costs and high ROI.
Mission-critical legacy systems often represent a growing source of risks, due to their programming in outdated languages, cobbled-together processes, data silos, and shrinking talent pool of support personnel. Fixing their vulnerabilities by optimizing and then modernizing these systems will be a top priority as hackers get more sophisticated and use advanced technology to pressure-test organizational networks for weak spots.
Whether the goal is to optimize or modernize, these systems will need assessment as their existing documentation is most likely obsolete, and knowledge of the current state of these systems lie in the memory of support personnel, many of them at or above retirement age. This is a good time for organizations to conduct due diligence on their application portfolios in order to fully understand the logic being executed, complexities, interdependencies, and expose areas of weaknesses.
The good news is that next-generation application modernization platforms now empower organizations to take a step-by-step approach. Using such platforms, organizations can first document their portfolio and use the included analysis features to optimize the existing applications and plan for their modernization. This phased approach results in phased spending, which is extremely welcome under tight budgets.
Harness These Five Trends to Grow the Business in 2023
During challenging times, it can be tempting to pull back on technology investments and strategic initiatives. However, history has taught us that organizations that lean into economic and business challenges become creative innovators and pull away from laggards. Netflix persevered through the dot.com bubble, ultimately transforming how media is consumed. Airbnb pioneered digital homestays during the economic downturn of 2007, grew exponentially, and pivoted to support local trips and longer-term rentals during the pandemic to protect its business. And Adobe evolved its boxed design tools into cloud-based software in 2013. The company disrupted its business model and revenues with a then unproven pay-as-you-go subscription model that has now become the norm for SaaS companies.
By developing a considered response to these five trends – talent shortages, automation advances, digital experience growth, COTS adoption and moving forward through uncertainty – organizations can continue growing and becoming more profitable.
The common thread through all of these trends is the need to modernize applications.
Agile processes, data insights, and automation provide organizations with the visibility and tools they need to make the right decisions on their modernization initiatives, while reducing risks. Success of these initiatives will enable them to compete effectively in the marketplace and the potential ROI will be one that the C-suite can support in any economic environment.
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ABOUT THE AUTHOR
Miten Marfatia is the founder and CEO of EvolveWare, a global leader in automating the documentation, analysis and modernization of software applications. An early player in the application modernization industry, Miten has helped revolutionize the approach to modernization by incorporating automation and ML into a unique platform that is successfully guiding large organizations such as the State of New York, U.S. Dept. of Defense, and Deloitte Consulting clients through complex digital transformation initiatives. Prior to EvolveWare, Miten was a founder of Perisol Technology, which provided state of the art storage solutions to corporations and government agencies, and prior to that, founded Silicon Electronics, a distributor of cutting-edge products to India’s nascent computer manufacturing industry.
Miten holds a M.S in Electrical Engineering and a M.B.A in Finance, Investment & Banking from the University of Wisconsin at Madison. He earned his B.S in Electrical Engineering from the University of Bombay in India.
