Legacy applications are one of the most difficult issues to face within IT. A rip-and-replace approach is expensive, difficult to cost-justify and tends to interrupt business. Meanwhile, the legacy software lingers in accounting's ledgers, outlives its welcome in sales and causes poor network performance throughout the organization.
And it gets worse. An old mapping application in a transportation department, for instance, is a disaster waiting to happen. As the months and years go by, the problem becomes more serious and harder to address.
In the examples below -- each featuring a slightly different legacy application problem -- the key to finding a solution involved business analysis. IT staffers helped figure out how the legacy app was being used, in what ways employees depended on it and how the company would be affected by a disruption in service caused by a failure of the software. Application failures, of course, typically lead to a loss of productivity that continues during the time needed to install new software and train employees to use it.
"A core element in all these cases is that the existing portfolio [of IT applications] ought to be continuously managed for its balance of delivered value to cost and risk," says Jim Duggan, a Gartner analyst who studies enterprise IT applications.
Of course, how these companies balanced the value of software against its cost and the risk of failure, and the factors that pushed them to finally make an upgrade, varied depending on the specific business need and the exact nature of the legacy app problem.
Hudson's Bay Company and Lord & Taylor
Problem: A merger renders existing ERP systems obsolete
Solution: Wholesale ERP replacement to meet the needs of all divisions
Hudson's Bay Company is one of the oldest retail chains in Canada, having been established in 1670. The company also owns other popular chains, including Home Outfitters and Zellers. In 2008, Hudson's Bay was purchased by NRDC Equity Partners, the same company that owns Lord & Taylor, an upscale department store chain.
Together, the two companies employ about 75,000 people and generate more than $8 billion in sales, so the merger presented some challenges. One was that Hudson's Bay and Lord & Taylor were both happy with their respective enterprise resource planning systems, which came from different vendors, and neither company's system could handle the needs of both organizations. (The previous systems, which the company declined to name, ran on IBM mainframes.)
One of the main ways Hudson's Bay uses ERP is to manage deliveries to its stores.
"When we order merchandise from a vendor, sometimes it comes in from Europe and we know about how many we need by store, but it might be months before it is delivered to our company," says Dan Smith, CIO of Hudson's Bay. The resulting delay, he adds, "may change how much you need for one store versus another." Store employees often have to wait until the merchandise arrives, open the containers and then route them to other stores as needed, he explains.
Hudson's Bay decided it needed one overarching ERP system for all stores to replace the older ones. Executives knew they wanted to move away from their older mainframe systems to use newer blade servers instead. One of the problems with the mainframes was finding Cobol programmers to maintain the old ERP software. The company upgraded to supply-chain management software from Manhattan Associates in part so it would know exactly what was being delivered to stores and when it was arriving.
Some of the benefits that the upgrade yielded included process improvements and labor savings, which Smith would not detail, and the ability to consider future acquisitions that could be parlayed more easily into the existing supply-chain software.
Of course, Smith says, the overall project presented several challenges too, including the need to integrate the systems for the combined companies and the need to train staffers on the new process.
Julie Lockner, a data management analyst at Enterprise Strategy Group (ESG), says all mergers are complex, but they're especially complicated for retailers that will need to address compliance issues and figure out how old data sets will be maintained after moving to one companywide system.