Wednesday, March 11, 2009

The time for IT Transformation is now

A while back a politician, whose ideology I didn’t particularly agree with, was found to be spot on about a controversial position. I mumbled a comment about broken watches marking the correct time twice a day. My teenage son Alex, overhearing my snide remark, replied with that characteristic perspective of his, “Not if the watch is digital!”

Information technology is in the midst of a revolutionary revamp. Many, if not all, information systems deployed in the last two decades have become fully depreciated, obtuse, or are too inflexible to respond to new business demands. As a result, legacy systems can’t easily leverage the extraordinary facilities brought forth by emergent technologies such as the Internet.

According to industry watchdogs such as Abeerden Group, Fortune 500 companies, including banks and insurance companies, are sitting in over 500 billion lines of COBOL. As recently as the year 2000, approximately 70% of all mission critical applications were running on legacy technologies, even though, as indicated by Gartner, systems using SOA (Service Oriented Architecture) for mission critical purposes were ramping up from a current 50% to an expected 70% by the year 2010.

What these statistics show is that we are right smack in the middle of an accelerated rate of technology transformation. Computer systems have now been around for over fifty years and every succeeding technology generation has piled up the number of legacy technologies that must be supported; technologies that, under the law of diminishing returns, are becoming less and less capable of meeting the speed of business.

The advent of IT practices and concepts such as Service Oriented Architecture (SOA), Software as a Service (SaaS), and Open Systems, combined with the globalization of the IT workforce have revolutionized the IT landscape. Whereas traditional IT processes were established over several decades to mirror a mainframe-centric view of data processing, new IT approaches can better mirror and support the business.

For many, the turning point where it might make more sense to completely transform the IT systems has been reached, but they may have not yet realized this. The question there is whether it makes sense to undertake a radical transformation or to continue the gradual tactical satisfaction of requirements via incremental upgrades. The answer is not always clear. Radical transformation requires a deep commitment and, frankly, it often represents a significant risk. Gradual improvements, on the other hand, may solve the short-term challenges while digging a bigger hole of continued years of inefficient IT operations.

Compounding the challenge, as I write this, we find ourselves experiencing one of the biggest worldwide financial and economic meltdowns since the grand depression.

There will be, no doubt, those who suggest that this time of economic hardship is not the ideal time to begin work on IT transformation. However, if history teaches us anything, it is that the companies and ventures that emerged most successfully from previous crises were precisely those that continued their investment especially during downturns. These players took advantage of the hidden benefits of a crisis: lower labor costs, new opportunities arising from a transformative macro-economic environment, and that innovated to open new opportunities to compete. It took a truly catastrophic event—a ten mile wide asteroid striking the earth—to wipe out the dinosaurs after an existence of more than two-hundred million years and to open the world to the eventual success of mammals—a class of animals that previously lived a very-contented rodent life but that given the opened possibilities presented by that worldwide catastrophe was nevertheless able to change, adapt, and thrive.

There’s something to this analogy. These are the very times that call out for change.

This Blog will be all about transforming mission-critical IT environments from hard-to- maintain legacy systems to modern systems. I admit to this clear bias (call it an assumption): Sensible IT transformation projects today should follow a Service Oriented Architecture (SOA).

Why? Well, SOA enables technology transformation today in much the same way air travel enabled globalization, or the way Internet enabled on-line shopping. Consider this: actual B2C revenues grew smoothly from 1997 to $70 billion in 2002, even in the midst of the dot-com bubble bursting; by 2004 B2B business was almost $1 trillion from “only” $56 billion in 1999 [1].

If anything, pursuing SOA as part of an IT transformation solution should remove the need for yet-another technology transformation effort such as the one you may have to tackle now or in the future. When done properly, SOA should establish a foundation that can evolve the system so that future transformations can actually live the dream of being able to expand in a more graduated, graceful fashion.

This Blog contains companion material to a book I'm writing, "IT Transformation with SOA—Tips, Techniques & Tribulations."

So here it goes. I hope that you find this notes interesting and useful . I most certainly look forward and welcome your comments!

[1] “The Singularity is Near”—Ray Kurzweil