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Legacyware-Based ROI

  Article published in DM Direct Newsletter
February 1, 2002 Issue
 
  By Paul Hessinger

Legacyawareness helps build the bridge for "crossing the chasm" to more effective e-business capabilities. Most every business is focused on each percentage point increase in ROI. IT sees the business value and increased technical viability of extending host-based applications and data - legacyware - to the Web. This is casting a new light on sometimes venerable, but almost always core business systems as valuable assets. Moving well beyond the screen-scraper genre of tools, host-to-Web publishing technologies enable incremental migration to a more integrated infrastructure that allows businesses to more fully leverage ERP/CRM/SCM projects, which are legacy by nature. All of this comes at a time when further leveraging existing assets is pragmatic if not mandatory given pressures on IT budgets and time-to- market imperatives for effective customer-facing "weblications" and greatly enhanced supply chain integration.

According to a June Aberdeen Group white paper, "Extending an Existing Infrastructure to Accelerate ROI and Speed Deployment for E-Business," as much as 70 percent of all critical business logic and data resides in host-based applications. Additionally, Gartner, Inc. reports that software developers spend 68 percent of their time "gluing" applications together at an estimated cost of more than $120 billion per year.

Technology that translates data to a browser-based format and aggregates business logic from OLTP applications into a Web environment is a powerful adhesive. Resulting applications can allow employees, customers and partners to communicate across an enterprise's entire value chain. Giga Information Group estimates that the number of lines of COBOL code that run core business applications exceeds 100 billion, suggesting legacy cannot all be replaced - nor should it be. With each instance of Internet time, yesterday's applications - built with more modern technologies than COBOL - become legacyware. They should be viewed as assets from the outset or by default they become liabilities and disintegrating obstacles to an effective e- business capability.

I will use traveling as an example. Frequent travelers can recall booking a reservation directly with an airline by phone. A trip booked with a recognized pioneer in the use of IT went quickly and smoothly with few keystrokes by the reservation agent heard in the background of the call. This road warrior moved on to a second reservation with another airline. It was a bit complicated. The grunts and groans of the reservationist along with the pounding of the keyboard belies a set of truly mean, green screen-based applications with little or no integration of process or data. Eventually, at significant cost, the reservation is booked.

As the trip begins, the traveler arrives at the airport dreading a minor change to the record. To her surprise, the ticket agent deftly directs a mouse around the now browser- based aggregation of the same applications that were originally used to book the trip. The data has been translated into a far more usable format. The functions to edit a leg in the itinerary or to change a seat assignment are now only one mouse click away. The agent can communicate with the frequent flyer about the status of her account by accessing that legacy application and data that, unknown to either, sits on another computer. Within minutes, the traveler is on her way.

Still later in that trip the road warrior must make another change. She tries the Web site and finds a truly rewarding experience. Several clicks and the changes are made. Once at the Web site, the opportunity to review other itineraries reminds her of a new reservation - several more clicks and it's booked. A quick glance at accrued frequent flyer data - another application on another computer - reveals a flight not recorded in her account that a quick e-mail to customer service takes care of. This e-process is timely and less costly for all concerned. As a veteran IT consultant, she had some sense that she had crossed a chasm to the airlines' legacy systems, but most consumers would never know that well- worn data and applications were aggregated together on a useful Web site.

It is tempting to look beyond the Web to wireless platforms, just as it was all the rage to focus on deploying a Web site as a driving part of becoming an e-business, often forsaking existing systems. Wireless devices are becoming an important platform with many functions - such as checking departure status on an airline flight - that have a legacyware access aspect.

ROI- focused enterprises are looking at a spectrum of deployment platforms for delivering new functionality and extending the life and value of legacy assets.

Exporting host functionality to the desktop is a reasonably well-trodden path. Emulation technology and fat-client models were often viewed as a stopgap rather than a way to translate applications and data to a new platform. With the ubiquity and ease of use of the Web browser, it was only natural to want host applications to work inside the browser. Such tools emerged and quickly seized the opportunities to aggregate data access and business logic inside the browser, so it began to appear as a more integrated process to the user. Application server technologies such as WebSphere, WebLogic and BizTalk are achieving their own ubiquity and are now the high-end platforms of choice for extending application and data access.

A good rule of thumb suggested by Aberdeen - enabling technologies should allow 80 percent of a "new" application to be created via a drag-and-drop graphical development environment with the flexibility to customize the remaining 20 percent using technologies including HTML, XML, ODBC, EJB and JDBC. Giga Information Group in a June 29, 2001 report, "Web-to-Host Tools in 2001: A Crowded Market but Compelling Technology," highlights more detailed functionality including:

  • Hiding legacy (green screen) menu navigation.
  • Adding browser-based graphical controls to host apps.
  • Wrapping screen segments as EJB, COM and XML components.
  • Simplifying access to message oriented middleware (MOM) such as IBM's MQ Series.

The profile of a legacyware- enabling platform should also include a strong server orientation for publishing to the user platform and an explicit administration function for IT infrastructure managers.

Organizations are leveraging the extensive value of legacy data and the relevance of OLTP transactions to an e-business infrastructure. They are integrating customer relationship management and automating cross-value-chain processes. Technology that translates and publishes data and applications from legacy systems extends the value of these assets to browser-based desktops, pure Web environments and, ultimately, to wireless devices. This extends core business activities making them more accessible and cost-effective.

Consider Federal Express whose core business deals with goods it ships, not data. It built a comprehensive technology and process infrastructure to enable its core business and has evolved to enable a variety of platforms. FedEx achieved dramatic cost savings and increased customer satisfaction and loyalty by "transacting" the data that is part of its core shipping process. The OLTP systems that support this process run mostly in the background transparent to the shipper and customer. But FedEx made the package tracking data that is handled by the core systems very apparent to customers via the Web. As a result, costly calls into customer support centers were greatly reduced, and the profit margin of each shipment increased. Legacyawareness drives profit - what better value proposition for legacyware-based ROI!

Mercedes-Benz wanted to improve their customer service in Europe by reducing the vehicle ordering complexity and providing up- to-date information on car specifications and availability. Previously, dealers had to look up codes manually and enter information into multiple systems - a process that was both labor-intensive and error prone. With OnWeb technology from Net Manage Inc., Mercedes-Benz created Vision. This dealer extranet integrates with legacyware - the factory systems to handle all the order processes, including configuration, pricing, locator services, delivery times and factory slot- booking. This leveraged the investment in the existing systems and provided totally new functionality. OnWeb was able to integrate business logic that dynamically calculates the price of the car and the system checks the factory's systems for availability and production dates. The project was completed in less than 120-person days.

A major U.S. telecommunications provider has enjoyed significant growth in its wireless business. It has a very effective storefront to sell phones and rate plans. It has noticed, however, that wireless customers place many more calls to the customer care centers than its core long distance business - up to 12 or more calls per customer in a year! Each call costs approximately $8. The reason for the calls spanned the value chain - from order status to technical support to account maintenance to billing questions.

Supporting OLTP systems - built in a stovepipe manner - have valuable data but are largely islands of automation. This is an endemic problem in IT architecture even with systems being built in the Internet era. The focus shifts to a common infrastructure for more effective access to and aggregation of data to support new e-business processes that will be built as layers across the stovepipes. Customer care requirements were not effectively aligned with call center/customer service systems. By providing legacyware access, the company reduced the number of customer support calls to an average of less than one- per-customer-per-year with resulting multimillion dollar cost savings.

Otis, one of the leading elevator and escalator companies in the United States, has an installed base of over 100,000 systems. Its customers increasingly have demanded real- time information about their equipment and maintenance. Otis quickly realized that providing customers with an online self-service extranet would reduce the heavy and costly demand on their call center and free account managers to sell rather than spend time researching maintenance information, both significant ROI considerations. A new solution would need to involve minimum maintenance and support and protect the company's investment in legacy systems, specifically a mainframe and SQL server databases.

Otis hired The Allied Group, a Glastonbury, Connecticut-based Internet technology consulting firm, to recommend an approach. In less than three months, they defined the architecture, identified suitable host-to-Web technology, designed the front end and integrated it with the relevant legacy systems. The resulting Otis Connect system uses data from multiple sources including mainframe files and Microsoft SQL server databases. It performs business logic on the requested data and publishes both current and historical information graphically through Microsoft IIS to Otis customers worldwide. Volume in the Otis call center has been drastically reduced. Property managers in North America can now immediately monitor the service status and maintenance information of operating elevators. Building managers can monitor individual elevator from any Web browser.

Huttig Building Products is the largest distributor of building products in the U.S., with annual sales more than $1.2 billion. One of Huttig's biggest successes this year was the launch of an intranet site that provided a common work environment for its 60+ sites and five different production systems, plus two proprietary ERP systems. DataDirect Technologies' ODBC driver for Progress was a key enabling technology for accessing the huge volume of sales and operations data among its disparate systems. Two of the company's systems have roots in legacy Progress databases, which represent a large share of the business volume.

The new platform represents a huge timesaving for the company. The product also made it possible for Huttig to synchronize data among the systems effectively. There might be five or six tables required for lookups for a single customer record. A remote user makes a change to a record, and the application on the intranet site uses the driver to pull the information from the different tables, populate it on the screen, make the updates and send it back to update the database. The ODBC driver made it easy for Huttig to accomplish this type of exchange over a Web site.

The goal of a centralized computer system is an ongoing conversion process for Huttig. The team has an aggressive goal to combine all these systems by the close of the year. In another application, Huttig is using the DataDirect driver to pull information from disparate systems for its accounts receivable system. Accounts receivable is shared by all five systems, with hundreds of data feeds, representing millions of dollars, going back and forth on a daily basis. The DataDirect driver enables the application to pull all that information up to a single level where Huttig's IT team can view it.

When Canada's largest independent retailer of furniture, appliances and electronics wanted to speed up its credit application process in order to generate more revenue, it looked to create an application by which sales representatives could administer the whole process over the Web. The company's previous credit process was slowing down approvals and frustrating customers - a critical problem facing many retailers today.

Previously, when Brick customers applied for credit, sales representatives had to enter customer information into individual lender mainframes using green-screen terminals via remote 3270 gateway connections. Sales representatives sometimes waited up to 20 minutes for a lender approval, forcing customers to wait to see whether they would be accepted or not. If a customer did not receive credit approval from the first lender, a second application was made, requiring sales representatives to reenter the same information and wait again for a response.

Streamlining this approval process was needed to increase The Brick's business. The Brick had nearly 800 sales staff that needed to link directly to lenders' systems, all of which had unique 3270 interfaces. Through the remote gateway connections, dumb terminals took on the appearance of the lender's 3270 systems. Too much money was being spent on training the sales staff to use these different systems.

The Brick, with the help of the NetManage E-Business Consulting Group, had the a lending application system live and running smoothly in three weeks, in time for the Christmas shopping season. The E-Business Consulting Group designed a new intuitive Web interface for The Brick, which incorporated common elements of their business partners' systems. They developed the application so that The Brick's own systems capture all customer demographic information entered by the sales staff - a key portion missing in their former system caused them to miss out on marketing opportunities. This enabled them to transform what began as a customer-driven initiative into business results.

The Brick created a new application that combined the mainframe information from their lending partners into a seamless, easy-to-use Internet-architected system. Sales associates can now use a single, integrated application and receive approvals within minutes over the company's extranet. The extranet allows the sales staff to access The Brick's lenders at any time.

The new application sends information automatically to the Brick's databases and directs it to the lenders. An intuitive single-screen interface virtually eliminates training - something that had been cumbersome and time-consuming under the old system.

The Brick sales representatives have benefited because their entire credit application process is much simpler and faster. They no longer have to dedicate significant time to a customer only to find out that the application has been rejected and then restart the process with another credit partner. The Brick's customers benefit because the credit application and approval process is faster with fewer hassles and less waiting. And easier customer credit means more sales.

This case study reveals dramatic legacyware- based ROI. The Brick has seen between $1 million and 1.6 million increase in sales per month (a three to five per cent increase) at each of its 50 locations across Canada. This is a tremendous cost benefit to the company, with the entire deployment paying for itself in two days. It has established a better, more efficient relationship with its lenders, which has enabled them to offer higher quality service to their customers. In addition, newly accessible customer demographic information enables The Brick to use that information for various marketing and cross-selling initiatives.

ROI is of limited strategic value when it is only thought of as merely a formula for profit divided by investment. Any formula has to include the latent value of existing assets that can be leveraged in SCM/CRM/EAI projects. Integration underlies each of those and can become a Holy Grail-like initiative. It is the quintessential means to an end. Focusing on legacyware is one thread in the fabric of an enterprise IT strategy. Technology from companies such as IBM, iWay/Information Builders, DataDirect Technologies, Jacada, Net Manage and Seagull are allowing IT to translate and aggregate legacy data and applications into e-business systems that allow enterprises to far better communicate with customers. "Weblications" that translate and aggregate data from multiple sources and leverage existing business logic while also allowing new automated processes to communicate with that data and logic are one manifestation of legacyware-based ROI.

...............................................................................

For more information on related topics visit the following related portals...
Business Intelligence and Strategic Intelligence.

Paul Hessinger is a veteran IT industry analyst and a former ISV CEO and CTO of a major professional services firm. Hessinger is currently managing director of Vision UnlimITed, an IT research and advisory firm based on Hilton Head Island, S.C.

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