"The board knew that the business had changed and that the legacy system wasn't built to deal with the kind of claims processing and transaction products we had," Roberts says. "They knew that if we created a new product, the old system would limit our ability to roll it out. We had to make it very clear that waiting any longer could really hold us back."
The migration was approved, the money found. Roberts went to work pulling apart his legacy applications in October 2000. He plans to finish by the end of 2003.
Selling Your CEO on Legacy Modernisation American Home Products' legacy system, according to its CIO, was ready for the junk pile. "We were dealing with a system that was weak in function and antiquated in platform, and to redefine our business processes we had to reconfigure the system. It was that simple," says Fadem.
When multiple, disparate systems begin slowing a company's growth, it's time to take action, no matter the state of the economy. But first the executive board has to give the thumbs-up. And when times are tough, selling infrastructure projects can be problematic.
To successfully sell a large-scale migration project to executive leaders, CIOs must present decisive evidence that the project will save money and strengthen the business.
"You have to fully understand the benefits of migrating, and discuss those benefits from a business perspective by showing how the project ties in to the company's strategy," says Al Biland, CIO of Snap-On, a Wisconsin-based power tool and equipment manufacturer with $US2.1 billion in revenues. "That can be by making the company more operationally fit, by cutting costs or by generating profitable growth."
When Murray became CIO of New York City-based AIG, no one knew how much money the $US46 billion financial services company was spending on maintaining its legacy systems. He organised a total cost of ownership study that served as a benchmark for the cost of maintenance and illustrated how much AIG could save in terms of money and efficiency if the company migrated to a Java-based system. The figure Murray came up with got the attention of his executive board. (Murray declined to share that figure with CIO.) "I told them that we could be saving 30 per cent of what we were spending on maintenance if we moved from mainframe to thin client," he says. "Their jaws hit the floor. They said: Â'It costs us that much?'" Murray presented his board with the ROI of migrating over a five-year period and showed how the project would increase employees' efficiency by reducing the hours spent on manual processes and maintenance. The study indicated that a migration would drastically improve AIG's speed to market and its customer service. That, Murray says, made the biggest impression. "The executive team liked hearing how the project would improve the business," he says. "And they gave us the money we needed."
In a cost-cutting environment, the theory that migrating now will provide a competitive advantage later needs to be advanced with caution, says Wayne Kernochan, managing vice president of platform infrastructure at the Aberdeen Group, a consultancy in Boston.
"CEOs and CFOs have to look at the issue in both the short and long term," Kernochan explains. In order for them to believe that their CIO understands their position, the CIO must acknowledge that the ROI of infrastructure modernisation will not immediately be realised even as he demonstrates that spending now will reduce maintenance costs. At the same time, the CIO can argue that "once we're out of the downturn, the advantages of revamping business practices now will become very clear", says Kernochan.
Plus, the pain of migration, in both cash and time, is not what it once was.
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