Discussions about information technology (IT) and business are often focused on new and emerging capabilities that will be developed and delivered. However, in practice, information technologies have a lifecycle. Many times, an information system’s role in business operations may extend the lifecycle. These systems are often described as ‘legacy.’ Ward and Peppard describe the role of legacy systems,
All organizations have to live with the legacy – asset or liability – of the applications previously developed, and often developed for reasons and using methods relevant to the past. (Ward & Peppard, 2002)
The continued use of legacy systems presents costs, risks, and issues to the organization. However, replacement of legacy systems also carries associated costs, risks, and issues. Businesses leadership must analyze and evaluate the costs and risks of the options surrounding legacy technology when deciding whether to replace or continue to operate these systems. As a large enterprise that has used information systems for several decades, one of my clients has several legacy systems that must be managed and maintained. For example, one legacy system used by this client is a Harris Mainframe used to run product quality assurance tests.
For my client, the Harris mainframe supports a product with a contract life cycle that is very long. The product has been in production since 1983 and the research and development contracts pre-date the procurement contracts. The value of the latest installment of the procurement contract has been reported to be worth $1.6 billion.
The contract specifically names vendors, makes, and models for equipment used to run quality assurance tests. Among the specified equipment listed is the Harris mainframe. Harris is no longer in business and no companies are continuing production of Harris mainframes. In addition, the segment of the information technology workforce that is familiar with mainframes is shrinking. My client faces risks of an existing Harris mainframe failing and being unable to find parts or labor with which to repair the system.
In addition to operational risks, continued use of the legacy Harris mainframe also reduces the effectiveness of quality reporting on the product line. Newer contracts have quality assurance systems that have real-time integration into the company’s enterprise resource planning system. Business leaders and product managers are able to review and analyze quality results using real-time data. The Harris mainframe is unable to provide real-time test results. As a result, product managers must operate with quality data delivered in batches.
My client has taken several steps to mitigate the risks associated with the Harris mainframes. The company has elected to keep a stock of replacement parts acquired from third parties as mitigation for failing parts. In addition, my client keeps a few retired Harris engineers on retainer to further mitigate the risk of the mainframe failing. The cost of maintaining the parts and retaining specialists is less than $100,000 per year.
Another risk mitigation option would be to re-negotiate the product contracts to allow for an upgrade of the Harris mainframe to a more modern and sustainable technology. The customer is the U.S. government and allows for renegotiation of the contracts, but costs would be borne solely by my client. Contract re-negotiation costs are estimated at $10 million. The company has made a business decision to defer the costs of renegotiating the product contract to a later date. The difference between the costs of mitigating failures with spare parts and retained labor versus the costs of a contract renegotiation are the primary driver.
Legacy systems are an unavoidable aspect of managing information systems in large organizations. Careful analysis of the costs and risks along with good planning allow IT practitioners to succeed in operating these systems. The use of Harris mainframes as part of the quality assurance for my client’s product line serves as a useful case study for evaluating the costs of legacy systems and making business oriented decisions regarding operating versus replacing older technology and solutions.
Ward, J., & Peppard, J. (2002). Strategic planning for information systems (Third Edition ed.) John Wiley & Sons.