The Mechanics of Progressive Modernization: How It Drives Analytics and Legacy Modernization

Our last blog introduced progressive modernization, i.e., the use of managed services to streamline IT operations, generate OPEX savings, and use these savings to chip away at agencies’ technical debt gradually.

In this article, John McDonald, Head of Marketing at Infosys Public Services and Alex Yang, Principal and Head of Modernization Practice at Infosys Public Services, deconstruct this new approach, discuss its mechanics and explore how it helps public sector organizations modernize their IT and analytics applications.

John: Alex, progressive modernization leverages managed services which has been around for decades. What is new about the progressive modernization approach?

Alex: Managed services is not new. The approach has been used extensively by commercial sector organizations to transform the administration of their IT portfolio, boost operational performance, reduce IT expenditure, and create more bandwidth for employees to focus on strategic programs instead of managing IT systems. The space is witnessing significant growth as well. Studies estimate a CAGR of approximately 8% between 2021 and 2026 for managed IT services.

What’s new is the use of this model to drive application modernization and build a data-driven, responsive, or a live enterprise. And there are not many who are leveraging this approach for this purpose.

John: Before we get into the examples of organizations leveraging progressive modernization, can you outline the mechanics of this new approach and how it drives transformation?

Alex: Progressive modernization leverages managed services which is a proactive approach to maintain an organization’s IT portfolio. Through this approach, public sector organizations engage a third party to manage their entire IT portfolio, including application development, maintenance, infrastructure, business process management, testing, data management, license management, third-party solutions, etc. It is a powerful approach for organizations that lack the resources and in-house expertise to drive a successful transformation of their IT operations. It also improves collaboration and transparency, establishes systematic benchmarks to drive continuous improvement, and enables access to modern standardized processes and tools to deliver IT services.

Also Read - What is Legacy Modernization - Glossary

The onus of managing and operating IT systems is on a third party or a managed services provider. Public sector organizations can either pay a fixed price to the managed services provider or opt for alternative pricing models like outcome-based, gain-sharing, or consumption-based, i.e., pricing based on the applications being managed and the utilization percentage of those applications.

Yearly improvements in productivity, SLA, and operational cost are often baked into the contracts, and this encourages managed services providers to activate several cost levers to generate OPEX savings. This approach delivers two additional outcomes:

  1. A better understanding of the application portfolio, including the integrations, data streams, and business workflows
  2. Access to contemporary technology solutions and skilled experts across different technologies

The progressive modernization approach allows agencies to take these savings, and the two additional outcomes, to plan and implement their modernization and other digital transformation programs, creating a virtuous cycle where they:

  • Run streamlined operations, enhancing efficiency and generating between 20% to 40% in OPEX savings
  • Fund and transform IT portfolio through automated modernization and unlock data trapped across legacy systems
  • Continuously evolve the enterprise making it more agile, data-driven, and responsive to changing needs

John: These are impressive numbers. Public sector organizations today spend anywhere between 60% to 80% of their IT budgets to manage their existing systems. Even 20% OPEX savings can create a sufficient corpus to fund transformation initiatives. What cost levers do managed services providers activate to realize these savings?

Alex: This depends on the scope of services and the maturity of an organization with respect to the adoption of industry tools. But generally, the savings are generated through infrastructure rationalization, which may include cloud enablement and/or workflow optimization, intelligent automation, productivity enhancements, vendor consolidation, and labor cost.

Cost Drivers of Progressive Modernization

For example, solutions like the Infosys Live Enterprise Application Management Platform, the Infosys Live Enterprise Application Development Platform, and the Infosys Data Intelligence Platform leverage NextGen technologies like Machine Learning, Conversational AI, and Cognitive Automation along with Agile, DevOps & Microservices Architecture to accelerate time to value by up to 30% and reduce cost and effort by up to 40%.

Take the Infosys Data Intelligence Platform for instance. It automates data management and provides ready-to-use scripts that link different sources, creating a data pipeline in minutes instead of days. This saves several person/hours for an organization while accelerating their analytics initiatives.

John: How does managed services lead to modernization and scaling of analytics capabilities? Does the managed services track run parallel with the modernization initiatives?

Alex: Yes, all three tracks run parallelly. Public sector organizations can start with the managed services track. It may take up to ten months or a year to achieve a steady state and realize operational savings. This also provides an adequate runway for a managed services provider (MSP) to understand the IT system and identity modernization approaches.

MSPs take a non-invasive and automated approach to modernization. This ensures that operations are not disrupted during the course of transformation and that the organizations don’t lose the rich business knowledge they’ve built into their applications. The two most popular non-invasive approaches that work best with the managed services approach are:

  • Re-factoring or Re-engineering: Here, MSPs use automated reverse and forward engineering techniques to migrate the old code and business logic to new technologies and cloud architectures, minimizing change management and eliminating the risk of disruption.
  • Re-hosting: Also referred to as lift and shift, the re-hosting approach involves redeploying an application’s underlying resources from on-premises servers or data centers to the cloud.

Progressive modernization breaks down the entire modernization program into micro-changes, i.e., small aspects of the system are modernized incrementally through an Agile delivery approach, creating minimum viable products.

While these pieces are being modernized, the existing system is still operational and is maintained through the managed services model.

MSPs adopt a similar approach to analytics modernization. Analysis of existing legacy systems helps them understand the data within the system that can be used to generate new insights.

Since the MSPs are looking at the entire IT portfolio, they get a unique opportunity to look at all the data streams and sources that an organization can access and the gaps that exist for analyzing these different data streams/sources.

While modernizing the system, MSPs create solutions to unlock the data trapped in the legacy system and make it available to different applications to generate insights the organizations were not able to generate before. Gradually, they are able to evolve the organization from being a data-driven enterprise to a data-native enterprise.

MSPs leverage different industry-leading tools and accelerators to navigate modernization and scale analytics capabilities for an organization.

John: The solution has many moving parts. How should an organization manage this initiative? Can you elaborate with examples of agencies that used this approach to accelerate their transformation?

Alex: While it may seem intuitive on paper, executing this approach is a complex exercise. Public sector organizations need to choose a partner with expertise in executing similar programs – not just managed services but also modernization and analytics transformation under the managed services umbrella.

Depending on their current priorities and requirements, public sector organizations can choose to either lead the entire program through managed services or they can disaggregate the modules and start with either application modernization or analytics modernization.

One of our clients, a national railroad operator (agency), opted to lead with the managed services approach.

The agency had a portfolio of applications to support its internal corporate functions, including human resources, financial management, procurement, etc. Several of these applications were outdated, running on mainframe systems. The agency was struggling to maintain these applications and provide the support and services that their business users needed. They were also facing high attrition and had lost several experts familiar with these applications.

The agency engaged us to manage this portfolio of IT applications in a managed services model. They wanted to reduce their cost of operations, enhance efficiency and improve user experience.

We leveraged several tools, accelerators, and capabilities built across different technologies to streamline IT operations. In a year, we were able to reduce the cost of operations and enhance overall efficiency.

Our access to the systems allowed us to analyze several of their mainframe applications, identifying interdependencies based on deep code analysis and workloads that could be migrated to the cloud.

The agency leveraged the savings generated through the managed services model and engaged us to re-architect and migrate their 20-year-old z/OS mainframe applications and workloads from on-premise COBOL/DB2 to Java/DB2 in AWS Cloud.

This helped the agency reduce infrastructure and operational support costs by nearly 30%, accelerate time to market for new features and capabilities, reduce operational risk, and improve SLAs.

This program demonstrated that through the adoption of a managed services approach, public sector organizations could save a significant portion of their budget being spent on the maintenance of aging in-house IT infrastructure and redirect these funds towards systematically modernizing systems over time.

John: Thanks Alex for discussing the mechanics of progressive modernization. How should people contact if they need more information or if they want to leverage this approach?

Alex: Thanks John. They can contact us through the solution page for more information or to see how they can leverage this solution to accelerate their modernization initiatives.

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