"I am trying to modernize more than 800 legacy programs," a deputy police commissioner told my company's head of Legacy Modernization. "It's absolutely one of my top priorities, so you might assume I have assembled a crack team of programmers. But every day we wheel in one COBOL expert in his wheelchair, oxygen tank and all. That's my team. If we lose him..."

The worry in that client's unfinished sentence captures better than any statistics the urgency of the legacy modernization movement. Legacy Modernization preserves investments in existing applications while evolving them to meet future needs. It can involve migrating a legacy application to a new environment, replacing a legacy system and moving the data to a new application while preserving data integrity, and moving data and functionality from various systems to fewer systems or one consolidated system.

Most large companies are taking steps to modernize their legacy applications in one way or another. According to Gartner, "By 2010 80% of smaller mainframe environments will migrate off the platform, while large environments will SOA-enable and remain on this platform."

The situation will become acute for financial institutions, according to Banking Strategies (April 26, 2006, Who Will Talk to the Mainframe Tomorrow?)1: "I'm still running 10 million lines of COBOL code," says Patrick Ruckh, an executive vice president at First Horizon. "And the reality is that the business rules running this company are still embedded in those COBOL programs."

Our experience says that legacy modernization could use some modernizing of its own. After all, how much good have you really done if you have simply migrated the old to the new - if you have just updated your applications, one at a time? The reality for most companies is a mix of Web services and legacy systems. Every time you modernize one component, there is the potential for

exacerbating the complexity of your infrastructure and multiplying your management challenges.

Legacy modernization cannot be accomplished effectively if it is approached as a pure technology challenge, e.g., if it is executed in silo fashion driven by technology issues. Instead, it must be executed in the full context of the business, which means starting first with a full business case with four essential pillars:

1. Efficiency: Deriving cost savings through legacy modernization will depend on leveraging your investment across all lines of business, and planning for the entire effort, not one component at a time.

2. Compliance: Heightened concerns about terrorism, fraud, and globalization have created enormous demands on systems. In just the past two years, the U.S. government has issued more than 100,000 new regulations that affect businesses in general, and financial institutions are especially burdened.

3. Revenue: What new revenue opportunities become available through legacy modernization? What are customers asking for that your company currently cannot deliver? Where is your pricing constrained by legacy application constraints?

4. Flexibility: If your legacy modernization efforts are not flexible and do not ultimately improve your company's ability to meet changing needs in the marketplace, it will be hard to consider them successful.

It may well be that legacy modernization has been forced on the business world because of outdated applications. But wise leaders will look on legacy modernization not as a technology deployment but as a strategic opportunity to take advantage of their future technology and business possibilities.

1 BAI article: http://www.bai.org/cs/blogs/

bankingstrategiesnews/archive/2006/04/26/4199.aspx

Bob Olson is Global Head of Financial Services at

Global Consultants, Inc. (GCI), 214-679-1196;

email: bob.olson@g-c-i.com; web: www.g-c-i.com.