Find a Better Boat (for your Workloads – Part 3)
Repurchasing and Retiring Applications for Modernization: A Cloud-Native Migration Approach
December 2, 2024
Introduction
Today, many enterprises find they have moved the workloads to cloud, but are increasingly faced with performance issues, barriers to new cloud capabilities due to legacy application architecture, financial over-runs and significant technical debt where they lack the budget and/or skills to address.
In short, these organizations find themselves ‘Stranded’ between legacy IT and modern Cloud capabilities.
Working with hundreds of enterprises, we have generally found that three patterns that provide a path forward.
The Three patterns:
Pattern 1 – Optimize: Optimizing Workloads through Refactoring and/or Replatforming. In this pattern, enterprises are seeking to improve their technology lot through lift, tinker, and shift actions, that is ‘just enhance it’. This is the focus of this posting. I call this pattern the ‘Un-stuck yourself’ pattern.
Pattern 2 – Enhance: Repurchasing and/or Retiring Workloads (Part 3, coming post). In this pattern, the enterprise seeks to ‘replace’ a workload by finding an alternative provider, such as a SaaS application, and retiring the existing workload. (Part 3, coming post). I refer to this pattern as ‘We are going to need a different boat pattern.’
Pattern 3 – Reinvent: – In the Reinvent pattern, organizations are fundamentally and deeply considering the need and purpose of the workload, the business processes, partnerships and, yes, the application(s) from the ground up. Often, there is a desire to leave behind business as usual or business as envisioned and ‘leap forward’ by re-envisioning how the business will work, perhaps serverless with AI-based engagement for example.
The Enhance Pattern
In the journey toward modernizing IT infrastructure, organizations often face the challenge of deciding how to handle their existing legacy applications. With the rapid shift toward cloud computing, it’s critical to decide how to migrate or transform these applications effectively to take full advantage of cloud-native technologies. Two key strategies that are frequently used in this process are repurchasing and retiring applications. Both approaches allow organizations to transition from traditional, on-premises infrastructures to the cloud in different ways, depending on their business needs, application requirements, and modernization goals.
This blog will explore what Enhancement, that is repurchasing and retiring applications mean in the context of modernization, how organizations can migrate from traditional infrastructures to cloud-native environments using these strategies, and the trade-offs, benefits, and challenges associated with each.
What is Repurchasing?
Repurchasing refers to the process of replacing an existing application with a new, commercial off-the-shelf (COTS) solution, typically a cloud-native application or SaaS (Software as a Service) product. This approach is often used when the legacy application no longer meets the organization’s needs, lacks scalability, or is too costly to maintain. Repurchasing involves adopting a new software product that is purpose-built for the cloud or that aligns better with modern business processes.
For example, a company might migrate from an on-premises Customer Relationship Management (CRM) system to a cloud-based CRM like Salesforce, which offers more features, scalability, and accessibility, and is easier to integrate with other cloud services.
How to Migrate via Repurchasing
- Assess the Existing Application: Understand the features and capabilities of the current application, including its dependencies, integrations, and customizations.
- Evaluate COTS Solutions: Research and select a suitable cloud-native or SaaS solution that aligns with business requirements and offers scalability, security, and ease of maintenance.
- Plan the Transition: Plan the data migration, integration with other systems, and ensure compatibility with other cloud-based tools the organization uses.
- Implement the New Solution: Deploy the new application, train users, and migrate necessary data from the legacy system.
Benefits of Repurchasing
- Speed: Using an off-the-shelf SaaS solution can significantly reduce the time and effort required to implement a new system, as much of the heavy lifting is done by the SaaS provider.
- Scalability: Cloud-native solutions are inherently scalable and can easily grow with the organization’s needs.
- Cost-Effectiveness: Eliminates the need for on-premises infrastructure and reduces long-term maintenance costs.
- Security and Updates: Cloud vendors handle regular updates, patches, and security, which frees up IT teams to focus on strategic initiatives.
Challenges of Repurchasing
- Vendor Lock-in: Migrating to a specific SaaS solution can create dependency on that vendor, making future transitions or integrations with other tools more complex.
- Customization Limitations: SaaS solutions might not fully meet the specific needs of the organization, and customization options may be limited.
- Data Migration: Migrating legacy data into a new system can be time-consuming and complex, especially if the formats or structures differ significantly.
What is Retiring an Application?
Retiring an application means completely decommissioning the legacy system and discontinuing its use. Rather than migrating to a new, cloud-based solution, an organization may choose to eliminate the application altogether and either replace it with manual processes, new workflows, or other software that provides the same or improved functionality. This approach is typically used when the existing application is outdated, no longer relevant to the business, or too costly to maintain.
How to Migrate via Retiring
- Identify Redundant or Outdated Applications: Review the legacy applications to determine which ones are no longer necessary or beneficial for the organization.
- Assess Impact: Evaluate the impact of retiring the application on business processes, employees, and customers to ensure a smooth transition.
- Develop Alternative Solutions: Create new workflows or processes to replace the functionality of the retired application. This could involve utilizing cloud-based tools, automation, or simplified processes.
- Decommission and Transition: Safely decommission the legacy system, migrate any remaining data if needed, and transition users to the new processes or tools.
Benefits of Retiring
- Cost Savings: Retiring applications eliminates the ongoing operational costs associated with maintaining legacy systems, including infrastructure and licensing fees.
- Streamlined Operations: By eliminating outdated systems, organizations can simplify their IT landscape, reducing complexity and potential points of failure.
- Focus on Core Functionality: Organizations can replace outdated systems with more efficient, modern tools or processes, focusing on what’s truly necessary for business success.
Challenges of Retiring
- Loss of Historical Data: In some cases, retiring a legacy system means losing access to historical data unless it is migrated to another platform.
- Operational Disruptions: If not properly planned, retiring an application could disrupt business operations or result in productivity loss as employees adapt to new ways of working.
- Change Management: Employees and stakeholders may resist the change, requiring significant training and communication efforts to ensure smooth adoption of new systems or processes.
Repurchasing vs. Retiring: Key Differences
| Aspect | Repurchasing | Retiring |
| Definition | Replacing an existing application with a cloud-native or SaaS solution | Decommissioning an application and discontinuing its use |
| Goal | Modernize and improve functionality by adopting a new system | Eliminate unnecessary legacy applications and processes |
| Cost Implications | May involve subscription fees or licensing costs for SaaS solutions | Can lead to long-term cost savings from eliminated maintenance and infrastructure costs |
| Impact on Existing Workflows | Minimal disruption if the new system fits well with business needs | Significant change in workflows, may require new processes or automation |
| Customization | May be limited depending on the SaaS solution chosen | Little to no need for customization, as systems are phased out |
| Scalability | Highly scalable as most cloud-native solutions offer flexible scaling options | Depends on what is implemented to replace the retired system |
When to Use Repurchasing vs. Retiring
- Repurchasing is ideal when an organization needs to replace a legacy system that is no longer efficient or secure but still provides critical functionality. For example, a business may have a legacy enterprise resource planning (ERP) system that is complex to maintain and unable to integrate with newer technologies. In such cases, migrating to a cloud-based ERP system like SAP S/4HANA or Oracle Cloud ERP can modernize operations and improve scalability.
- Retiring is more appropriate when an organization has outdated, underused, or redundant applications that no longer contribute value. For instance, a company might decide to retire a legacy HR management system in favor of a simplified, cloud-based solution like Workday or even build new HR processes from scratch without relying on an application at all.
Case Studies: Application & Infrastructure Modernization Using Retirement and Repurchase Approaches
A global manufacturing company with a large portfolio of legacy applications and infrastructure, primarily running on outdated on-premises data centers, was facing significant challenges in terms of scalability, cost efficiency, and security. The company’s IT systems were becoming increasingly difficult to maintain, with aging hardware and software platforms, rising operational costs, and limited flexibility to adopt new technologies.
As part of its digital transformation strategy, the company aimed to modernize both its applications and infrastructure. This would involve a combination of retiring obsolete systems and repurchasing new, cloud-based solutions to meet current and future business needs. The company decided to use two primary approaches: retirement (discontinuing outdated technologies) and repurchase (replacing legacy solutions with modern equivalents, often leveraging cloud services).
This case study explores how the company used these two approaches—retirement and repurchase—to successfully modernize its applications and infrastructure.
Retirement Approach: Discontinuing Legacy Systems
The first step in the modernization journey involved assessing the current state of the company’s applications and infrastructure to identify legacy systems that were no longer providing value or were too costly to maintain. This process included evaluating each application and system for its relevance, performance, cost-effectiveness, and potential for future scalability.
Example 1: Retirement of Legacy ERP System
- Old System: The company was using an on-premises, heavily customized Enterprise Resource Planning (ERP) system, which had been in place for over 15 years. Over time, it became increasingly difficult to integrate with new technologies, and the software vendor stopped providing updates, leaving the company vulnerable to security risks.
- Retirement Decision: After a thorough analysis, the company decided to retire the old ERP system entirely. This involved decommissioning the system, migrating data to newer platforms, and discontinuing support contracts. The retirement was justified by the high operational costs of maintaining the system and the inability to scale it for modern business needs.
- Outcome: By retiring the old ERP system, the company significantly reduced its on-premises infrastructure costs and improved operational efficiency. They were able to redirect resources to more strategic initiatives, such as cloud-based solutions and digital transformation projects.
Example 2: Decommissioning On-Premises Data Centers
- Old System: The company operated several on-premises data centers that hosted both legacy applications and infrastructure. These data centers required significant investment in hardware, cooling, staffing, and maintenance, leading to high capital and operational expenditures.
- Retirement Decision: The company decided to retire its on-premises data centers in favor of a hybrid cloud infrastructure. This shift was driven by the high operational costs of maintaining physical servers, the need for better disaster recovery, and the desire for improved scalability and flexibility.
- Outcome: The company achieved substantial cost savings by migrating to the cloud, reducing its data center footprint, and eliminating the need for costly hardware maintenance. The cloud environment also offered better disaster recovery options, higher reliability, and the ability to scale resources as needed.
Repurchase Approach: Replacing Legacy Systems with Modern Solutions
Once the legacy systems were retired, the company moved to the repurchase phase of its modernization strategy. This involved procuring new, modern solutions that were more adaptable, scalable, and cost-effective. The focus was on cloud-native applications, Software as a Service (SaaS) offerings, and infrastructure-as-a-service (IaaS) platforms.
Example 1: Repurchasing a Cloud-Based ERP System
- New System: After retiring the old ERP system, the company decided to adopt SAP S/4HANA Cloud, a modern cloud-based ERP solution. SAP S/4HANA provided out-of-the-box capabilities for finance, supply chain management, manufacturing, and other critical business functions.
- Repurchase Decision: The decision to move to SAP S/4HANA Cloud was driven by the need for a more scalable, flexible ERP platform that could be easily integrated with modern technologies like artificial intelligence (AI) and machine learning (ML). Additionally, the cloud-based system would provide real-time data analytics and a simplified user experience.
- Outcome: By implementing SAP S/4HANA Cloud, the company achieved greater efficiency, improved decision-making capabilities, and lower total cost of ownership. The system’s ability to scale rapidly allowed the company to handle increased demand and global expansion without significant infrastructure investment.
Example 2: Adopting Cloud Infrastructure with AWS
- Old System: The company’s legacy on-premises infrastructure was replaced with cloud-based infrastructure to support its applications. The company evaluated several cloud service providers and selected Amazon Web Services (AWS) for its flexibility, scalability, and comprehensive set of services.
- Repurchase Decision: AWS offered a variety of services that aligned well with the company’s needs, including virtual machines (EC2), managed databases (RDS), and serverless computing (Lambda). The decision to adopt AWS was based on its ability to offer a fully managed cloud environment, reducing the need for in-house infrastructure management.
- Outcome: The transition to AWS resulted in improved operational efficiency, faster time-to-market for new products and services, and cost savings due to the pay-as-you-go pricing model. The company was also able to leverage AWS’s security features and global network to improve the reliability and security of its applications.
Example 3: Replacing Legacy CRM with Salesforce
- Old System: The company had been using an outdated, on-premises customer relationship management (CRM) system that lacked modern features like mobile support, AI-powered analytics, and integration with other business systems.
- Repurchase Decision: The company chose Salesforce as its new CRM platform due to its robust cloud capabilities, extensive app ecosystem, and integration with other Salesforce products like Marketing Cloud and Service Cloud. Salesforce’s AI features, like Einstein Analytics, provided valuable insights into customer behavior and sales performance.
- Outcome: The adoption of Salesforce resulted in improved customer engagement, streamlined sales and marketing processes, and better customer insights through AI-powered analytics. The cloud-based CRM allowed sales teams to access real-time data from anywhere, improving collaboration and responsiveness.
Challenges and Key Lessons Learned
While the retirement and repurchase approaches were effective in modernizing the company’s IT environment, there were several challenges faced during the transformation:
- Data Migration: Migrating data from legacy systems to modern cloud-based platforms proved to be a complex and time-consuming process, requiring careful planning, testing, and validation. The company needed to ensure data integrity and minimize downtime during the migration.
- Change Management: Transitioning to new systems and processes required significant change management efforts. The company invested in training programs to ensure that employees could effectively use the new platforms, and dedicated resources to managing stakeholder expectations.
- Integration Complexity: Integrating new cloud-based systems (e.g., SAP S/4HANA Cloud, Salesforce, AWS) with existing enterprise applications presented some challenges. Ensuring seamless communication between different systems required custom integrations, API management, and middleware solutions.
Outcome
The combination of retirement and repurchase approaches allowed the company to modernize both its applications and infrastructure effectively. By retiring outdated, costly, and inefficient systems, and repurchasing modern, cloud-native solutions, the company achieved greater flexibility, scalability, and cost savings. The company’s IT environment is now better aligned with its business goals, with the ability to adapt quickly to changing market demands and technological advancements.
Ultimately, the successful modernization of applications and infrastructure not only enhanced operational efficiency but also positioned the company for long-term growth in a competitive global marketplace.
Conclusion
Repurchasing and retiring are both viable strategies for migrating legacy applications to cloud-native environments, but they come with different goals, benefits, and challenges. Repurchasing is best suited for organizations that need to replace outdated applications with modern, scalable, cloud-native solutions, while retiring is more suitable for companies seeking to eliminate redundant systems altogether and embrace more efficient, often manual, workflows.
Ultimately, the choice between repurchasing and retiring depends on the specific needs of the business, the nature of the legacy applications, and the long-term goals for modernization. With careful planning and thoughtful execution, both approaches can help organizations unlock the full potential of the cloud, driving innovation, agility, and cost-efficiency.
Previous articles
- From ‘Lift & Shift’ to ‘Land & Strand’ (Part 1)
- From ‘Lift & Shift’ to ‘Land & Stand’ – Un-strand your Workloads (Part 2)
- From ‘Lift & Shift’ to ‘Land & Strand’– Find a Better Boat (for your Workloads – Part 3)
- From ‘Lift & Shift’ to ‘Land & Strand’ – Finding Blue Ocean through Reinvention – Part 4)
About the Author
Robert is seasoned high-tech software executive with more than 30 years of proven industry experience, both in entrepreneurial and enterprise corporate settings. With proven track record of bringing to market dozens of enterprise-class commercial platforms and products, Robert has built and led high-velocity product and strategy teams of product managers, developers, sales teams, marketing teams and delivery units.
His mission is to help enterprises achieve sustainable competitive growth through innovation, agility, and customer-centric value.
@Robert – www.linkedin/in/ericksonrw
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