Shared lessons: What financial services can learn from public sector legacy technology modernisation

Paul Rundle

By Paul Rundle

According to 70 percent of technology executives, aged technology, or ‘technology debt’, is a major drag on innovation, holding back launch of new customer-facing services and internal efficiency solutions that are enabled by data and AI.

Legacy systems are often perceived as a constraint to change and an operational resilience risk because years of tactical, short-term add-ons or fixes have created a complex knot of interdependencies that few people understand. This situation is becoming untenable as established financial services businesses face multiple pressures on their legacy estate, including competing with fleet-of-foot fintechs, systems becoming unsupportable as software goes out of support, pressure from suppliers and sometimes regulators to move from data centres to cloud, and and demonstrating compliance with new resilience regulations such as DORA, which comes into force in January 2025.

With such an array of drivers, selecting a technology modernisation strategy is hard because leaders have mixed confidence on which initiatives are achievable and provide the most benefit. Moreover, legacy technology is typically costly and risky to change, but even more costly and risky to replace – making modernisation difficult to justify when current technology is still working. And legacy replacement technologies, such as cloud platforms, often bring a commitment to recurring ‘as-a-service’ costs which can become surprisingly expensive and difficult to manage.

Like financial services, the public sector has a long tail of legacy technology, with both sectors facing similar challenges: systems built over decades, holding population-scale numbers of customers, with severe consequences for IT failure, all leading to a cautious approach to technology change. Yet many public sector organisations we work with are ahead of the private sector in addressing their technology debt. For example, we worked with the Crown Prosecution Service to deliver better citizen services and operational cost efficiencies whilst systematically modernising its complex legacy technology estates.

So what can financial services organisations learn from the public sector to help them modernise their own legacy technology in a way that unlocks opportunity for innovation, delivers operational cost efficiencies, and supports regulatory compliance?

Track the costs and status of your digital estate using automation

Understanding the status of a diverse technology portfolio and live projects is typically achieved through laborious interviews or audits. As the status constantly changes, data needs to be maintained to stay relevant. It’s a huge and ongoing administrative burden and often delivers estimated costs at best.

With the right tooling and integration, portfolio status information can be collected automatically in many instances, giving digital leaders confidence, and bringing visibility to senior management and IT leaders. Good tooling and integration will capture:

  • Run cost information, providing data on software licence usage, cloud consumption and managed service costs (collectively known as FinOps)
  • Bespoke software usage, identifying data integration between components and software libraries in use so that issues can be detected early. An example of why this is important is the Log4j security incident, an exploit in a popular Java framework that led to attempted attacks on 40% or more of all business networks internationally
  • Data entered by product teams into self-service forms, for data that can’t be gathered by integration, to create a culture of teams maintaining data about their apps.

Create views to show how your digital architecture serves your business ambitions

Architecture tooling used to be introspective and rightly led to criticism that it was a theoretical ‘ivory tower’, and didn’t show practical, business-relevant views. Yet we’ve found that tooling helps link legacy technology modernisation investment to tangible outcomes. The latest architecture tooling, when implemented well, demonstrates the ‘so what?’ of proposed projects and risks in the technology estate. This allows leaders to:

  • Visualise the relationship between business goals and projects to show how costs and benefits flow against a strategic roadmap
  • Aggregate reporting to show how a resilience risk in a system component impacts the business processes that rely on it, so business consequences can be used to prioritise investment in technology modernisation
  • Generate live reports to provide analysis of spend on cloud services, with clear linkage to business services and revenue streams
  • Integrate with software engineering tooling to automatically identify use of undesirable software, for example where the software product is non-standard, commercially unattractive or at risk of security vulnerabilities.

These business-relevant views of the portfolio highlight capability shortfalls, resilience risks, and poor value for money. Rather than these insights being hidden within product teams and managed service providers, the views are maintained up-to-date for product teams to self-assess themselves; for architects to do strategic planning that is grounded in reality; and for execs to communicate status and roadmaps in business-relevant terms.

Run scenarios to test the value, risk reduction, and achievability of digital investment options

To justify investment, legacy technology modernisation must demonstrate the business value it delivers and compete with investments that have a clear link to top line growth. Failure to do so will mean that modernisation initiatives are not funded and aged systems remain a constraint. Showing the value of legacy technology modernisation is difficult because it is often hard to see the business impact of technical updates – especially in very large enterprises, and because there are a confusing array of options and permutations.

For a 60,000-employee public sector client with a £1.3bn transformation programme, we found a way through the complexity, decommissioning 33 apps, migrating 34 more, and modernising core apps that will remain as platforms for the future. To demonstrate the value from legacy technology modernisation, we:

  • Defined a scoring framework to assess proposed investments in an unbiased way
  • Developed possible legacy technology modernisation scenarios using architecture tooling
  • Ran technology modernisation scenarios through the scoring framework to see how each investment could drive outcomes, such as realising the strategy and addressing tech risk
  • Provided organisation-wide visibility of the roadmap and change plans so decision-making could be validated at all levels, involving product teams and execs alike, to secure buy-in
  • Tracked implementation programmes within the architecture tooling, using automated integrations, to assess if programmes were delivering value as promised.

As our Vision for Banking report highlights, the growing influence of technology-led organisations is a clear threat. To implement the technology needed to compete, financial services organisations need to be able to modernise their platforms and lower operating costs. By looking at how similarly complex public sector organisations have approached this challenge, financial services businesses can develop the capabilities needed to successfully manage their legacy technology estate.

About the authors

Paul Rundle
Paul Rundle PA IT architecture expert

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