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How to Innovate with Legacy Technology: Modernizing a Business Critical Legacy Application

Brian Pennell
Engineering Director
July 20, 2021

For many years, the rates of enterprises beginning to migrate their legacy technology have been rising, accelerated by the shift to digital during the pandemic. While at least 74% of organizations have started modernizing their legacy applications, most cloud migration efforts take many years, and at least 50-60% of these efforts take more time and cost more money than the organization expected.

Many of our clients, particularly large enterprises like financial services organizations, have hundreds or even thousands of both user-facing and internal applications that they need to migrate. Clients often come to us with the challenge of taking their project through the last mile, navigating the many starts and stops of competing for resources and balancing many priorities.

What Makes Modernization so Difficult?

With 61% of HR professionals claiming that hiring qualified developers would be their biggest recruitment challenge of 2021, the difficulties of hiring and retaining top digital talent is an obvious answer — but it’s not the entire answer.

  1. Organizing Resources for Scale: Most large financial institutions have the funds to pay competitively and access resources; but the big challenge comes with how to allocate and organize those resources to develop applications with minimal risk. Many FIs have centralized their digital and technology teams to support many different business units across the organization, but adjusting to this change can take time, especially at a large enterprise.
  2. Accomplishing Multiple Priorities Simultaneously: While most big companies generally have enough employees to continue adding new features and executing the roadmap for existing applications, when the need to modernize and move to the cloud arises, it can be challenging to spin up and maintain teams to accomplish this in parallel.
  3. FTEs vs. Contractors: In some organizations, it might be easier to get approval for funds to hire contractors rather than additional full-time employees (FTEs), but managing and organizing individual contractors can create even more work for current FTEs. Hiring a few individual contractors at a time may help get a few initiatives over the line, but it can be difficult to establish consistent engineering best practices and deliver at scale. Plus, when companies add FTEs specifically for projects like a modernization effort, when the project ends they might be left with overlapping skills and unnecessary capacity on that team. In an ideal world, companies would transition FTEs to help in other parts of the company, but in large, multi-department organizations, it can be challenging to move resources around efficiently.
  4. Transitioning Product Ownership: After completing a re-platform and launching a new application, it can be tricky for companies using outsourced resources to transition the product fully back to the in-house team. The migration from the old to new product needs to be a joint effort for implementation and knowledge transfer. To make the application easy to support long-term, teams need to have top-notch documentation, well-commented code, and consistent coding standards.

The Outsourcing Dilemma

Given the aforementioned tech talent war, it’s no surprise that companies turn to outsourcing and working with contractors to accomplish their digital goals and keep pace with demands for innovation.

The global outsourcing market in IT in 2019 was $92.5B, and post-pandemic it has grown to $132.9 billion. By the end of 2021, Statista projects the IT outsourcing market size will hit $413.7 billion.

However, according to research from Dun & Bradstreet, 20-25% of software outsourcing relationships fail within two years, and 50% fail within five years. We hear from clients every week who have been burned by outsourcing in the past for a variety of reasons — the external teams were misaligned on priorities with the internal team, their development practices had varying levels of maturity and they couldn’t find common ground, the quality of engineering was less than what they expected — all leading to projects that fail to launch on time and on budget.

How We Can Help

WillowTree is not an IT outsourcer in the traditional sense of the term — we build software with our clients rather than building for them. When we were founded in 2008, most of our first clients came to us looking for full-service support to strategize, design, and develop their flagship applications, and we worked with client leadership to determine what their product vision and roadmap could be.

Over time, companies began to hire their own internal product and engineering teams to own and execute roadmaps for their core digital products. Today, most large organizations have divisions segmented by product, and they don’t need to (or want to) outsource product ownership, but they may find that they have specific gaps outside of core product development — such as modernizing their legacy applications to the cloud.

Today, at least 32% of all technology budgets are dedicated to the cloud, yet companies estimate that 27% of their cloud budget goes to waste each year due to many of the challenges listed above.

While most financial services companies have distinct business strategies and teams allocated internally to long-term projects, like migrating to the cloud or driving innovation initiatives, many find that there are still gaps in organizing and scaling these cross-functional resources.

To fill specific gaps like this, one engagement model that has been helpful for many of our clients is Surge Squads.

What is a Surge Squad?

A Surge Squad is a very small, nimble group of technical or product specialists, led by a program director, that plugs in specifically to advance clients’ most mission-critical priorities.

Like a full-service team, a Surge Squad includes a program lead that manages the team and runs point on client communication and ensures adherence to the roadmap, which keeps the client’s internal resources free to continue to execute on their priorities. Unlike a full-service team, a Surge Squad is often brought on to a client when their product vision and roadmap are already in place. The client may have large-scale engineering teams in house, they just need a partner to accelerate their software delivery.

Rather than having to battle for and organize internal resources, clients can plug a WillowTree Surge Squad when and how they need them. These stable teams can quickly learn the client’s codebase and business model, and because WillowTree’s attrition rate is a fraction of the technology industry average at under 10%, the team is sustainable and can remain with the client for the duration of the project.

Often, a Surge Squad is brought in to execute on a predetermined need like modernization or core re-platforming, so the group maintains a hyperfocus on this need and can deliver at a high velocity. For one of WillowTree’s clients, a top 10 national U.S. bank, plugging in a Surge Squad to re-platform mobile features has increased the speed of feature release by 2x.

If you’d like to learn more about adding a Surge Squad to accelerate your organization’s most important engineering initiatives, reach out to our team. We’d love to hear from you.

Brian Pennell
Engineering Director

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