Best Practices for Replacing Core Systems

Many companies are compelled to upgrade inefficient legacy systems with business IT support. The justification for replacing core systems comes from the need to increase operational flexibility, improve efficiency, and have better communications.

The goals are to improve both upstream and downstream communications and enable interconnectedness. By using open data sharing and integration with partners, this increases customer satisfaction. This should result in a demonstrable positive effect on the bottom line.

Risk mitigation is a critical issue, for business IT support, when replacing core systems because a migration at this level entails significant risk of disrupting an organization’s operations.

Implementation Strategies The choice for an implementation strategy depends on the organization’s resources, in-house capabilities, and the level of tolerance for change.

A complete core systems overhaul produces significant benefits at the enterprise level; however, such a major change takes large amounts of time to implement, with the average project being three to five years. There is a significant risk that the overall organizational goals may shift during the implementation time frame.

Best Practices

Here are ten key considerations that are the best practices to use, which will increase the likelihood of having a successful outcome when replacing core systems:

1. Create a Well-Defined Strategic Vision for the Organization Compare and contrast the current status with the expected results after the change implementation occurs. Make goals as definitive as possible and measurable. This strategic vision will guide both internal staff and outside vendors to make sure everyone works towards the same results. Having such a vision that is clearly defined helps in the selection of a solution when comparing different vendors. It also provides an objective baseline for the future.
2. Changes Support the Strategic Vision Modernization of business IT support improves the long-term strategic vision of the organization. Change implementation is not just for change sake and IT is not the driver of the change. Instead, IT modernization is the enabler of the strategic business goals.
3. Start Dialogue Early with Potential Vendors There is a tendency to keep vendors less informed about the organization’s true status, especially in terms of budget for the IT upgrade, because of the feeling that this information, if known by vendors, might weaken the negotiating power. This is a less effective strategy.

The alternative is seeking to learn what is possible when operating under certain budget constraints. It is more beneficial to have an open discussion with multiple vendors to get the best ideas about how to proceed.

1. Choose the Best Development Methodology Each organization is unique and this requires using a developmental methodology that is appropriate for the particular circumstances. Before committing to a change program, it is important to choose the methods and approaches that best serve the organization and not allow the vendors to drive the project in a direction that is not complimentary to the business efforts.
2. Accurately Assess Internal IT Department Skills The CIO and the IT department must be able to completely articulate the need for change and have the skills necessary to implement the changes. These changes need management in collaboration with ongoing business operations to create as little disruption as possible.
3. Focus on the New Operating Model By aligning the IT modernization with the business goals, the new operating model influences the vendor choices and design solutions. Throughout the change transformation, it is important to understand how processes, operations, and employees interface to create a new operating model.
4. Comprehensive Change Program Management The management and staff responsible for the core systems transformation controls the process from the point of view of business goals and IT implementation. The responsibilities include making sure the IT modernization stays within budget and produces deliverables on schedule.
5. Management of Vendor Relations Projects that result in significant core systems change require using a number of outside vendors that have specialized expertise in areas such as efficient data processing, data mining, data warehouse storage, and business process redesign.
6. Avoid Software Customization There is a tendency to try to replicate the old systems and processing methods rather than adopt new methodologies that are more efficient. Replacing a legacy system with a modernization program that replicates it, defeats the purpose.
7. Overcoming the Clinging to Legacy Systems A surprising and natural phenomenon that is very common in core systems replacement efforts have at its basis in the staff’s resistance to change. The motivation to modernize legacy systems suddenly reverses to a feeling by the staff that the old system is good and does not need changing.