Few industries have spent as much on computing technology over the last 40 to 50 years as the financial services industry. Automating fundamentally manual functions in the 1960s on mainframes was the most common type of application.
Today, the demands have moved far beyond really fast processing to really flexible access. Internally focused applications, built for volume and speed, are not ideally suited for flexible, multi-channel access.
In the four key segments of the financial services industry that Gartner follows – banking, investments, insurance and healthcare payer organizations (payers) – we have witnessed companies struggling to create and enhance knowledge.
There are four goals behind this pursuit.
• Improving operational efficiency and enterprise profitability
• Revamping critical business processes that must be shared effectively among internal business units and external business partners
• Focusing on information management at the company level
• Increasing revenue by focusing on new markets, improving customer retention and exploiting technology to address changing customer needs
The path from yesterday’s technology decisions to tomorrow’s business initiative is neither direct nor simple. Faced with a myriad of solutions from packaged software and outsourcers, financial services organizations must act against the backdrop of financial constraint and generational shifts in technological skills. The evolution of aging, albeit working applications to newer, more modern architectures can be implemented through a wide variety of options. Replacement with packaged software solutions for portfolio management, investment performance measurement, integrated banking/general accounting, time deposit and credit union management, etc. represent one evolution option. These often imply a platform migration from legacy mainframe environments. Usually this leaves some number of applications on the mainframe platform, and integration becomes the new challenge.
Where the fundamental problems are about access, legacy extension solutions can provide a more user-friendly presentation of traditional character-based mainframe applications to new internet-based users. These new users can be within or outside the company.
Significant improvements in ease-of-use can be derived using a class of products known as presentation integration or programmatic integration servers. Application access can be enabled for a whole new class of constituents, unfamiliar with the internal business process. Altering the presentation of existing applications can continue the existing metaphor for interacting with the system, or can be enhanced to significantly improve the human-machine interface. Information from multiple legacy screens can be combined and tedious menu navigations can be eliminated. These types of improvements can significantly improve the productivity of help desk or call center personnel.
These non-invasive approaches are dependent on the granularity of the business function as represented by the original screens. Sometimes, this is acceptable; other times, it can be limited. Some level of restructuring, perhaps separating presentation from business logic, can enable finer grain services that can be combined in new composite applications. New applications can be built that cross the stovepipes of traditional legacy applications, yet reuse the decades of investment in these systems and the infrastructure on which they operate.
Finally, a complete migration from legacy platforms to newer environments is possible. For existing IBM mainframe environments fewer than 500 MIPS of processing power, such a migration is feasible. Certainly, mainframe environments under 200 MIPS can easily migrate to Microsoft Windows or UNIX environments, reducing total cost-of-ownership and providing significant new opportunities for improved multi-channel access and new business opportunities.
Modernizing legacy applications is provided through a continuum of solutions from non-invasive presentation or programmatic integration to complete platform migrations. Financial services organizations should not hesitate or miss the opportunity to evaluate the variety of solutions available.
Dale Vecchio, a research director at Gartner Research, has 20 years of experience in the computer industry. Prior to joining Gartner, he served as vice president of product marketing for VIASOFT, Inc., where he managed the company’s technology and services to help companies assess, plan and manage the year 2000 century turnover problem, as well as the European currency conversion initiative. A graduate of Loyola University of Chicago with a B.S. degree in psychology and mathematics, he earned a master’s degree in data processing from Washington University of St. Louis. For more information about Mr. Vecchio, visit http://www4.gartner.com/AnalystBiography?authorId=13107.