It often makes more sense to recycle and reuse existing IT infrastructure, rather than embarking on a costly rip-and-replace IT project, according to Allianz's CIO Steve Coles.
"I hate the term 'legacy' technology," Coles said today at a CSC event in Sydney.
"Legacy means [a system has] got to be replaced, and we've got to get a shiny new one. For us, it's been a key part of our strategy to reuse and simplify rather than rip and replace," Coles added, saying that CIOs who embark on the latter carry a lot of risk on their shoulders by conducting a project that's going to cost more and may never work correctly.
In Coles' case, when the business came to him to solve problems that weren't being addressed by current systems, he decided to analyse Allianz's existing technology, and see what could be innovated upon.
"We've look[ed] at what [a system] does and what it did, and saw that it was pretty damn good. It was very efficient, reliable and had a lot of investment in terms of functionality. Replacing an investment that's been in the business for many years [is] a tough call," he said.
Coles didn't identify what systems he was talking about, but said that bypassing the rip-and-replace mentality means that he is able to deliver on the needs of the business for a fraction of the cost.
"We wouldn't deliver the value we provide for the expense we charge the business if we hadn't used that strategy. It's a key component."
For this reason, rip-and-replace projects will likely fall out of favour with financial-services businesses that are looking to improve upon their infrastructure, he said.
"Internationally, [reusing IT is] becoming more in vogue. Large technology investments are not only a big investment, they're an enormous risk. There's a lot in the market around big technology investment failures, but if we're reusing and reintegrating and adding components, not only does it reduce the cost, it also reduces the risk," he said. He added that being able to complete a successful reuse project depends on what you inherit as a CIO.
"We had a more mature environment that was working well, and it could support some of the things the business was asking me to do, but if you haven't got that, you're not starting from a strong enough base [for a reuse project].
"I wouldn't discount rip and replace ... but for us, it didn't fit. I'm sure we're not alone in the situation we were in. I would predict there's less of a rip-and-replace strategy going forward, due to the level of risk, but it would come back to your starting position," he concluded.
What skills shortage?
Coles said that because he decided to innovate upon Allianz's old infrastructure, rather than implementing an entirely new back end, the Common Business-Oriented Language (COBOL) for programming still needs to be supported — but that everyone else ripping and replacing has made that easy.
Coles isn't feeling the bite of the skills shortage, however. Instead, it's never been a better time to look for COBOL resources, he said.
"I'd say that the more people who are getting off [COBOL means] that it's become a lot easier, rather than a lot harder [to hire people], because a lot of [organisations] are getting rid of that technology stack, and it's easier for us to secure resources there. It's easier now than it ever was in the past," he said.
Allianz has 40 employees with COBOL skills in his 350-strong team, some of whom are only 30 years of age. Coles says that because of this, the business will be able to support COBOL operations for the few years.
"The only driver around COBOL is really the workforce to support it. It's something we monitor very closely in terms of having the right workforce strategies, but, for us, it's not an issue for the next five to seven years. Post-that, unless we manage that risk carefully, then we might be left exposed, because we might have people who provide the right level of support, but we'll look at a range of strategies around that."