It is reasonable to suggest that companies of all types and sizes have integrated information technology systems of some sort to help them manage their businesses and achieve a competitive advantage in recent years. Because computer systems tend to become obsolete rapidly as Moore's Law continues to hold true, many companies have accumulated a mish-mash of various computer types and capabilities that may not operate efficiently in a networked environment. When these legacy systems are replaced by a standardized array of compatible computers, the transition may introduce a number of challenges and obstacles that can adversely affect the company's ability to remain agile and responsive to internal and external customer needs. To determine how the transition from an older legacy system to an improved set of computers can be achieved in an efficient fashion, the key stakeholders who are involved in the process, and the potential lessons to be learned from the transition, this paper provides a review of the relevant peer-reviewed and scholarly literature, followed by a summary of the research and important findings in the conclusion.
Review and Discussion
Background and Overview
Change is inevitable in organizational settings, and it can create enormous challenges for management and this is certainly the case when it comes to replacing an existing collection of disparate computer systems with an integrated and compatible system. In fact, because of the enormous amounts of resources that many companies have allocated to these computer systems, the decision to discard these systems in favor of a completely new collection of more efficient computers may be delayed for lengthy periods of time. According to Nakata, Zhu and Kraimer emphasize that, "Annual spending on information technology capability -- specifically on computer hardware, software, and related devices -- increased to $1.2 trillion by 2008, representing the single largest capital investment by businesses" (2008, p. 485). All of this money is not being spent for nothing, of course, but it is rather being invested in order to achieve a competitive advantage. In this regard, Reddy emphasizes that, "Effective use of information technology is often heralded as a source of firm competitiveness. Paradoxically, many large and mature companies facing complex international competition appear to suffer from a lack of competitive flexibility due to past information technology investments" (2006, p. 16).
The decision to upgrade a legacy system can be hampered by the fact that over time, much effort and expense has been invested in making these systems operate and the adage "if it isn't broken, don't fix it" is a major factor. As Johnson and Andrews point out, "Legacy applications are described as 'systems that work.' They have provided reliable, daily processing and a repository for business knowledge and corporate policies. As computer and human assets age and knowledge is lost through attrition or restructuring, these applications have come to embody the most complete history of market, regulatory and company policy changes -- a grassroots corporate memory" (2003, p. 48). By definition, though, legacy systems are obsolete as noted by McGinn, Kudyba and Diwan who provide the following descriptions:
1. Legacy Applications. Programs that were implemented for use on legacy systems or outdated hardware which many times are not as efficient as newer or updated applications.
2. Legacy System. An old system still in use that uses flat files, or non-relational databases (2002, p. 211).
Although a company's leadership team may be loath to make the transition to more efficient computer systems, the longer they wait, the harder it may be to make the change efficiently and the more the company's performance will suffer in the meantime. For example, Reddy cites the "performance inhibiting effect of legacy systems" and emphasizes, "Because IT is not as visible as property, plant and equipment, proper depreciation and replacement tends to be neglected, leading firms to accumulate a multitude of rigid, complex and fragile legacy systems. Such legacy systems ultimately may lead to competitive disadvantage" (2006, p. 17). The competitive disadvantage that can result from retaining an antiquated legacy system can relate to inadequate performance levels or the system's inability to provide management with the timely information that is needed for informed decision making. For instance, Robinson and Chappelear note that, "Another reason these legacy systems often fail to provide useful data is that the reporting and extraction facilities lacked the flexibility to support customization mandated by the creation of new products" (2002, p. 17).
This problem is not uncommon either and businesses competing in a wide range of industries face the same types of aging legacy application and platform problems including the following:
1. Diminishing support for third-party products;
2. Resource drain for new initiatives;
3. Difficulty retaining new and legacy technical and business skills;
4. Response time to new business or regulations threatens opportunities and compliance, and may impact channels, customers and business partners;
5. Manual processes and work-arounds lead to data entry errors and data inconsistencies;
6. Business continuity may be threatened by embedded or unsupported processes;
7. Difficulty maintaining a clear picture of customer and channel relationships across applications; and,
8. Difficulty tracing and auditing systems and transactions (Johnson & Andrews, 2003, p. 49).
Therefore, the process of delaying the decision to replace legacy computer systems can be likened to a frog placed in a pot of water where the heat is slowly turned up until it boils, but the frog does not jump out because the heat is applied slowly and it does not realize it is being cooked until it is too late.
This is essentially the case at the company in question where a diverse collection of older desktop computers were being used. These computers range from "doorstop"-type 386s to more sophisticated and powerful modern computers in a networked environment. These networked computers are still being used for all of the company's information technology requirements, including human resource management functions, customer relationship management, marketing and enterprise resource management applications. The company does not have a manager in charge of the overall IT operation, either, and this introduces a number of challenges for individual departments trying to integrate their software applications with other departments. Not surprisingly, the network experiences frequent crashes and trying to extract information from the system is akin to a trip to the dentist. Despite these constraints, the company's president has been heard on more than one occasion to insist that these computers are "real workhorses" and he had "built this company on them" and "they are good for what we need them for."
After several missed business opportunities that resulted from the company's inability to respond to customer inquiries and requests, the company's president finally decided that it was time to make a change and because the company did not have an information technology director, he authorized the purchasing director to make inquiries concerning a replacement for the existing IT system. When the company's management finally determined that a wholesale change was in order, many of the employees and managers celebrated the decision but a few employees, particularly those with the more powerful computers, were reluctant to change anything. These issues and the key stakeholders who were involved in the anticipated transition process are discussed further below.
Key Stakeholders and Recommendations for the Transition Process
Because the company's information technology system affect both internal and external customers, the key stakeholders include the company's employees and management team as well as vendors along the entire supply chain that rely on the company's IT system for order fulfillment and collaboration concerning new products and services. For this purpose, the company's president, "Mr. Johnson," should actively seek feedback from all of the stakeholders who would be affected by the transition to a new IT system, and conduct several face-to-face meetings with employees and managers individually and in small groups to learn what they believe is needed in a new computer system and why. Besides meeting with employees and managers, Mr. Johnson should also encourage all key stakeholders to provide their feedback anonymously on the company's intranet to ensure that everyone has the opportunity to voice their open opinions about the existing IT system and what is needed to replace it without fear of reprisal.
Beyond the foregoing steps, Mr. Johnson should also encourage the company's supply chain partners to provide their input concerning what they needed from the company to facilitate their interactions. In addition, Mr. Johnson should authorize the company's purchasing director to visit other companies that had recently upgraded their IT systems as well as IT vendors in an effort to gain some fresh insights into what was available and what worked best. In addition, while the purchasing director is gathering this information, the company should create an IT management position and actively recruit eligible candidates.
The newly installed IT director should survey the company's existing resources as well as the findings that were provided by the purchasing manager to develop a series of recommendations for replacing the company's legacy IT system that were all capable of providing the functionality needed but which…