Why Digitalization Needs Application Modernization
Authors: Stefan Pauly and Gerhard Kaucky
Looking at the current hype around Digitalization we recognize the positions and arguments of two groups: One group is Sales and Marketing, CEOs and CMOs who reflect about the business value of Digitalization, about new sales and service channels, digitalized products, and – in general – renewed business processes.
On the other side, the IT department and the CIOs are confronted with this Digitalization trend, but the other way around they even can influence and enable the Digitalization.
Who is right, who is wrong, or are both standpoints plausible?
In our opinion, IT is so prevalent in today’s organizations that Digitalization (just like the word tells us!) is to nearly 100% dependent on an efficient and effective IT.
Let us for example take look on the Banking Industry (in fact one of the oldest industries relying on IT applications) where we observe currently a discussion about the Fin Techs. Fin Techs are quite new companies (although some of them are indeed very established like PayPal), mostly organized like start-ups and they occupy all front-end processes and channels with smart Apps/mobile web sites, web-based applications, use of Big Data and Analytics, and of course everything is Cloud-oriented. The Fin Techs provide disruptive functionality in Crowd Financing, Mobile Payment, Online Banking, Investment Consulting, and much more.
Considering this, we recently came across the dictum “are you in front of the API or behind the API?” The (Banking) API is envisioned as a standardized logical interface between front-end (i.e. Fin Tech) applications and back-end, core banking applications like payments and securities management.
We know de-facto APIs very well, e.g. in the Telecommunication and other network-related industries like Utilities or Transportation between the network and value added services. In the Automotive industry, a new API will emerge between cars, car dealers, and other organizations.
We are convinced that the new API-thinking like exemplified for Banking, is a main driver and catalyst for the implementation of Digitalization.
This is the moment to switch to the title thesis of this blog: Behind the API we detect in Banking (same in Insurance and other industries) a bunch of legacy applications that limit the success of the new digitalized processes and front-ends. The limits are out-dated technologies, end-of-life software, lack of IT experts, and complex and expensive Application Management.
What companies need is a fast and thorough Modernization of the legacy applications behind the API to make Digitalization successful! Solutions like CSC’s “FuturEdge for Modernization” can solve this problem by providing services such as examining the Application Modernization needs and benefits, Migration and Rationalization services, and finally Application Management of the modernized applications (maybe in a Cloud environment).
Traditional Banking or Insurance companies, equipped with successfully modernized Applications, and in cooperation with FinTechs, will be able to set out to a bright future.