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1.4 IT Can Disable an Organization

IT, more than ever, has a direct impact on business competitiveness, quality, productivity, the bottom line, and survival. This is true for the private sector as well as for government agencies. As a result, executives can no longer push IT into a corner. Fortunately, IT executives are increasingly moving into positions of power at major corporations. This is important because today's executive must be IT-savvy or encounter difficulty leading an organization through this period of increased innovation. Legacy systems is one area that executives must familiarize themselves with and address as part of this leadership model.

Unfortunately, there is a flip side to the business-enabling, revenue–generating, and cost-saving opportunities IT provides. When problems occur, IT can also be to blame for bottom-line losses. There are numerous accounts of companies suffering lost business, lost revenues, and lost opportunities related to legacy system failures, failed replacement projects, or just a lack of foresight in deploying new IT initiatives. Consider some recent, high-profile reports that have appeared in the press.

  • Citibank's 2000 ATM debit and credit systems were down intermittently during a 24-hour period. The outage was blamed on legacy application systems6.

  • JPMorgan Chase & Co. experienced problems in its retail banking systems that impacted transactions at 1900 ATM facilities. The situation was caused by a problem in updating transactions from the prior day6.

  • Kmart planned to take charges of $195 million to modernize its aging warehouse network to improve in-stock management capabilities. This move was necessary to stay competitive with other retail chains7.

  • More than a year after IT had installed new student administration software, Cleveland State University continued to have problems processing financial aid, enrolling transfer students, and recording grades8.

The ability for IT to trigger problems within an enterprise is not new. What is new is that businesses and governments rely on IT to a much greater degree for business continuity. In doing so, these institutions increase their vulnerability if a critical computer system fails or stays offline for an extended period of time.

Failures come in many varieties. The Citibank and JPMorgan Chase scenarios were failures that resulted in a loss, albeit temporary, of customer confidence. The Kmart situation, on the other hand, reflects a company trying to catch up to retailers that made major IT infrastructure investments well ahead of Kmart to address inventory and customer issues.

The Cleveland State University situation involved a software package being licensed by the university from a major software supplier. This package did not fit the requirements of the university—or so it seems from the media's version of this story. It is quite likely that Cleveland State was able to track students and record grades with the system it replaced. The new package changed this—for the worse. Progress can come with a price, particularly where legacy applications are involved.

Each of the above scenarios involved legacy systems. Whether an organization is just trying to make it through another day's worth of high-profile transactions, is investing in major infrastructure upgrades, or is attempting to transition to a third-party package, legacy systems remain the key to success.

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