Nearshore Americas

New Pressures Build to Modernize Applications and Eliminate ‘Technical Debt’

Dave Moore, chief innovation officer at Growth Acceleration Partners

Today’s businesses are in deep trouble if they can’t get their foundational applications to perform at their peak. Both internal and customer-facing software systems must run smoothly, without developing bugs or incurring high maintenance costs.

The Covid-19 pandemic and the shift to remote work has highlighted the importance of optimizing digital operations. Cutting corners and using legacy systems can save money in the short term. But that strategy also creates technical debt – the cost of using your software team to tweak or maintain your existing systems without reaching for optimal performance.

Speed and resiliency are two of the key drivers of application modernization, says Dave Moore, chief innovation officer at Growth Acceleration Partners, a technology solutions partner with headquarters in Texas and operations in Costa Rica and Colombia. “I don’t know of any team that embarks on a modernization project with the intent of getting slower,” Moore said.

Digital transformation efforts are also focused on ensuring technologies are consistent, agile and resilient.

“Building a highly resilient application… was very difficult to do 10 years ago,” Moore said. “Now we have a pretty standard cookbook for how you do that, and all the pieces are in place to enable it.”

The research company Research and Markets predicts the global application modernization services market will register a nearly 17% compound annual growth rate to 2025, reaching a total valuation of more than $24 billion.

But the persistence of technical debt suggests many firms are still resistant to updating or replacing legacy systems. For these businesses, launching a modernization campaign still has the potential to unlock significant value.

A Heightened Focus on Cybersecurity

The Information Services Group (ISG), a global technology consultancy, recently surveyed 70 of their advisors and asked where they expected clients to direct their spending in 2021. Cybersecurity was the area with the greatest forecast expenditure, with 73% of advisors predicting an increase on that front. The second major focus area was public cloud, with 66% forecasting a rise there. Automation followed, with 52% of the advisors expecting an increase in that area.

Stanton Jones, director and principal analyst at ISG

The heightened focus on cybersecurity is largely driven by the work-from-home revolution. In a recent webinar, Stanton Jones, a director and principal analyst at ISG, argued that clients had already grown accustomed to providers offering high-functioning remote operations. Now they expect their partners to ramp up their cybersecurity efforts to match them.

“The key difference now is that enterprises want to know how providers will mitigate transition risks given the fact that a large percentage of the work will take place remotely,” Jones said. “Enterprises are expecting providers to mitigate these risks without any additional cost and with minimal changes in service level agreements. So, the bar has definitely been raised here for providers.”

Industry experts agree that major security breaches are inevitable in 2021. In fact, the recent hack targeting the US software company SolarWinds has already heightened security concerns among tech clients. Conscious of this rising concern, successful providers will put enhanced cybersecurity at the top of the list when it comes to tackling technical debt in 2021.

Mass Migration to the Cloud

Many Nearshore organizations are opting to modernize their legacy applications by adopting a cloud-based delivery strategy. These models speed up the software development process, typically leading to a faster time to market. They also allow for greater agility – allowing enterprises to increase or decrease capacity. Cloud computing also tends to reduce ownership and maintenance costs. The flexibility of the infrastructure means you are not paying for unused capacity, as you would be with on-premise facilities.

The pandemic has been a major catalyst for cloud adoption. Hyperscalers such as Amazon Web Services (AWS), Google Cloud and Microsoft Azure are reaping the rewards of surging demand. Meanwhile, ISG predicts the cloud-based services market will grow by 20% this year.

Despite soaring interest in cloud solutions, some companies remain resistant to the change. Providers that have recently poured money into sophisticated on-premise infrastructure may be slower to migrate. Others are concerned about trusting a third party with sensitive data.

While such concerns may be valid, cloud solutions are increasingly incorporated into every aspect of the industry. Investing in cloud now should cut costs in the long run. Dispersing data across the cloud – rather than storing it in a single location – could even strengthen security.

Automating the Process

Application modernization efforts are also trending towards automation, as executives seek to minimize manual coding. The US company Profound Logic provides automated solutions for assisting clients migrating from legacy systems to the cloud. The company developed its automation tools to reduce labor intensity and errors.

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“The concern we had been hearing from customers over the years is that manual rewrites are always significantly over budget, very risky and can create all sorts of business disruption,” said Jordan Antonoff, Profound Logic’s chief revenue officer. “We therefore set our focus on figuring out how much we can automate throughout this process.”

Jordan Antonoff, chief revenue officer at Profound Logic

Antonoff says Nearshore companies should seek out an external vendor that has the experience to guide their modernization efforts.

Above all, he urges executives and tech teams to collaborate on addressing technical debt.

“Modernization and transformation shouldn’t be viewed as just an IT project,” Antonoff said. “It should be viewed as a business-led project. ‘How do we modernize and transform the system to drive business results and improve business efficiency?’ Not ‘how do we get the shiniest, fanciest new technology just for the sake of it?’”

Stephen Woodman

Stephen Woodman is an independent journalist based in the Mexican city of Guadalajara. He has six years’ experience covering business and culture in Latin America. Stephen has been published in numerous international media outlets, including The Financial Times, BBC News and Reuters. To share story ideas, drop him a note here

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