Migrating from legacy systems to cloud-native… before your competitor does

Migrating legacy is scary - and rightly so

When faced with a legacy system, it feels like it is never the right time to migrate. And this feeling is far from irrational, on the contrary. Migrations are probably one of the riskiest IT operations and failures can be crippling enough (and have been more than once…) to bankrupt a company.

Studies by the Oxford Said Business School have shown that time and budget estimates in such large IT projects are consistently under-estimated and 1 in 6 projects develop into a black swan, ie a project where reality completely diverges from estimates, resulting with, on average, 3x cost overrun when that happens.

Surviving in the tech age requires state-of-the-art cloud-native systems

But can you really afford to keep your legacy systems, will it really be possible to compete in 10 years with them?

The huge improvements in technology over the last 20 years allow for much better user experiences and much more agility in the business. Systems built today not only make those built 20 years ago look clunky and slow, they are also able to evolve at a weekly pace while legacy is usually stuck on quarterly update cycles. There is no way a legacy system can compete with new systems in the long run.

The question therefore becomes: how long do you have until one of your competitors succeeds at migrating their legacy systems before you?

It’s not just the startups: some market leaders are now (finally!) building state-of-the-art cloud-native systems

Startups have tried to disrupt incumbents with better technology for the past 20 years. Some amazing successes like Amazon, Google, Facebook or Netflix have shown how new startups can become in less than 20 years the new leaders of their respective markets.

But in many industries startups failed to break barriers to entry and find a path to profitability, giving some respite to the established players. And the current crisis will weaken even more many of these fragile startups… does that mean that CEOs of established companies should not be scared of disruption anymore?

They should probably not be scared as much by startups anymore, but by the first of their competitors who will succeed at building a tech capability worthy of the best startups. The combination of an established business and brand and state-of-the-art tech capability will enable the first movers to leap way ahead of competition and this is happening now.

How Goldman Sachs (and not Monzo) is redefining the cash management industry with a new cloud-native platform

Monzo and Goldman Sachs are a good illustration in the banking sector that the danger is not coming from startups but from the established players becoming tech leaders.

Monzo proved it was possible to build a new cloud-native core banking system from scratch and grow to 3.5M customers in 5 years. They were the first in 20 years to get homologation from the Bank of England for a new core-banking system and the speed at which they delivered it was incredible. But none of the leaders I spoke to at established banks seemed genuinely threatened by Monzo, pointing at the huge losses and no clear path to profitability.

On the other hand, Goldman Sachs has been building a brand new cloud-native transaction banking platform for the last two years to become a new leader in the 250B$ cash management industry. They believe they can succeed with better tech because “corporate treasurers at big U.S. multinational corporations complain that other banks’ systems are clunky and outdated”. Better tech will also allow them to save on costs and reward clients with better returns… established players in that industry should definitely worry!

Is your business able to survive for the next 10 years if one of your established competitors succeeds at migrating their IT to cloud-native and is suddenly able to redefine their products and services at startup-speed? Probably not… The question therefore becomes when and how to migrate your current legacy systems. The sooner, the more chances you can become that market leader yourself.

Serverless, the cloud-native architecture that can help you overtake your competitors

Serverless, the state-of-the-art cloud-native architecture you want to adopt

Twenty years ago, Steve Jobs gave this inspiring vision of the direction in which software development would evolve:

“Here’s the deal. The way you get programmer productivity is not by increasing the lines of code per programmer per day. That doesn’t work. The way you get programmer productivity is by eliminating lines of code you have to write. The line of code that’s the fastest to write, that never breaks, that doesn’t need maintenance, is the line you never had to write.”

Serverless is the industry’s latest innovation in helping get more value for less code. Fundamentally, the goal of serverless architectures is to eliminate commodified work in software. This includes:

  • server maintenance, fully abstracted in a serverless architecture
  • standard architecture building blocks like queuing systems, api gateways, state machines, etc. which can be used “as a service” without complicated installations and configurations
  • standard software modules like authentication systems, payment systems, etc. that have been designed to fit in most scenarios and avoid to recode yet again a custom-built version

This enables serverless teams to save large amounts of time and focus only on what matters to the business. Serverless draws a sharp distinction between commodified IT — the mundane maintenance work that looks roughly the same at every company — and differentiated work that elevates IT to a direct provider of business value.

Serverless, a unique opportunity to catch-up (right now)

Serverless is a great opportunity for companies that are late to the game and do not master cloud-native architectures yet.

The big cloud providers (AWS, Microsoft Azure and Google Cloud) have competed hard to provide incredible building blocks as a service in the last two years, enabling any team today to leverage the kind of technology that only the best startups could afford to build just a few years ago.

And many companies who started investing heavily in migrating to the cloud a few years ago have done it in ways that make it hard to leverage these innovations now. Because at the time Serverless was not mature enough and therefore the strategy was to build the most “vendor-agnostic” architectures possible.

Being late to the cloud-migration game is the opportunity right now to avoid the complex Kubernetes architectures and overtake competitors with much faster-to-build Serverless architectures.