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Realizing The Cost Savings of Mergers & Acquisitions by Retiring Legacy Applications

Following a Merger and Acquisition (M&A), there is usually a focus on consolidating the two companies’ IT systems, leaving behind many redundant legacy applications.  Until those legacy applications are shut down, you haven’t realized the cost savings of the consolidation. However, those old applications may contain data that’s no longer used for daily operations, but need to be retained for regulatory compliance.  Keeping those applications up and running, just to retain the data within them introduces operational, business and legal risks.  It is likely that the IT staff who have the expertise about those applications are no longer with the company, and without them it may be difficult to impossible to access the data in a meaningful way, in the time required, for an audit or eDiscovery request.

Many organizations who have gone through M&As are undertaking massive application decommissioning projects for exactly the following reasons:

  • Eliminating the associated infrastructure, data center, and maintenance contract costs
  • Eliminating reliance on IT staff w/ legacy knowledge, who are no longer with the company
  • Reducing IT complexity
  • Reducing the cost of regulatory compliance by centralizing the storage of retired data for easier search and discovery

A leading European financial institution is planning to decommission a few hundred applications from a recent acquisition, within the year.  Some of these applications contain regulated data that need to be retained.  Their approach is to use database archiving to retire the legacy data to an optimized file archive format, which yields up to 98% compression to reduce storage capacity, ensure immutability and security, while maintaining easy access from any reporting tool.  Their expected benefits from the retirement project are:

  • £20m cost savings annually from a single retired application
  • £100s millions total savings within two years
  • Reduce  maintenance contracts, number of suppliers

In addition to reduced IT complexity and compliance effort.

Another leading US pharmaceutical company who just completed an acquisition is going through a retirement project to archive and decommission thousands of legacy applications within the next two years.  They use the same approach for archiving the entire application data to an optimized file archive format to significantly reduce storage consumption, enforce retention and disposal policies, and maintain easy access from multiple interfaces, including reporting tools and a discovery portal.  They need to comply with varying complex retention regulations, based on where the data is located.  Their offices are distributed across Europe, the Middle East, Africa, Asia Pacific, Latin America and North America, therefore, there data is not only in multiple languages, but also regulated by multiple regional requirements.  Their expected benefits from the retirement project are:

  • $2 million cost savings per retired application
  • Up to $5 billion total savings in hardware, facilities, staffing and software costs

And they are in the process of establishing a retirement factory across the company to increase project efficiency.

As these examples illustrate, the cost savings from legacy application retirement projects is tremendous.  And the investment keeps paying for itself with the savings from the potential fines due to delayed eDiscovery responses.

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This entry was posted in Application Retirement, Data Governance, Financial Services, Governance, Risk and Compliance, Healthcare, Operational Efficiency and tagged , , , , , , , , . Bookmark the permalink.

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