AS400 Modernization

This article dives into the benefits of AS400 modernization, while also exploring the challenges, costs, and fears of disruption that often hold companies back. The summary is perfect for IT leaders looking to weigh the risks and rewards of AS400 transformation in a competitive, tech-driven landscape.

Contents:

Why are companies modernizing AS400 systems?
Why do companies defer AS400 modernization?
How to approach AS400 modernization?
An example before and after

Why are companies modernizing AS400 systems?

Companies are moving away from AS400 systems (now IBM iSeries or IBM Power Systems) for several reasons, driven by modern business needs, technology advancements, and market demands. Here’s why organizations are increasingly seeking alternatives to these legacy systems.

1. Need for Modern User Experiences and Interfaces

Outdated Interfaces: AS400 systems typically have text-based, green-screen interfaces that are not intuitive for modern users. Business users expect user-friendly, graphical interfaces with modern features for ease of use and productivity, which AS400 systems generally lack.

User Training and Productivity: Training employees to use these older interfaces can be time-consuming and costly, and they often don’t match the productivity levels achievable with modern software interfaces.

2. Lack of Flexibility and Integration Capabilities

Integration with Modern Applications: AS400 systems were not built to integrate easily with modern applications, cloud services, and APIs, making it challenging for companies to connect them with other business-critical tools.

Data Silos: Many AS400 systems create data silos that restrict the flow of information across the organization. This makes it harder to analyze and utilize data in real-time for decision-making, especially when other systems and platforms are cloud-based.

3. High Maintenance and Operating Costs

Aging Hardware and Limited Skills: AS400 systems rely on hardware and software expertise that is becoming rare, as fewer professionals specialize in maintaining these systems. As these skills become scarce, the cost of maintaining AS400 systems rises.

Increasing Maintenance Burden: The systems require regular upkeep, custom development, and support, which often end up consuming a large portion of IT budgets. This maintenance effort diverts resources from innovation and new technology investments.

4. Security and Compliance Risks

Security Limitations: AS400 systems were built in an era with different security standards, and they often lack modern security protocols. While IBM provides updates, many companies find it challenging to maintain up-to-date security on older platforms.

Compliance Issues: Industries subject to strict compliance standards (such as GDPR, HIPAA, or PCI DSS) may struggle to ensure AS400 systems meet all requirements, potentially exposing the business to compliance risks and regulatory fines.

5. Scalability Challenges

Difficulty Scaling with Demand: AS400 systems were designed for static workloads and don’t scale as effectively as modern cloud-based solutions. This limits an organization’s ability to scale resources on-demand or adjust to changing business needs quickly.

Inflexible Infrastructure: The lack of elasticity in AS400 systems makes it hard to adapt to evolving workload demands, particularly in dynamic business environments where scalability is crucial for growth.

6. Incompatibility with Modern Technologies

Cloud Transition: Many companies are migrating to cloud-based environments for increased flexibility, accessibility, and cost-efficiency. AS400 systems don’t easily migrate to cloud platforms, making them a barrier for cloud-first strategies.

Incompatibility with AI and Analytics: The architecture of AS400 systems makes it difficult to incorporate modern data analytics, AI, and machine learning capabilities, which are becoming essential for data-driven businesses. As a result, companies often find it easier to migrate to newer platforms that support these technologies out-of-the-box.

7. Competitive Disadvantage

Slow Time-to-Market: Due to the limited flexibility and integration capabilities, companies using AS400 systems may struggle to quickly launch new products or services, adapt to market changes, or adopt innovative technologies.

Customer Expectations: Modern customers expect real-time insights, seamless digital experiences, and high levels of service—all of which are harder to provide with legacy systems. By moving away from AS400, companies can better meet customer expectations and keep pace with competitors using modern systems.

8. Long-Term Strategy and Business Continuity

Future-Proofing: Organizations are investing in scalable, cloud-based architectures to future-proof their technology stack and prepare for growth. Migrating from AS400 aligns with this strategy, ensuring long-term viability and adaptability.

Business Continuity: Newer systems typically offer more robust disaster recovery, backup solutions, and data protection protocols, which are crucial for continuity in case of disruptions or data loss.

Why do companies defer AS400 modernization?

While many companies recognize the limitations of their AS400 (IBM iSeries) systems, there are several reasons why they may hesitate to modernize or replace these legacy systems.

1. High Initial Costs of Modernization

Upfront Investment: Modernizing or replacing AS400 systems can require a substantial investment in new hardware, software, and infrastructure, as well as migration costs. For companies operating on tight budgets, the initial cost of modernization may appear prohibitive.

Budget Prioritization: Many companies allocate their budgets to initiatives with a clear, short-term ROI, whereas modernization efforts are typically viewed as a longer-term investment.

2. Reliability and Stability of AS400 Systems

Proven Stability: AS400 systems have a reputation for reliability and stability, especially in industries where uptime is critical (like finance, manufacturing, and healthcare). These systems are known to be exceptionally stable and, in many cases, can run continuously without significant issues for years.

Risk Aversion: Some businesses are risk-averse and hesitate to replace a system that has consistently proven dependable, fearing that modernization could introduce instability.

3. Perceived Complexity of Modernization

Complex Migration Process: Migrating from an AS400 system is complex and often requires specialized knowledge to ensure data integrity, minimize downtime, and manage the transition smoothly. Companies worry about disrupting core business functions during the migration process.

Customization and Legacy Code: Many AS400 systems are highly customized and have accumulated a substantial amount of legacy code, which is deeply embedded in business processes. Replacing or rewriting this code can be a complex and time-consuming task.

4. Limited In-House Expertise

Lack of Modernization Skills: Companies that rely on AS400 systems often lack in-house expertise in newer technologies and may not have the necessary resources or knowledge to lead a modernization effort.

Dependency on Legacy Skills: Many of these companies employ specialists who are skilled in maintaining AS400 systems but may not have the experience or interest in migrating to newer platforms. This makes it harder for companies to shift away from their current systems without a skills gap.

5. Concerns Over Data Security and Compliance

Fear of Security Vulnerabilities During Transition: Companies are often concerned about the potential security risks involved in moving data and processes from a legacy system to a new environment, especially when sensitive or regulated data is involved.

Compliance Risks: Industries with stringent compliance requirements worry about data handling and the regulatory implications of migration. While modern systems often have better compliance features, companies still fear possible lapses during the migration process.

6. Complex Interdependencies with Business Operations

Integral to Core Operations: AS400 systems often support critical operations (such as ERP, supply chain, or inventory management) that are deeply embedded in the company’s workflows. These interdependencies make it challenging to replace or modernize the system without significant operational impacts.

Compatibility Concerns: Some companies have custom-built applications or third-party software that rely on the AS400 platform. Migrating could mean rewriting or replacing these applications, which may not have equivalent functionality on newer systems.

7. Uncertain ROI for the Business

Lack of Clear, Immediate ROI: The benefits of modernization—like enhanced flexibility, reduced maintenance, or improved scalability—are often long-term and difficult to quantify. Companies may struggle to justify modernization costs if the ROI is not clear.

Perceived as Non-Essential: Many organizations view modernization as a “nice to have” rather than a critical business driver, especially if their AS400 system is currently meeting their needs without major issues.

8. Risk of Disruption to Customers and Business Processes

Business Disruption: Companies fear that a system migration could disrupt operations, potentially impacting customer service, supply chains, or other critical business functions. This is especially true for industries where any downtime directly affects customer satisfaction or revenue.

Customer Experience: For businesses that rely on AS400 systems to support customer-facing functions, the potential risk of downtime or errors during migration is a significant deterrent.

9. Limited Vendor Support or Pathway for Migration

Lack of a Clear Migration Path: IBM offers some modernization tools, but there may not always be a straightforward or supported pathway from a legacy AS400 system to a new platform. This forces companies to rely on very specialized third-party consultants, further increasing complexity and costs.

Vendor Lock-In: Many organizations feel tied to their AS400 system because of long-standing vendor relationships, proprietary software, or reliance on IBM-specific technologies. Transitioning away from this ecosystem can be daunting and costly.

10. Sunk Cost Fallacy

Investment in AS400 System: Companies that have invested heavily in AS400 systems over the years may be hesitant to abandon this investment. The perception that they have “sunk costs” can make it psychologically difficult to justify starting anew with a different system.

Feeling of Dependence: After years of using AS400 systems, companies often feel that the system is irreplaceable due to its history and reliability, creating an attachment to the existing setup that makes them less willing to consider modernization.

How to approach AS400 modernization?

While companies recognize the benefits of modernizing from AS400 systems, the perceived risks, costs, and complexities often make them reluctant to do so. To overcome these concerns, modernization strategies must focus on demonstrating clear ROI, minimizing risk, and providing a clear roadmap that minimizes disruption and maintains business continuity.

Assessment

Software seldom “breaks”; rather, it decays. Business requirements change, security threat vectors evolve, costs increase, and user expectations grow continuously. Software that was highly effective when developed is now a limiting factor. A comprehensive assessment can quantify that decay and qualify realignment with business priorities.

Evaluate Current Usage: Identify which business processes rely on AS400, the specific applications running on it, and any customizations and/or integrations in place.

Set Clear Objectives: Determine goals you expect to achieve through modernization—better scalability, improved performance, enhanced security, integration with other systems, etc.

Engage Stakeholders: Ensure that both IT and business leaders are involved to align modernization efforts with business goals.

Blueprint

A blueprint provides a comprehensive pathway that describes the structure, scope, functionality, and usability of a software system. It enables stakeholders to visualize an outcome while an idea is still on paper, incorporating their knowledge of functions, workflows, and constraints to support business and technical goals.

Vision Planning: This step is a series of collaborations between executives, stakeholders, and engineers from both sides. The goal is to narrow in on a clear vision that lends itself to tactical planning.

Purpose: Goals, priorities and constraints
Ideation: Scope setting
Shaping: User, environmental and operational considerations

Roadmapping: Through additional collaboration, this step yields the necessary assets to support a detailed action plan. The goal is to create a strong foundation that drives a reliable development process.

User Experience: Process steps through key workflows
System Architecture: Reflecting components and dependencies
Functional Specifications: Detailed feature requirements
Project Plans & Projections: Guides resources, timing, and budget
Risk Analysis & Mitigation: Forestalls technical, security, and other risks

An example before and after

Application Sustainability is a concept where the software matches the stride of the business. It begins with awareness of the business’ strategy and priorities to ensure that the system remains useful, efficient, and maintainable over time.

At Gavant, we build, deliver and manage purpose-built software solutions that empower businesses to achieve their mission and surpass their goals. AS400 modernization can help companies stay competitive, meet customer expectations, and prepare for future growth.

They say a picture is worth a thousand words.