Before beginning any kind of modernization or migration project,business and IT executives must understand exactly what their legacysystems do and whether the way the systems work actually reflects thebusiness strategy, McDaniel says.

"It's a huge mistake to jump into migration on a per-project basisjust to see where it leads," he says. "Develop a vision of where youwant your architecture and infrastructure to be in two, four, six andeight years. Assess what skills are available and know what yourinvestments are right now in development versus maintaining legacyapplications. Does the existing system map the key business processesthat are critical to success? That's where you must start."

David R. Guzman, senior vice president and CIO of Glenallen, Va.-basedmaker of medical and surgical supplies Owens & Minor, did just that.His legacy systems were configured to assume that Owens & Minor, with$3.5 billion in revenues, owned all the supplies it shipped tocustomers, but the company was evolving toward a third-party logisticsdistribution model. What Guzman needed was a system that allowed thecompany flexibility in distribution methods. This provided thebusiness rationale for migrating to a Web-based platform.

For Roberts, CIO of the $763 million San Francisco-based PMI Group,his legacy system's ability to support customer demands was"questionable." The back-office systems, which included claimspayment, billing and policy maintenance, were 12 to 15 years old.According to a 1996 study commissioned by PMI (one year before Robertsarrived), the cost of modernizing the company's legacy systems,estimated to be about $20 million, wasless than the estimated cost of the potential service-related failuresthat could result if the systems were left in place.

At that time, PMI staff in both the IT department and the policyservicing department were spending hours cross-referencing customerdata between the legacy systems and the separate policy systems. Asthe two systems didn't talk to each other, there was always the riskthat someone might miss something during the manual check.