Modernizing enterprise systems proves to be a daunting task.
A few years ago, I had an interesting conversation with Dale Jablonsky, who at the time was CIO of California’s Employment Development Department (EDD). Jablonsky was leading a massive legacy replacement initiative that would modernize systems used by the state to collect payroll taxes, determine eligibility for unemployment and disability insurance, and pay out those claims.
All of this gave him a bird’s-eye view of the business drivers for replacing old systems and the challenges involved in these projects.
The EDD’s core systems dated back to the 1970s. Not only had they reached the end of their useful life, according to Jablonsky, they also were nearing the limits of their capacity. The department’s eligibility database processed 7 million transactions daily, making it the largest system of its type in the world. The system also contained nearly 170,000 business rules and some 80,000 function points.
This complexity made the system difficult to maintain and extremely hard to modify. The latter point was driven home during the height of the economic crisis, when Congress repeatedly extended the length of time that individuals could draw unemployment benefits. Every extension required changes to several hundred interconnected programs in the EDD’s eligibility system. Since those programs were written in COBOL, the department often had to contract out for expensive programming help.
Making the changes took anywhere from a few weeks to more than a month, depending on the complexity of the federal legislation, Jablonsky said. One particularly complex piece of legislation in late 2009 required modifications to 650 programs in the EDD system. The resulting delay in mailing unemployment checks made front-page news statewide and landed Jablonsky before angry state lawmakers who demanded an explanation.
“That’s the one we took a lot of heat for,” Jablonsky told me. “There were close to 110,000 claimants who were entitled to benefits, but because of our problems in getting those changes in, they were delayed several weeks.”
I was reminded of Jablonsky’s comments as we prepared this issue’s cover story. As the article points out, the California EDD’s experience is hardly unique. A study of states’ unemployment insurance systems released last year by the National Association of State Workforce Agencies reported that most of them were built in the 1970s and 1980s, and haven’t been modernized much since then. And the story is similar for state systems that handle core government functions like finance and Medicaid programs.
To be sure, replacing these old systems can be extremely difficult and expensive. Years of programming Band-Aids and cobbled-together modifications can make legacy replacement projects akin to a nightmare kitchen remodel on steroids. “I liken it to refurbishing a Victorian house where you find substandard electrical and plumbing,” Jablonsky said. “The older the system and more comprehensive the change is, the more surprises you’re going to find.”
Still, the costs of keeping these systems running — the risk of failure, the inability to respond to changing business requirements, the expense of support, the difficulty in launching new electronic services — mean their days should be numbered.