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AI in IT Modernization: Speeding, Cost-cutting, Quality-boosting

2024-12-02

At the core of every large organization lies a significant challenge - the tech debt embedded in legacy IT systems. These systems, often built decades ago, form the technical backbone of companies across various sectors. As much as 70 percent of the software used by Fortune 500 companies was developed 20 or more years ago. Modernizing these aging systems and reducing tech debt has traditionally been seen as an "IT problem," but with the rapid advancement of technology, it must now become a CEO priority.

Unlock the Potential of Gen AI in Modernizing Legacy Tech

Improving Business Outcomes

Companies have often used gen AI in a simplistic way by directly translating legacy code into modern language. This "code and load" approach simply shifts the tech debt to a new context. The true goal should be to improve systems and processes to generate more value. Gen AI can help understand existing code, determine business needs, and modernize necessary processes. For instance, at one financial-services company, experts' transcripts were fed into the gen AI model to provide better guidance, enabling business and engineering experts to work together.

By using gen AI, engineers can gain clarity on system operations and allow business experts to make more informed decisions. This leads to a more efficient use of resources and a better alignment of technology with business goals.

Enabling Autonomous Gen AI Agents

In software development, using gen AI agents to assist developers can increase productivity. The next level of acceleration involves deploying hundreds of autonomous gen AI agents with human oversight. These agents have distinct roles and expertise, collaborating on complex tasks such as data analysis, integration, testing, and outcome refinement.

For example, at a banking company, the deployment of gen AI agents allowed for a 40 percent reduction in the estimated time to migrate mainframe components. Data mapping and storage agents worked with other specialized agents to ensure safe and secure code development. Implementing controls like feedback loops and ID assignment helps ensure the agents deliver the right outcomes.

Focusing on Scaling Value

The excitement around gen AI has led companies to focus on tool evaluation. However, the bigger issue is how to scale gen AI. Technology leadership should develop a central, autonomous gen AI capability with two components - a factory and a platform.

A factory is a group of people who develop and manage gen AI agents for specific end-to-end processes. It standardizes and simplifies agent development and management. A platform provides reusable services and capabilities that factories can access. It includes a user interface, APIs, supporting services, and a library of gen AI agents.

By focusing on scaling value, companies can build sophisticated multiagent workflows and drive innovation and value.

Next Steps

Companies looking to adopt the multiagent orchestration model should take four steps. First, question any technology proposal with a long timeline and many people. Second, focus gen AI on the biggest problems. Third, tie the business plan explicitly to value and track it closely. Fourth, get ahead of talent, technology, and operating-model implications.

Companies have only begun to scratch the surface in applying gen AI to modernize legacy technology. By focusing on orchestrating gen AI agents on meaningful business opportunities, they can cut tech debt and drive innovation.

City Commissioners are set to deliberate on two crucial contracts during their December 3 meeting. These contracts pertain to the Lift Station No. 1 project, which holds significant importance for the city's infrastructure. The first contract is with Prospect Construction for the general contractor construction manager role, with a guaranteed maximum price of $7,456,692. This includes improvements to the lift station and supplemental force main. Simultaneously, a professional services agreement with TD&H Engineering for engineering construction phase services has been recommended for approval, amounting to $687,600. The total value of these two contracts reaches $8,144,292.

Commissioners' Approval of Contracts for Lift Station Upgrades

In 2021, a comprehensive feasibility study was conducted for this project. Subsequently, the city successfully applied for and received American Rescue Plan Act funds, also known as federal COVID relief funds, to support the undertaking. Design work commenced in 2022, and by October of that year, 30 percent of the designs were completed. At this stage, the cost estimate was $7.8 million. In April 2023, commissioners made the decision to adopt the general contractor construction management process, which is permitted by Montana law for complex projects meeting certain criteria. This process consists of preconstruction and construction phases.The city has already approved about $1.6 million in related contracts last month. Under the proposed contract, TD&H will continue to play a vital role in coordinating various aspects such as the general contractor construction manager process, bid package review, general construction management and inspection, as-built and operations and maintenance plan development, and archaeological monitoring service.

City Approves Contract for Lift Station Project [2023]

This is not the first project where the city is utilizing the GCCM process. In September 2023, the contractor manager contract was awarded, and by December 2023, the design had reached 60 percent. At this point, the cost estimate had risen to $16.7 million, an increase of $8.9 million. City staff informed commissioners in April that the initial cost estimates were largely based on the 2021 river crossing project, but many costs had since doubled due to inflation. During an April 2024 commission work session, staff discussed a $9 million budget shortfall that occurred during the design phase of the project.

City Adjusting Plan for Lift Station No. 1 Project Due to Cost Increases

Due to the significant cost increase, city staff took measures in April to adjust the project scope. The focus was shifted to Lift Station No. 1 improvements in the first phase, while forcemain repairs were postponed to a future second phase. In November, commissioners approved two contracts for the pre-procurement of long lead time equipment required for the project.Lift Station No. 1 was constructed in 1976 and is the city's second-largest pumping station, handling about 40 to 45 percent of all raw wastewater to the wastewater treatment plant. According to city staff, the current stormwater pumps and associated ball valves are deteriorating, and spare parts are no longer available for repairs. The bar screen, installed in 1986, has difficulties in screening rags and debris during high flows due to its large five-eighth-inch screen openings. Modern screens typically have either a quarter-inch or three-eighths-inch opening. The exhaust fan, which is essential for removing hydrogen sulfide from the building, is nearing the end of its useful life. Additionally, wet well repairs and the replacement of six sluice gates are necessary as two gates no longer operate due to corrosion, and the other four gates are approaching the same condition."The renovation of Lift Station No. 1 ensures the future reliability of pumping raw wastewater to the [wastewater treatment plant]. This minimizes the risk of service interruption, wastewater bypassing to the Missouri River, regulatory exposure, and environmental damage associated with aging equipment," stated public works staff.

City Considering Contract for Sewer Crossing and Lift Station Project [2023]

This project is the first phase, with the second phase expected in the future to construct a redundant river crossing. Completing these projects will reduce the severity of an S.O.S. situation during extreme rain events and prevent the older 1979 forcemain from breaking, as stated by public works.The Lift Station No. 1 project has been selected and prioritized under the public works capital improvements program. It is being funded with $3,854,585 of state ARPA minimum allocation grant funds, $2,000,000 of state ARPA competitive grant funds, and the remaining $5,521,597 from the city sewer treatment fund. If the ARPA funds are not spent by December 31, 2025, the city risks losing these funds and having to find alternative sources to fund the project. If commissioners delay the project, city staff noted in their staff report that it will lead to a delay in equipment lead time, scheduling issues, and an estimated $420,000 increase in overhead costs. Construction completion is estimated for the fall of 2026.