Puzzle: IT Optimization

Puzzle: IT Optimization

As the new year begins, your first task is to create a transition plan for five legacy IT systems to modern SaaS platforms while minimizing costs and staying within operational constraints. Here are your systems, their current steadily increasing monthly costs of maintenance, their new stable monthly SaaS costs, and their migration costs:

The KPIs

  • Primary Goal: Minimize total annual expenditure (Target: $250,000; Limit: $300,000).
  • Quarterly Constraint: Keep maximum quarterly spending under $100,000 (Ideally closer to $80,000).
  • Execution Rule: Your team can maximally handle one migration per month.

 

The Financial Mechanics

  1. Technical Debt: Monthly maintenance fees for legacy systems increase every month starting in February.
  2. Migration Cost: A one-time capital hit paid in the month the migration starts.
  3. The Switchover: During the migration month, you pay the Legacy Fee + Migration Cost. In the following month, the legacy fee stops and the lower SaaS Fee begins.

 

By the end of 2026, you must have migrated all systems. When do you schedule each one?

You have two objectives, the overall costs and the quarterly costs. There is a maximum for each and also a desired target. How will you use this information to strike a good balance between both KPIs?

Seeker's multi-objective optimizer finds this solution:

  • A. Core Banking. Migrate in July.
  • B. CRM Legacy. Migrate in in January.
  • C. Supply Chain. Migrate in May.
  • D. HR Portal. Migrate in February.
  • E. Data Warehouse. Migrate in April.

 

Overall Costs: $270,070

Quarterly Costs:

  • Quarter 1: $93,765
  • Quarter 2: $92,905
  • Quarter 3: $69,600
  • Quarter 4: 13,800

 

Without the quarterly limit, we could lower the total costs to less than $236,000. If we used the $100,000 as bound but did not strive to bring the maximum quarterly costs closer to $80,000, we could still achieve a total costs of less than $261,000. But as the cash-flow KPI is deemed equally important, Seeker decides to spend about $10,000 more in total costs, thereby keeping the costs still healthily below the limit of $300,000, but with more buffer on the quarterly expenses.

A free Seeker Colab is available here.

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