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Case Study

How a state government modernized its payroll and pension mainframe on Microsoft Azure

Learn how a state government agency partnered with OZ Digital to modernize its mission-critical payroll and pension system supporting millions of people.

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The Challenge

A state government depended on a decades-old mainframe system to manage payroll and pension services for millions of citizens. Over time, the platform became increasingly difficult and expensive to maintain due to millions of lines of legacy code, complex batch processes, limited documentation, and reliance on a shrinking pool of specialized mainframe experts.
Modernization was critical, but any disruption to payroll or pension operations was not an option.
TECHNOLOGY:

Microsoft Azure

GitHub Copilot

Azure Sentinel

Azure API Management

Azure Functions

Logic Apps

“It’s tempting to say, “If it’s working, don’t touch it. But doing nothing is still a decision and usually the riskiest one. Costs continue to rise, skills become harder to find, and every policy or regulatory change takes longer to implement. Over time, the system becomes less resilient, not more. This is how stable systems quietly become single points of failure.”

— Chris Pietschmann

The Solution

OZ Digital modernized the legacy environment into a secure, cloud-native Azure architecture using an incremental, low-risk approach. GitHub Copilot accelerated code analysis, documentation, business rule discovery, code transformation, and testing, while experienced SMEs ensured accuracy and governance throughout the process.

Modernization Approach

Step 1: Discover & Document

Used GitHub Copilot to identify business rules, dependencies, and generate documentation from legacy code.

Step 2: Transform Applications

Converted core mainframe applications into modern C# services using AI-assisted transformation.

Step 3: Modernize Batch Jobs

Replaced legacy JCL processes with Azure-based automated workflows.

Step 4: Modernize User Interfaces
Converted terminal screens into modern, user-friendly web applications.
Step 5: Test & Validate

Used AI-assisted testing to verify accuracy between legacy and modernized systems.

Step 6: Deploy in Phases

Rolled out components incrementally to minimize risk and maintain uninterrupted operations.

Impact

  • Significant reduction in infrastructure and maintenance costs by moving from expensive mainframe operations to a scalable cloud platform.
  • Reduced reliance on scarce and costly mainframe specialists.
  • Faster development and release cycles through modern microservices and automation.
  • Improved scalability and performance with elastic cloud infrastructure.
  • Enhanced security and regulatory compliance using Azure-native controls.
  • Higher reliability and resilience with built-in failover and disaster recovery.
  • Complete documentation of critical business logic for the first time in decades.
  • Greater testing coverage and modernization confidence through AI-assisted validation.

The Result

Today, the state operates on a modern, secure, and cost-efficient platform that supports mission-critical payroll and pension services while enabling faster innovation, reduced operational risk, and long-term sustainability. OZ Digital continues to support the platform with ongoing optimization, governance, and continuous improvement.
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