Legacy Application Modernization Strategy: A Comprehensive Guide to Revitalizing Your IT Infrastructure

To operate in a world that is moving towards being primarily digital, your company’s system and software will either help or hinder your capacity to expand and retain your competitive advantage. However, the software capabilities required to keep up with changing business dynamics are behind that speed. This is where the strategic need for legacy application modernization comes to the rescue.

According to IDC, by 2024, most legacy applications will undergo modernization investments, with 65% utilizing cloud services to enhance functionality or replace inefficient code. This foresight simply highlights the urgency and prevalence of this transformative trend.

Embarking on legacy system modernization requires businesses to make crucial decisions- whether to abandon outdated systems, upgrade existing software, or restructure applications hindering business objectives. This process is not just technological but strategic, enabling businesses to overcome challenges, embrace innovation, and stay competitive.

In this blog, we’ll dive into some key questions surrounding legacy application modernization. In addition to looking at the benefits of the same, we will also offer you a good look into a solid legacy modernization strategy for businesses capable of giving them a competitive advantage in today’s dynamic market.

Whether you’re a CIO shaping the future of your organization’s IT landscape or a business leader seeking strategies for sustainable growth, this blog will equip you with the knowledge and tools necessary to make informed decisions.

What is Legacy Application Modernization?

Let us start answering this question by first looking into what a legacy system is and how to identify one.

Legacy systems are concepts understood as old software, incumbent technology, or systems that slow down an organization’s ability to expand, grow, or keep up with the changing market demands. When a system is no longer able to meet the organizational needs, it is referred to as a legacy system.

Here’s how you can identify if you have a legacy system in place.

• It is no longer supported by the vendors
• It doesn’t get any security updates
• It doesn’t integrate with modern software
• You have to find workarounds for the processes
• You have to wait for it to load, finish, or simply run
• The maintenance cost is extremely high.

Even though a legacy system could be old or outdated, it is not inherently obsolete. For many businesses, legacy systems are essential to their daily operations and can operate at acceptable output levels. They utilize the best application modernization tools to keep their legacy software running.

Now, legacy system modernization involves giving an old system a makeover by adding modern features, updating its platform infrastructure, and improving its architecture.

This transformative process not only addresses the limitations of outdated systems but also ensures alignment with current industry standards, security protocols, and evolving business requirements. Updating legacy systems allows organizations to enhance operational efficiency, scalability, and overall performance. This further helps position themselves for sustained success in the dynamic digital landscape.

Understanding the Need for Legacy Application Modernization for Businesses

In the ever-evolving landscape of technology, legacy systems designed 5 or 10 years ago struggle to envision today’s rapid changes and competitive demands. While many legacy systems are vital for business operations, the decision to modernize becomes crucial as IT managers and executives weigh the ongoing maintenance costs against the benefits of application modernization.

The aging systems have faithfully served their purposes, but their ability to adapt to today’s dynamic business environment is limited. Modernization is not just about technological updates; it is a strategic plan to unlock enhanced efficiency, improved performance, and the ability to stay ahead in a competitive market.

According to McKinsey, legacy systems are a major drag on business performance. They can be difficult and expensive to maintain and upgrade, preventing businesses from adopting new technologies and innovative business models.

Deloitte also emphasizes that businesses are modernizing applications to be more flexible and agile, aligning IT technologies with their needs. This is because legacy applications, especially those that are based on mainframes, face compatibility issues with modern platforms. This limits organizations’ ability to address critical business needs and seize future growth opportunities.

Furthermore, the global application modernization tools market is projected to reach a valuation of $36.86 billion by 2027. The increasing market size can be attributed to the growing recognition among businesses of application modernization’s pivotal role in staying agile and competitive.

Simply put, modernizing applications is crucial to bridge the gap between old systems and today’s dynamic needs. Businesses embracing this transformation set the stage for meeting current challenges and driving future growth in the digital landscape.

Legacy System Modernization Strategy Crucial to Your Business Success

Digital transformation is all about an organization’s broader attempt to increase productivity, become more creative, and promote growth. A streamlined legacy modernization strategy is a key component within the technology facet of the people-process-technology triangle, contributing significantly to the overall digital transformation journey.

Legacy system modernization, especially around older versions of applications, is difficult because they are custom-built in a single monolith style compared to a microservices model. This means that the software – data, network configurations, and security are all tightly coupled with the base infrastructure, making it difficult to upgrade any one component. You evaluate the demands of your company, choose which aspects to update first, choose one of the dedicated legacy system modernization strategies, and carry it out.

Below outlined is a strategic plan for legacy system modernization:

1. Establish Your Software Modernization Goals

Switching your COBOL/CICS (a 60-year-old programming language still not out of vogue) environment to Java won’t solve every problem. It is advisable to align legacy software modernization initiatives with your business and technological objectives, focusing on scalability, additional features, and faster time-to-market.

For instance, updating billing software and incorporating it with a fresh e-commerce platform could increase client satisfaction and save service expenses. This is due to the fact that fewer clients need to get in touch with the company regarding bill-related issues.

Depending on your industry, market, and goals, you can determine how legacy system modernization might affect the company’s revenue, market share, customer experience, and more.

2. Identify the Issues

Yet another vital part of the legacy application modernization strategy is to detect bugs. It’s time to identify the issues further if the old system doesn’t meet current organizational or IT needs. Find out the issues with your digital solution that frustrate the users. Choose the relevant user stories.

However, it’s equally crucial to comprehend what legacy software does well. The knowledge of what works and what doesn’t can be used to choose the best legacy modernization strategy.

3. Assess Modernization

Analyzing legacy modernization calls for a systematic approach that includes identifying the needs, analyzing the present status, assessing modernization possibilities, and creating and implementing a thorough modernization strategy. Below are the top 4 legacy application modernization approaches that can be considered while mapping out the legacy modernization strategy.

Replatform

It is one of the legacy system modernization strategies that involves applying minimal changes in the legacy system and then moving them to another platform. Although it does not change the present system’s code function or structure, it allows you to host the applications on a less expensive platform. While the re-engineering of projects takes time, the re-platform approach is fast and designed to keep underlying business logic intact.

The situations where the approach makes the most business sense –

• There are very few functionalities that have to be modernized
• There is a business need to migrate a few processes to the cloud
• There is a financial crunch in the company

Reface

This legacy modernization approach surrounds scraping off some information from your legacy system and adding a graphical interface. It helps make your old software look new with some new UI features. The approach makes procuring any new technology unnecessary, thus reducing licensing costs.

The approach is best suited in cases where –

• The management team has a strong association with the legacy application.
• IT teams are highly skilled in the old technology and know how to continuously improve.
• Although the software is old, the technology base is modern (e.g. J2EE/Java)

Rebuild

This is one of the legacy system modernization strategies where you build the enterprise legacy system from the ground up. You can consult with your legacy system modernization company, Appinventiv, on whether to rebuild the entire system or simply rebuild the core parts of the software portfolio. The approach, although extreme, offers the greatest returns and best competitive edge.

The approach is chosen when –

• The present system is unable to support changes demanded by the market.
• Its vendor no longer supports the underlying technology
• The present technology is very expensive to license

Appinventiv experts worked with the world’s biggest furniture retail brand, IKEA, by creating a robust ERP system. In order to fully understand the challenges IKEA customers encounter when shopping in-store, our experts first began the customer journey mapping process. They used an agile development methodology to design the ERP solution, which would serve as the initial point of contact for all walk-in customers of IKEA.

Our committed efforts in developing the ERP system resulted in the engineering of a solution that is currently being deployed across 7+ IKEA stores in the UAE. The retail establishment now promotes the solution as the most important tool for calculating ROI.

Extend and Migrate

This is one of the most well-strategized legacy system modernization strategies. Here, you gradually extend your legacy system and introduce new features and modern applications on a milestone basis. This way, you get to perform legacy system updates without replacing them altogether. It is one of the lowest-risk ways to transform the system by moving one component at a time. And since only one component is migrated, the cost of failure and business impact is very low.

The situations where it suits best –

• When you are looking to replace the entire system one element at a time.
• When there are only a few components that contribute to your current business process.
• When you have to change the current system from batch to real-time
• When there’s a need to modernize the outdated database with an RDMS system.

4. Choose the Architecture

During this phase, it is time to determine the ideal architecture or legacy modernization approach at the three primary levels of application, database, and platform/server based on the selected strategy.

• Do you want the platform/server in the cloud to lower capital expenditures (CapEx) and raise operational expenditures (OpEx) or in your data center for more control?
• Do you choose a less expensive, open-source database like MySQL or Postgres if the program works well as it is? To do that, the program will need to be re-platformed to use the new database.
• Do you wish to replace your data center with the cloud and relocate both the application and the database there? This means higher immediate costs for a long-term reduction in IT staff.

Although the enterprise architect is responsible for making these choices, the business is also affected. The architecture you choose must accommodate automated processes and technologies like DevOps, DataOps, and other pipeline delivery paradigms in order to achieve that level of acceleration and value.

5. Choose the Team That Will Carry Out the Plan

To ensure carrying out legacy application modernization solutions, partnering with the right team is essential. The majority of legacy application modernization initiatives follow the following personnel hierarchy:

The program is led from the top by C-suite executives, including the Chief Information Officer (CIO), Chief Technology Officer (CTO), Chief Information Security Officer (CISO), And Chief Security Officer (CSO).

They receive reports from the enterprise architecture team.

The business and IT teams serve as contact points for their respective communities.

The enterprise architecture team balances IT capabilities with the business community’s demands for goods and services. The team must also develop the specifics of a plan to modernize outdated applications in order to carry out the overarching business goal.

6. Establish Success Metrics

Choosing metrics based on your initial motivation is the best approach to determine the effectiveness of your legacy application modernization.

The more data you comprehend, the more data-driven insights you will have to enhance the modernization of your legacy applications.

7. Automate Modernization

The goal of legacy software modernization is to increase value for the company, which necessitates automation. Fully automated migration, which refactors legacy data and code to contemporary platforms, is a more effective method for achieving legacy modernization.

Additionally, it makes it possible for organizations to gradually implement digital modernization without affecting daily operations.

Furthermore, completely automated digital migration enables businesses to move forward with legacy transformation at their own speed. For instance, refactoring a legacy program can result in “quick wins” by lowering risks and enhancing IT effectiveness.

8. Start Monitoring

The modernization of legacy applications does not always immediately reap the rewards, as there are also some persistent legacy application modernization challenges. Therefore, towards the conclusion of the project, your approach should incorporate monitoring and optimizing. As you examine the landscape of accessible tools, consider the following factors:

To make sure that your modernized application satisfies corporate goals and stays within budget, think about how to track its performance.

If the modernization of legacy applications uses the cloud, make sure to keep an eye on both your environment’s performance and the price of cloud computing. Although many businesses use the cloud to cut costs, they must use it wisely in order to benefit from any financial savings.

What Are The Hidden Costs of Legacy Systems?

Organizations may still be using legacy systems, which are old hardware or software programs. Even while these technologies may still be useful, they have a number of unanticipated costs that might harm the productivity and profitability of an organization. The following are some hidden expenses associated with legacy systems:

Maintenance Costs

Systems and applications become difficult to manage over time. Every other alteration adds up a level of complexity – these changes over a period of time introduce glitches. It takes very little time for even simple updates to become a time and money-consuming task.

Support Costs

With the systems becoming old and outdated, vendor support also lowers. So, if you have been relying on third-party software providers, it will become all the more difficult to keep the software running if they stop providing the support altogether.

Legacy Skill Set Costs

The upkeep of a legacy system calls for a legacy skill set. Once the employees carrying those skills retire, the talent pool shrinks. What makes it worse is that the market, which has now moved to more new-gen technologies and systems, curbs the demand for legacy skills even further.

Agility Costs

Most of the legacy systems are difficult to change. So, what happens when you have to add a new feature or application to the business? Here’s what – projects run longer and over budget. You keep encountering roadblocks during the project. Testing new features takes time since measuring how well everything fits with the old system is difficult. These events tend to up the integration costs as well.

Up until this point, you must have gathered insights into why legacy system modernization services are necessary (in many ways a prerequisite) for any business looking to invest in digitization.

Simply put, the reasons why IT legacy modernization is necessary includes:

• High business operation cost
• Lack of ability to maintain a competitive edge
• Encountering challenges in digital transformation

While updating the legacy system is expensive, it is vital to carefully consider which software modernization strategy is good for you.

But how do you decide that?

• By ensuring that the legacy system is actually outdated and not for you anymore
• By having a complete understanding of how the different legacy modernization models work.

Real-World Legacy Modernization Examples

Here are a few real-world examples of companies that have successfully undergone legacy modernization:

American Airlines

American Airlines is one of the most famous legacy modernization examples across the globe. The airline successfully modernized its legacy systems by migrating critical applications to the cloud. This strategic decision resulted in improved scalability, operational efficiency, and the ability to quickly adapt to changing customer demands and market conditions.

Delta Air Lines

Delta Air Lines recently upgraded its reservations system to better cater to the needs of modern travelers. The outdated legacy system was replaced with a more adaptable and expandable platform, allowing Delta to introduce new and innovative features, enhance reliability, and elevate the overall passenger experience.

National Australia Bank (NAB)

NAB successfully modernized its legacy systems by migrating important banking applications from mainframes to modern and scalable platforms. This initiative resulted in reduced operational costs and allowed the bank to embrace agile development practices, leading to improved time-to-market for new features and services.

AT&T

AT&T successfully transitioned from monolithic applications to a microservices architecture, enabling faster response to market demands, improved scalability, and enhanced system resilience.

JPMorgan Chase

JPMorgan Chase, one of the world’s largest banks, has also been investing heavily in legacy modernization. The company has modernized a number of its critical systems, including its core banking system and its trading platform. These modernization initiatives have helped JPMorgan Chase to reduce costs, improve customer service, and comply with new regulations.

Also Read- Resurrecting Patient Care With Legacy Systems in Healthcare

How can Appinventiv Aid Your Modernization Efforts?

Whether you are looking to re-platform the legacy system, integrate a new solution in the system, or simply want to re-architect the enterprise system, opting for the best-in-class legacy application modernization services from a skilled software development company is necessary for both short and long term outcome and success.

With extensive expertise in handling enterprise-level projects, our in-house software development team carries expertise in legacy modernization. Right from defining goals and establishing scope to integrating systems in your legacy software and working on a milestone-based migration, our team hand-holds you through the entire process.

For instance, our modernization efforts revitalized Pizza Hut’s food delivery app, providing a robust digital appearance, scalable architecture, and an enhanced user experience. The app was able to witness a 30% increase in conversion rate and 50K+ downloads.

Similarly, our legacy application modernization services empowered the renowned sports merchandise brand Adidas to reshape its digital presence, achieving substantial user engagement. The brand was able to bag 2M+ app downloads and 500k+ new users.

Get in touch with us to design your business objective and understand the best route to migrating them into digital-first software.

FAQs

Q. What is legacy application modernization?

A. Modernization of legacy systems involves converting out-of-date software applications to more current, effective ones. This entails updating the application’s technological stack, revamping or replacing its architecture, and enhancing its functionality to satisfy present-day business requirements. The importance of legacy application modernization includes increased scalability, decreased maintenance costs, and enhanced performance, security, and usability.

Q. What are the benefits of legacy application modernization?

A. Here are some of the top benefits of legacy application modernization:

Enhanced performance: By the modernization of legacy systems, organizations can handle greater workloads and process data more quickly. These improvements include speed, scalability, and efficiency.

Enhanced security: Due to outdated security measures, legacy applications may be susceptible to cyber-attacks. By enhancing security controls, modernizing the application can lower the risk of data breaches and better secure sensitive data.

Better user experience: Modernized apps may provide a user-friendly, intuitive interface, enhancing the user experience and raising customer satisfaction.

Reduced maintenance costs: Maintaining legacy applications on a regular basis can be expensive. Organizations can cut maintenance expenses and boost overall effectiveness by modernizing the application.

Q. What are some legacy modernization trends?

A. Here are some of the top legacy modernization trends adopted by business across the globe:

Cloud Migration: Moving apps and data from on-premises infrastructure to a cloud-based environment is required to migrate traditional systems to the cloud. This modernization method can offer high availability, security, scalability, and cost savings.

Re-platforming: Re-platforming is the process of migrating an application to a new platform without altering the code that runs on that platform.

Microservices Architecture: Breaking down huge, monolithic programs into smaller, independent services that can be created, deployed, and managed independently is the concept of a microservices architecture. This modernization strategy offers greater agility, scalability, and flexibility.

Containerization: Application packaging into containers that can be used in different settings is known as containerization. This modernization method offers efficiency, scalability, and portability.

THE AUTHOR

Saurabh Singh

CEO & Director