Legacy Application Modernization: How To Advance Your Industry Forward And Succeed

BCG reports that only 30% of modernization projects have successfully achieved their objectives, causing confusion among enterprises. However, is that a real reason to get frustrated and postpone your modernization plan?

I don't think so. Moreover, I am sure many businesses fail because of completely addressable flaws. I would highlight two main mistakes: a fixed business mindset and a fear of obstacles. First, you have to spare yourself from skepticism about innovations. Second, you can't achieve anything without accepting the challenges that come together with any changes.

Flip The Switch: From A Fixed Business Mindset To A Growth One

By tackling your reactive behavior as an entrepreneur, you can see numerous opportunities to capture an existing market or even create a new one.

When we entered the edtech industry, the concept of online education and e-learning solutions was still in its early stage. To provide some context, there were only 479 registered education startups in 2010. However, the landscape has dramatically changed, and there are now almost 25,000 participants in this fiercely competitive market, including vendors and custom developers.

We identified this specific market niche and established our presence in e-learning, consistently attracting profitable opportunities. By dedicating 80% of our resources to the most lucrative ventures, we have been securing funds for fostering creativity and conducting experiments—ultimately scaling up to other services like application modernization and diverse domains.

An example of such a domain switch that has turned out to be timely and lucrative is digital healthcare. By 2019, approximately 72% of office-based physicians and 96% of nonfederal acute care hospitals had implemented a certified electronic health record (EHR). In 2009, only 12% of hospitals and 22% of physicians had adopted an EHR. I believe this significant digitalization progress, despite taking 10 years, eventually helped the healthcare industry cope with pandemic challenges.

If you can't forecast booms or be a trendsetter and an innovator, don't get upset. Few people can. However, both a startup entrepreneur and a seasoned business executive can be at least an early adopter. According to the diffusion of innovation theory, these people are keen on new ideas and happy to leverage new technologies as soon as possible. They relish a leadership role and welcome chances for change.

Take The Challenges Head-On

As a CTO of a service software development company with 18 years of experience, I see plenty of times how companies went through all five stages of accepting changes. Finally, they come to realize it is unavoidable in an ever-evolving global economy.

Many business owners choose to use outdated software because they are afraid of expenditures on legacy system modernization. These programs are out of date, but a company is still using them to support some business processes and meet the needs. For instance, it can be ERP software, CRM systems or accounting software.

An organization wants to avoid any interruptions in its performance. The software is still working, so it seems there is no urgent need to upgrade it and invest resources in looking for an appropriate solution and then implementing it.

However, you might be surprised when your legacy programs start causing growing security issues because of outdated design vulnerabilities, when you realize that your company can't scale legacy applications to provide advanced functionality for your customers, or when your legacy apps turn out to be not compatible with the latest software.

According to Gartner Inc., 91% of CIOs reported that technical debt provoked by legacy programs influences agility and delivery speed.

If your legacy application lags, you need to upgrade it. The challenge is that as a business owner, especially without tech expertise, you don't know how to modernize legacy applications. Who's creating a modernization plan? Who's executing this plan? How do you find staff with the necessary experience or choose the right external partner? How much does legacy software modernization cost?

Whether you are an internal project manager or an outsourced contractor, you have to advocate your modernization plan in front of business owners. It's not only about identifying the right approach, tools and technologies; a much more daunting challenge is proving your strategy and getting funding from stakeholders because any modernization requires investment for updating/replacing old systems and acquiring new skills by employees.

Jump On The Opportunity

Both stakeholders and project managers should answer a specific set of questions to see the opportunities instead of obstacles.

From a business standpoint, three business drivers matter:

• Does the legacy application align with the new demands set by digital businesses?
• Should we upgrade our old software to enhance its business value?
• Do our legacy systems respond to agility principles?

From the IT perspective, three following drivers are essential:

• Is the total cost of legacy systems maintenance reasonable?
• Is the complexity of the technology sensible?
• Which risks are arising from using obsolete IT components?

When a few drivers from both business and technical viewpoints cross, you will see new opportunities and how to capitalize on them.

Eventually, modernizing your old programs typically means rehosting, refactoring, replatforming, re-architecting or rebuilding them. Each of these modernization approaches has pros and cons as well as different costs, risks and time frames.

While rehosting (lift-and-shift migration) is the least complicated because it involves transferring on-premise apps into the cloud without code changes, it brings fewer opportunities. The refactoring model is more time-consuming and expensive because you need to rethink the business logic and redesign your existing software but provides better performance.

That is the essence of the risk-return principle, and you have to balance between less effort and risks but more value and outputs. Conducting business and technical audits helps you find this golden mean in your modernization path.