Application Modernization 101: The Definitive Guide

The vast majority of businesses today rely heavily on technology to both serve their customers and support their internal operations.

Delivering a superior, secure customer experience and supporting effective internal processes requires cutting-edge software and IT infrastructure that work seamlessly together. That’s what application modernization is all about.

Net Solutions created this guide to help enterprises understand the importance of application modernization, its benefits, and all the various technologies they can leverage when shifting on-premise, monolithic applications to the cloud—adopting flexible, scalable microservices.

What is Application Modernization?

Application modernization, also known as legacy modernization or software modernization, is the act of re-writing or porting a legacy system to a more modern, cloud-based system.

Application modernization can include a shift in:

• Programming languages
• Architecture
• Libraries
• Tools
• Paradigms surrounding modern user interactions

Application modernization delivers better user experiences, optimizing systems for internal staff and customers.

Chapter 1Application Modernization Best Practices

Application modernization is a significant undertaking for large enterprises, and successful companies approach it strategically and methodically.

Here are some best practices surrounding application modernization that will help guide your strategy and support your success.

• Build a modernization team, and don’t be afraid to outsource the build, strategy, and labor to professionals with a proven track record.
• Gather input from a variety of stakeholders, users, and leaders
• Map your modernization workflow and strategically update apps to optimize the user experience and avoid compatibility issues
• Identify goals and Key Performance Indicators (KPIs) to measure success
• Avoid data loss when transitioning legacy systems

Again, implement these best practices, and don’t be afraid to turn to an experienced outside resource. Even if your IT team is exceptionally talented, their strengths are likely focused on their day-to-day tasks, not app modernization.

Chapter 2Application Modernization Drivers

What inspires enterprises to engage in an expensive, time-consuming app modernization process?

Gartner has identified the following six key drivers for application modernization. When the business case for app modernization is met, it makes sense to move forward.

• Cost: Legacy systems are expensive to run and maintain
• Complexity: Monolithic, legacy systems are complicated to diagnose and require work-around solutions that distract IT staff from adding value for customers
• Risk: Legacy software is far more vulnerable to cyber security threats
• Business fit: Outmoded systems often struggle to fulfill the needs of both internal and external customers
• Business value: Refusing to upgrade systems and modernize apps can make it difficult to compete
• Agility: Outdated systems make it difficult to be responsive to customer needs, especially when legacy software fails to integrate and work with new applications

When businesses reach a point where the pain of failing to upgrade is greater than the benefits of investing, the only rational choice is app modernization.

Chapter 3Benefits of Application Modernization

Digital transformation is rising as companies work to remain competitive, and they know that integrating new technologies is key to their success. Application modernization means changing how work is done and delivering value to end users.

A fundamental paradigm in this new approach is combinatorial technology, which describes how applications interact to support an entire ecosystem of apps and technology.

Cloud migrations will leave on-premise, monolithic software solutions in the dust as cloud spending is poised to reach the top of IT balance sheets by 2025. That means legacy applications will need help to integrate with new cloud-based systems.

Failing to upgrade legacy apps can present:

• Software maintenance challenges
• Integration problems
• Technical debt that grows
• Increased operations costs over the long haul
• Security problems
• Slow and unresponsive systems that lack flexibility
• Data siloes that create a competitive disadvantage

What follows are some of the key benefits associated with app modernization and digital transformation.

Reduced maintenance costs

Adding new features to legacy applications makes them bloated, and increased support requests boost maintenance costs. Replacing legacy systems with modern apps will cost more upfront, but they require less maintenance and save money in the long run.

Full integration with other systems

Many modern cloud and SaaS solutions are incompatible with on-premise, legacy applications. Upgrading applications creates full compatibility and fewer problems with efficiency, security, and effectiveness.

Easy integration with external software via API

Integrating legacy apps with modern tools may require expensive custom work, while cloud-based, modern solutions with APIs are much easier to integrate.

Greater efficiency and reduced labor costs

As enterprise workloads move to the cloud, shifting modern systems away from on-premise apps will reduce hardware, security, and storage costs.

Business agility

Legacy applications remain an obstacle to becoming agile and adapting to the latest trends in your industry. Agility is a key aim of most digital transformation efforts, and modern apps make this possible.

System responsiveness

It’s easier to update modern software with new features and security patches.

Better data collection and processing

Data trapped in legacy applications result in data siloes, making the data streams challenging to capture, process, and analyze. Modern apps are designed for data collection, offering insights into customer behavior and optimizing business processes.

Efficient workflows

Working with legacy systems takes time and effort for staff members who must develop workarounds to complete their jobs. New systems pave the way for more efficient workflows.

Increased security

Legacy applications may rely on older operating systems, third-party software, or code that is no longer updated and remains unpatched. This opens you to security breaches, which could destroy your brand and harm your customers.

All these factors make digital transformation an intelligent business strategy. According to a recent Forrester study, app modernization can provide an ROI of up to 228%.

Chapter 4Application Modernization Challenges

Application modernization is a wise strategic decision, but it still has its share of potential challenges. Be aware of the following risks so you can address them and take steps to mitigate them.

What are some common risks that enterprises face when engaging in application modernization?

The truth is that application modernization can amount to an enormous job. The more integrated, critical, or central any given application is to the business, the bigger the risk of getting it wrong.

Rather than go it alone, it may be worth hiring an outsourcing partner who can advise you at every step and do the heavy lifting.

Chapter 5Application Modernization Trends

What does a modern application look like? Let’s look at the latest trends in app modernization.

Today, modernization always means installing or creating a cloud-based application, but there’s more to it than just cloud computing. Enterprise application modernization involves integrating several key technologies, including one or more of the following.

Cloud-based systems and applications

First and foremost, enterprises undergoing application modernization are looking to leverage the power of the cloud, which means coming up with a cloud migration strategy that works.

This means shifting to a public cloud (the most popular and flexible being Amazon AWS or Microsoft Azure), private cloud deployment, a hybrid cloud, and/or multi-cloud platforms.

As businesses embark on their cloud application modernization journey, they will likely embrace Platforms as a Service (PaaS), a framework to build, test, and manage custom applications. They will also probably adopt Infrastructure as a Service (IaaS) platforms, otherwise known as virtual data centers.

Since so many business needs are tied to cloud application modernization, and because migration can feel overwhelming, 19% of enterprises report turning to an experienced cloud infrastructure migration partner to assist them.

MACH Architecture

It used to be that microservices tools were the main focus of app modernization; today’s application modernization approaches are taking things several steps further. To ensure the architecture reflects the greatest flexibility possible, MACH architecture has become the new standard.

Mach stands for Microservices, API-first, Cloud-native, and Headless. Here’s what each of those terms means.

• Microservices Microservices are independent services used for different software components and business processes, each communicating through an API.

  A microservices approach allows enterprises to build or choose the best service for each component, scaling or swapping each service as needed.

  Built in a modular fashion, microservices enable organizations to create multiple modules, accelerating time to market. Working with apps that use microservices is one of the top reasons for application modernization—up there with cloud compatibility itself.

• API-First To be API-first means to think of the API as the center of the product design, not an add-on. This concept forces developers to approach product design such that it prioritizes how individual components communicate effectively.
• Cloud Native As mentioned above, application modernization is often called “cloud application modernization” because it prioritizes the cloud.

  Cloud-native means the design has all servers, databases, and software running in the cloud. Ideally, it leverages containerization to isolate components from the larger architecture and reduce dependencies.

• Headless Headless design is an architecture that decouples the front end from the back end of an application, connecting them via API.

  This allows businesses to change the front or back end without affecting one another. This will enable developers to optimize each “end” with different frameworks.

  Combined with microservices, headless architecture usually means the backend simultaneously contributes to many different business modules.

  MACH architecture can be applied to many products for a quick launch, enabling changeable components and increased scalability, resiliency, and operational efficiency. That makes it ideally suited for digital transformation efforts.

Composable Architecture

Composable architecture is similar to MACH architecture. It includes incorporating microservices into the front end increasing flexibility across various touch points. Composable architecture is widespread in modern eCommerce applications.

Composability occurs when components of different apps can work to serve other purposes, as the composable front end and back end of headless architectures often do.

This allows for flexibility and agility that support further innovation, allowing companies to quickly adapt to changing user demands.

Containers

Most modern applications leverage containers and Kubernetes. A container will hold everything needed to run an application (all the code, libraries, etc.). Kubernetes is a container management platform that helps create a unified pool of computing resources.

UX Modernization

Consumers demand more personalization, modern experiences, and intuitive design these days than ever before. Many organizations are rethinking how they approach User Experience (UX) as part of application modernization.

UX modernization means examining an existing application and seeing how it can better meet the user's needs, expectations, and desires. As with any great UX design, this will involve research into visual design, features, and accessibility.

Artificial Intelligence (AI) and Machine Learning

Enterprises are incorporating AI into their systems in new and exciting ways, including virtual assistance, the automation of business processes, customer support, AI chatbots, forecasting, and many other areas.

Multi-Cloud Environments

The use of multiple cloud services (i.e., using more than one managed services provider for your cloud) is growing since each provider offers different features. Rather than building and integrating custom features into individual apps, using a multi-cloud infrastructure, using APIs, containers, and middleware to manage workloads is faster.

Chapter 6Application Modernization Roadmap

Once you’ve conducted a preliminary cost-benefit analysis and determined that application modernization is ideal for your company, it’s time to chart a clear path toward success in your app modernization roadmap.

Successful app modernization includes the following steps, which we will outline in greater detail below.

• Evaluate legacy systems
• Define the problems
• Evaluate the types of application modernization
• Choose your application modernization approach
• Prepare for the future
• Choose the right partner
• Optimize

Step 1. Evaluate legacy systems

Conduct a thorough review of your current systems and identify which applications require modernization.

If you have any non-cloud-based software those need an upgrade. Pay attention to any older apps and systems that aren’t working well with the new systems you’ve already introduced.

Coming up with a thorough plan to evaluate your needs and assess your budget is essential for several reasons, including:

• Presenting a complete cost-benefit analysis
• Getting buy-in from leadership
• Verifying that the ROI for app modernization is greater than sticking with the status quo

Later, we’ll discuss the different application modernization strategies available to you, which will help you determine the ideal approach based on your goals and budget.

Step 2. Define the problems

Once your cost-benefit analysis shows that your legacy applications are no longer meeting current business needs, it’s time to break that down further.

In product development terms, this is the process of developing user stories that describe the application’s desired functionality and how that will benefit users.

The legacy application may satisfy those user stories without producing additional tech debt or interfering with other operations. In many cases, legacy systems impede that user journey and impact functionality.

User stories are essential for prioritizing your app modernization strategy, and it all begins with identifying the problems your users and your company face.

Step 3. Choose an Application Modernization strategy (the 7 Rs)

There are many different approaches to app modernization. To help conceptualize various strategies, thought leaders at Amazon Web Services (AWS) have broken them down into the 7 Rs of app modernization.

Remember that you will likely use a combination of these strategies, perhaps choosing an approach that involves retaining some apps, retiring others, etc.

These are just general guidelines for thinking about your approach. Over the years, different thought leaders have developed other models, from Gartner’s 5 R model to the 6 Rs that AWS originally proposed.

We’ve listed AWS’s 7 Rs in order of difficulty and the resources required to implement them, starting with the easiest and moving up to the most resource-intensive and comprehensive.

Retire

Retiring is a common approach for dealing with redundant workloads and legacy apps companies are no longer using. As the name implies, the app is simply removed from the ecosystem without revising, replacing, or making other changes.

Benefits: Retiring is simple and straightforward, requiring little financial or time investment.

Risks: Do your due diligence to ensure an app is genuinely out-of-use and a good candidate for retirement. Prematurely retiring an app could seriously impact workflows.

Retain

Retaining a legacy application or system involves encapsulating it by building an API wrapper, which allows newer systems to communicate with it. It’s typically quick and costs less upfront, and it can work well when you’re aiming for a hybrid migration that retains elements of legacy systems.

Benefits: Quick, cost-effective, and allows you to retain on-premise systems for the foreseeable future.

Risks: Often only serves as a stop-gap, which might deter leadership from embracing a full-scale digital transformation.

Relocate

Relocating is a newer strategy based on migrating workloads without rewriting source code or purchasing new hardware. For example, a company might migrate its on-premise Kubernetes platform to a cloud-based one, such as Amazon Elastic Kubernetes Service (EKS).

Benefits: Fast changeover without disrupting current workflows or requiring staff retraining.

Risks: Fewer cloud-native functions and might be harder to scale down if needs or use decrease, compared to an entire cloud-first, cloud-native approach.

Rehost

Rehosting (also known as lift and shift) uses Infrastructure-as-a-Service (IaaS) to redeploy workloads on the cloud without changing the core infrastructure—as you would with a complete replatforming.

Benefits: Rehosting is relatively easy compared to more comprehensive methods and involves fewer workload interruptions.

Risks: Rehosting might produce incompatibilities that impact users, and it limits the number of cloud-native features you can enjoy.

Repurchase

Repurchasing is the act of changing out internally run systems for external ones that are monitored and managed by a third-party service. It’s an excellent way to retire legacy systems and switch to a use-based model.

Benefits: Moves quickly and offers a flexible payment model (pay-as-you-go)—a comprehensive solution offering cloud-native functionality.

Risks: Increased costs compared to simpler models, with some loss of infrastructure control by outsourcing to a third party.

Replatform

Replatforming involves moving applications to the cloud while providing elements of platform optimization to support cloud-native functions. It can be a cost-effective way to enjoy some of the benefits of native-cloud apps while saving money compared to the complete overhaul that constitutes refactoring (see below).

Benefits: More cloud-native capabilities, including API-first apps and the strategic use of microservices. It also costs less than refactoring.

Risks: Not as thorough as refactoring, missing out on some cloud-native functions.

Refactor

Many consider refactoring the most complex and labor-intensive approach to app modernization.

Characterized by a complete re-architecturing of all workloads, it costs more than the other techniques listed here. However, it provides the greatest degree of future-proofing, scalability, and flexibility with an entirely cloud-based, serverless, API-first approach.

Benefits: Produces a fully cloud-based, thoroughly modern infrastructure that can grow with your business.

Risks: Extra costs can cause your refactoring efforts to go over budget without careful analysis, requiring a willingness to invest upfront for greater long-term results.

Step 4. Choose your application modernization approach

Choosing your application modernization approach will be primarily rooted in your understanding of the user journey—internal and external users (employees and partners).

User stories are the key to understanding which legacy application modernization approach to take because they identify the pain points associated with current apps and what you can salvage.

Rank your efforts (time and cost) alongside the business impact of each approach. Other factors to consider include the internal team's capacity, budget, risk, security, and the overall support you’ll receive from leadership.

Replatforming and refactoring are the most common approaches to legacy application modernization—the right mix of ease and return.

Organizations can choose a gradual approach to enterprise application modernization, first opting to encapsulate while undertaking a more comprehensive (and time-consuming) refactoring or replatforming strategy.

Step 5. Prepare for the Future

Today, 90% of organizations are held back by legacy technologies, so the last thing they want to do is create an app that produces additional technical debt. Choose an application modernization framework with the least "lock-in " (i.e., the most incredible flexibility and scalability) based on what your budget can accommodate. Prioritize future-proofing.

When choosing an application modernization method, ask how long that method will work and whether refactoring or replatforming offers the best long-term approach.

Retailers also use augmented reality (AR) to enhance the user experience and boost growth and scalability. AR forms a natural component of the application modernization roadmap.

Step 6. Choose the Right Partner

Few organizations rely on internal resources to modernize applications since most companies need specialized internal staff to complete the project without abandoning their existing duties.

A trusted application modernization partner can offer technical expertise, connecting you with a team that understands the latest web, mobile, and cloud technologies.

Look for an agency specializing in digital transformation with an established track record delivering end-to-end solutions using Agile development. Also, ensure they can support the latest digital products and customer experiences.

Step 7. Optimize

As with any effective product development process—and application modernization is among them—it is essential to include iterative feedback in your strategy.

Agile principles are designed to support rapid development backed by transparency, continuous feedback and improvement, and adaptation.

DevOps is also essential since it helps align the Development and Operations teams. It allows for efficient deployments and cohesive strategies that reduce errors and promote collaboration.

These principles are essential to designing your application modernization roadmap. They ensure that companies incorporate user stories, eliminate hiccups such as connectivity issues, and optimize overall performance with scalability and future-proofing in mind.

Chapter 7Application Modernization Tools

In the Application Modernization Trends section, we went into great detail about the many popular trends in app modernization today.

To recap, those trends include:

• Cloud-based systems and applications
• MACH architecture
  • Microservices
  • Cloud-native apps
  • API-First
  • Headless architecture
• Composable architecture
• Containers
• UX Modernization
• Artificial Intelligence (AI) and Machine Learning (ML)
• Multi-cloud use

Several app modernization tools can help companies incorporate those trends smoothly, including API management tools like Google’s Apigee and migration tools like Zapier.

Online retailers can access composable architecture tools through apps like Commercetools. Also, many SaaS platforms like BigCommerce have the features listed above.

Chapter 8Application Modernization Assessment

Assessing your application modernization needs is essential to adopting the right strategy, allocating the necessary budgetary resources, and ensuring that user needs are addressed. ‘Application Rationalization’ is the process that helps in assessing the present state of applications in terms of their business value, cost, use and functionality and in deciding whether the application should be kept as such or retired, or updated or replaced.

The following steps are essential to your readiness assessment strategy.

• Meet with leadership, key stakeholders, technical experts, and outsourcing partners to “plan the plan.” Discuss your overall strategy and what you’re hoping to accomplish.
• Conduct user interviews and meet with department heads to understand the use cases for your current technology and any challenges users currently face.
• Gather information from experts and other resources to assess your current state and the path forward.
• Meet with all the key players once more to explore your findings and prioritize your app modernization strategies.

Investing the time upfront will allow you to adopt a strategy that minimizes risks and increases your odds of developing an effective, efficient app modernization strategy.

Chapter 9Application Modernization Business Case

Techies sometimes make the mistake of believing the technological benefits of app modernization speak for themselves. The hard truth is you’ll need buy-in from non-technical leaders before you can move forward.

The business case for app modernization, just as with any other business need, comes down to clearly communicating ROI and overall benefits to the organization.

Your business case should cover:

• The problems you are trying to address and how they impact the business
• The costs involved in migration
• A full description of the project and all it will entail
• A thorough cost-benefit analysis that includes the opportunity costs of sticking with the status quo

This business case will also play a role in how you communicate the value of app modernization to employees at all levels. They will likely adopt and embrace the new technology if they understand the why behind your endeavors.

Chapter 10Legacy Application Modernization

Application modernization, as we’ve covered in great detail throughout the earlier sections of this guide, involves revising or replacing legacy apps. These applications are usually not cloud-based and no longer enhance (or support) the user experience.

The case for legacy application modernization is solid. Legacy apps often present the following challenges:

• High maintenance costs
• Bloated code that makes integrations challenging
• Third-party elements that are no longer supported
• Difficulty interacting properly with other apps
• Failure to serve users seamlessly
• Security and compliance issues

Making this case to non-technical leaders and staff is essential because many might see application modernization the same way they view getting a new iPhone when their 2-year-old model works just fine. Nothing could be further from the truth.

Outmoded legacy apps cost companies in various ways, and using an old system is more like driving a broken-down car on the autobahn at high speeds. It’s just not safe, and the costs greatly outweigh the benefits.

Chapter 11Enterprise Application Modernization

Enterprise application modernization is a vast endeavor requiring careful planning and foresight. It also requires buy-in at different levels and a thorough assessment of the resources and time needed to do the job right.

The following principles should guide your enterprise app modernization efforts.

• Create a thorough business case
• Explain the benefits across the organization
• Hire a competent outsourcing partner if your in-house team needs more time or expertise.
• Identify Key Performance Indicators (KPIs) to measure success
• Conduct a thorough risk assessment

App modernization in a large organization is like turning a giant cargo ship around. It takes time and patience, and it’s not something you can accomplish overnight.

Trying to rush it will introduce unnecessary risks, so if time is of the essence, focus on an integrated strategy that targets your most important business needs. Throughout the process, ensure that all new apps work well with the legacy apps you’re waiting to replace.

Chapter 12Cloud-Native Application Modernization

Cloud-native application modernization ensures that apps take full advantage of everything cloud computing offers.

While application modernization is focused on cloud compatibility, companies sometimes will retain a legacy app by creating an API that interfaces with cloud-native apps.

What characterizes cloud-native apps? These apps:

• Use a microservices approach to architecture
• Use headless architectures so that one back-end can fuel multiple front-ends
• Take an API-first model
• Are highly agile and scalable, so they can grow with your business.

Creating a cloud-native ecosystem is the most flexible, powerful option. This is known as refactoring. While it’s the most expensive approach to app modernization, it will future-proof your business technology when done right.

Chapter 13Application Migration and Modernization

Application modernization involves migrating software systems to the cloud. Most legacy systems are built on monolithic architecture, storing data in a single database. This reduces flexibility, creates data siloes, and makes scaling difficult.

Migrating apps to the cloud offers the following advantages:

• Better use of data
• Improved capacity to serve users and adapt to their needs
• Better security
• Greater opportunities to collect and analyze actionable data
• Enhanced capacity to serve a variety of platforms

Ideally, companies will want to use as many cloud-native apps as possible. However, retaining certain legacy apps sometimes makes better business sense. To do this, you would adopt a hybrid model that allows modern apps to interact with the legacy systems through APIs.

Chapter 14Application Modernization and Cost Optimization

Application modernization is an expensive endeavor, but over the long haul, it’s a comprehensive investment that will save your business money and increase profits if done correctly.

While you shouldn’t sacrifice quality app modernization to reduce upfront costs, there are measures you can take to ensure you spend your budget wisely. Here are some ways to optimize costs while modernizing your applications.

• Do your research to identify the apps that most need replacement
• Plan properly and update apps strategically to reduce rework and downtime
• Chose a modernization approach that makes sense for your business and balances the upfront costs with anticipated return
• Work with an expert outsourcing partner

A strategic, well-reasoned approach to app modernization will reduce costs without cutting essential corners.

Chapter 15Application Modernization Case Studies

Application modernization requires experience and expertise. It’s typically not something you can ask your IT team to do because modernization is not one of their day-to-day duties.

What follows are two application modernization case studies describing work we’ve done with international brands, guiding them in key aspects of their app modernization efforts.

American Golf

America Golf is a leading sports retailer that needed to upgrade and modernize its eCommerce website and all its infrastructure.

Net Solutions helped American Golf by:

• Creating a custom eCommerce platform
• Integrating MS Dynamics NAV into their systems
• Building flexible discount management technology
• Implementing workflow-based fulfillment management
• Creating analytics and customer dashboards

The result was a multi-channel eCommerce platform that boosted sales and increased ROI for both online businesses and physical stores alike.

You can read the complete case study to learn more about the details.

Bonds of London

Net Solutions worked with Bonds of London to modernize both its eCommerce app as well as its internal sales app.

This included:

• SAP Integration
• A Magento-based, fully customized eCommerce app
• The ability to provide rules-based offers to customers
• A customer portal for sales staff

Chapter 16Application Modernization Services Market

According to the latest research, the market for application modernization services is poised to grow to $32.8 billion by 2027, a compounded annual growth rate of 16.7%.

Important factors influencing this growing specialization include:

• The need for businesses to remain flexible and scalable
• Greater demands for security and risk reduction
• Customer demand for a more seamless user experience
• The need to increase ROI through investing in technology

Companies typically need help to handle app modernization through their in-house team. That’s because in-house team members were hired for specific core competencies unrelated to application modernization.

In Need of App Modernization?

Net Solutions has been developing software for leading organizations for more than 30 years, and we apply the same Agile approach to application modernization for building cutting-edge software products.

We’ve worked with leaders like IMG and the Harvard Business Review, and we can spearhead every aspect of your enterprise app modernization efforts.