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Legacy Application Modernization Strategy: A Step-by-Step Guide

Summary: Legacy app modernization is the process of rearchitecting, rebuilding, or replacing current legacy applications that have become outdated to the point that they no more operate effectively and fail to satisfy business goals. Many organizations are on their way to digital transformation, and legacy application modernization continues to be a roadblock. Up to three-quarters of legacy system modernization projects fail to be completed without clarity or a rushed discovery phase. Learn how you can make your legacy app modernization initiative a success.

Digital transformation may have become a buzzword in the past few years. But that should not overshadow the importance of transforming existing products and processes to allure and retain customers, drive business growth, and remain competitive.

By 2022, 70% of all organizations will have accelerated digital technologies, transforming existing business processes to optimize the customer experience, employee productivity, and business resiliency. Within IT, the digital transformation includes modernizing legacy systems and processes to increase efficiencies and infuse greater intelligence across the entire business.

As organizations undergo digital transformation, IT leaders must modernize the application portfolio to operate at the pace of business change.– Meghan Rimol, Gartner

A failure to modernize legacy systems can hold an organization back. For example, one study has suggested that maintaining legacy systems in a bank can take up 78% of the IT budget, with 70% saying these same systems are a bottleneck to change. More broadly, CIOs say 40-60% of their time is spent managing legacy systems, a roadblock to more strategic initiatives.

In this guide, we explore what constitutes a legacy system, the concept of legacy application modernization, common benefits and challenges, and a clear guide to help organizations on the path to success. This guide is essential to success if digital transformation is on the agenda.
legacy application modernization

What is a Legacy System?

A legacy system is any older software, technology, or method/language that an organization relies on. While a legacy application may continue to be used and may be integral to the organization, this application comes with a whole host of challenges as a result of the technology, architecture, or functionality that impede the business (value, agility, fit) or IT (cost, complexity or risk).

On a granular legal, applications become legacy systems when they start to introduce these common challenges:-

  • Difficult to maintain or update, increasing IT costs in both time and staff
  • Code bloat or hacked integrations can lead to performance issues, instability, or bottlenecks in scaling.
  • Code bloat in monolithic apps or undocumented code elements makes it difficult for new IT staff.
  • Third-party elements of the application may no longer be supported
  • The application may not interact with newer systems
  • The system is no longer agile to emerging customer needs
  • Potential security or compliance risks

Though planned obsolescence is a term that applies to product life cycles, the rapid pace of technology change, market dynamics, and organizational change inevitably lead to legacy systems.

Legacy systems in life and P&C are built on outdated architectures with high maintenance costs, inherent inflexibility, redundant features, lack of connectivity, and low efficiency. Complex application and process logic is often hard-coded and undocumented.Gartner

What is Application Modernization?

If one were to ask, ‘what is legacy system modernization?’ the answer would be – the process of taking a legacy system and updating it to include modern platform infrastructure, architecture, and/or features.

Application modernization is a journey that can take many paths depending on the state of the legacy system, the problems being faced by the organization, and the business goals driving the app modernization (and digital transformation). Application modernization isn’t just replacing – there are many modernization approaches to migrate, update, and optimize legacy systems to more modern architecture.

Later in this guide, read on for a 7-Step Application Modernization Strategy an organization can go through to understand drivers and choose the right approach for each project.

Why Modernize Legacy Applications?

While agility has always been a priority in IT, systems designed 5 or 10 years ago could not imagine today’s technology changes or competitive landscape.

While many legacy systems are critical for business operation, at some point, IT managers and executives must examine the continued cost of maintaining a legacy system against the cost and migration of application modernization.

Further, the decision about legacy application modernization must look beyond cost to the strategic importance of modern applications. As noted in a recent McKinsey report on digital transformation acceleration related to COVID-19, there has been a massive mindset shift into the strategic importance of modern technology:
strategic importance of modern technology

The drivers to modernize legacy applications include addressing all challenges associated with legacy applications, from cost to customer and employee experience. Meeting customer expectations is the primary driver of digital transformation, but the decision is complex. 52% of employees are unhappy with their applications, and 24% would consider leaving their jobs. Organizations that prioritize digital transformation could reap a 20% increase in revenue, according to research by IBM.

Key Technologies for Application Modernization

When speaking to “modernization,” organizations are typically aiming to take advantage of several key technologies:
key technologies for application modernization

1. Cloud

Replatforming or rehosting applications on Cloud is always a part of the application modernization approach. Organizations may help make available the advantages of cloud computing, such as scalability, agility, and lower cost, by using a range of alternatives, including public, private, hybrid, and multi-cloud.

2. Containers and Kubernetes

Containers are:

  • A packaging method.
  • Deploying and operating units of software in the cloud.
  • Leading to benefits in growth and motility.

Kubernetes are a container-orchestration system to automate processes.

3. Microservices

Most legacy applications are monolithic – self-contained single-tier applications. One of modernization’s main drivers is achieving agility to meet changing customer and employee expectations. To do this, most organizations opt for a microservices approach that emphasizes services linked by API, allowing organizations to choose and change out best-of-breed solutions to meet changing expectations or to scale as needed.

4. Orchestration and Automation

Automation sets up individual tasks to run independently, while orchestration automates multiple tasks as a process or workflow. Automation and orchestration introduce deployment, scaling, networking, and security efficiencies.

Five Questions for Enterprise Before Planning App Modernization

Suppose an organization is considering a legacy application modernization project. In that case, the first step is to step back and understand the problem being solved by the legacy application and how that legacy application is or is not solving the problem. Let’s break that down into the following questions:

  • What features of our legacy software are effective?
  • Which modernization strategy for legacy applications do we wish to employ?
  • What are the objectives of the modernization process for enterprise applications?
  • How would modernization help us achieve these objectives?
  • What are the following stages in modernizing our legacy systems?

The questions mentioned above can assist a company in avoiding legacy application modernization hazards, the most frequent of which is a failure to comprehend the need for such modernization.

7-Step Legacy Applications Modernization Strategy

Organizations should undertake the following 7-step strategy to evaluate legacy systems and choose an application modernization approach best suited to the needs at hand:

1. Evaluate Legacy Systems

Looking back to our previous challenges in legacy systems, Gartner recommends evaluating legacy systems against each of the six drivers:
six drivers of application modernization

If the legacy application is not meeting the business needs of today’s competitive landscape – if it is an impediment or simply not a contributor to success – it should be modernized. Equally, if the application is driving up the total cost of ownership or introducing undue risk, it’s time to update. Overall, the more drivers present, the greater the benefit of modernizing legacy applications.

2. Define the Problems

If the legacy system doesn’t match present-day organizational or IT needs, it’s time to refine the problems further. What precisely is causing friction for users (customers or employees)? Target the specific user stories.

However, in this approach, it’s also essential to understand what works well in legacy software. This understanding of what works – and what doesn’t – can help determine the modernization approach.

3. Evaluate Application Modernization

Once the chance to modernize a legacy application has become clear and the problem is clearly defined, the next step is to decide how the application will be updated. There are seven approaches to application modernization, the “7 Rs, ranked from easiest to most complex and from most negligible impact to greatest impact.
evaluate application modernization

4. Retain / Encapsulate

A low-risk technique that retains or reuses components of the legacy application within a new architecture. The legacy software is wrapped or encapsulated and is accessed as a service via API. This approach also introduces the capacity to expand the app with a microservices system over time.

a. Rehost

To rehost is to “lift and shift” application components to other infrastructure without any (or very few) modifications. This is often the fastest approach to moving an application from an on-premise environment to the cloud.

b. Replatform

This approach moves the existing code to a new platform with some reshaping of the code but retaining the current code structure, features, and functions.

c. Refactor

One step further, refactoring optimizes the code and makes changes to the code structure (restructure) to remove some of the technical debt that leads to legacy software issues, which could be outdated libraries, frameworks, code, or incomplete or inefficient features.

d. Rearchitect

To rearchitect a legacy application is to significantly alter the code to shift it to a new architecture with greater capabilities.

e. Rebuild

Redesign or rewrite the application from scratch, but without changing the scope or specifications.

f. Replace

When a legacy system is no longer working for a variety of business reasons, it’s time to go back to the table to understand the problem and find the right product solution to solve that problem. This approach will retire the legacy application and follow a comprehensive product development process.

Organizations can choose a gradual approach to modernization, first opting to encapsulate while undertaking a more comprehensive (and time-consuming) refactor, rearchitect, rebuild or replace strategy for the long-term. This said, re-platforming, refactoring, and architecting are the most common approaches to legacy application modernization – the right mix of ease and return.

4. Choose the Application Modernization Approach

To choose among the seven options, you can go beyond just effort and impact to evaluate the options in terms of their:

  • Workload
  • Architecture
  • Cost (modernization and continued operational)
  • Risk
  • Operations
  • Security

The weight of each of these will depend on their priority to each organization. Still, factors such as competition and shifting consumer demands are also considerations about the ultimate value of each modernization approach. So, one could consider the relative importance of features such as scalability and agility in evaluating each option.

5. Prepare for Future Growth and Changes

Organizations are subject to perpetual change by consumers, a cutthroat market, an unstable economy, and the opportunities presented by developing technology. The average application has a lifespan of 6-8 years.

Legacy software is typically monolithic in design, locking organizations into hard-to-update applications. Today’s digital landscape requires greater agility to roll out new features or capabilities. The right modernization approach is about choosing the greatest flexibility to adapt to change. An encapsulated application can be connected to other microservices, but it still faces all the same limitations as its existing code base. However, software that has been refactored or rearchitected stands a better chance of meeting an organization’s future needs.

6. Do Your Homework to Choose the Right Modernization Partner

Most organizations are not building or modernizing applications all the time – it’s simply not their core focus. Internal teams may lack the skills for the “new” environment, requiring training to use a new system. So it is implausible that there will be enough internal resources to make all the appropriate decisions over modernization approach, cloud, or microservice support.

Instead, many organizations lean on a trusted software partner to assist in application modernization. Look for an agency specializing in digital transformation, with expertise in re-engineering technology, systems, and processes following various modernization approaches. To maximize the time-to-market of your modernization project, look for a team that leverages Agile and DevOps practices.

7. Observe and Optimize

Once a project has begun, it is crucial to iteratively test and optimize the application’s modifications to ensure there are no kinks in the hosting, software licensing, or connectivity to other services or databases during the transition. To guarantee that the application adapts to changing demands, plan for continual modernization initiatives.

App Modernization, the Agile Way, with Net Solutions

Net Solutions is your digital transformation partner with proven experience in legacy application modernization leveraging our Agile development process:
agile development process

1. Define goals

Examine how the existing legacy system meets or does not meet the problems (user stories).

2. Establish scope

Prioritize the user stories that should be solved, aligning with a modernization approach.

3. Craft requirement

Develop or brainstorm an approach, and choose new architecture, technologies, frameworks, languages, and microservices. Assign product owners, scrum masters, designers, developers, and testers.

4. Development phase

Build user stories or follow development plans in time-boxed sprints.

5. Test and deliver

Test after each user story or each major development step (in lighter modernizations), identifying any bugs or impediments to progress. Track changes toward a smooth rollout of the completed application fully integrated and connected.

6. Training and support

Provide ongoing support for the new application and support continued innovation and modernization.

Frequently Asked Questions

  • 01

    What does “APP modernization” mean?

    Application modernization is modernizing outdated software to interact with newer infrastructural platforms, frameworks, and programming languages. The terms “legacy modernization” and “legacy application modernization” frequently describe this technique.

  • 02

    Why do we need application modernization?

    Making the most of digital technologies, such as AI, machine learning, big data, and the cloud, is made possible via application modernization. It helps create a flexible basis for future innovation while transforming your IT environment based on the most recent commercial trends.

  • 03

    What are the trends in app modernization?

    From monolith to microservices – Refactoring and disassembling a monolithic program into a group of compact, loosely linked microservices is the most typical method of application modernization.

  • 04

    How APIs modernize legacy systems?

    APIs modernize legacy systems by letting IT teams abstract away core data and services from the underlying system complexity. It reduces the skill gap and even non-experts can easily consume data in legacy systems.

Upscale your business for a competitive edge.

Talk to our experts to modernize your legacy apps.


Lalit Singla

About the Author

Designation: Technical Architect
Forte: Programming / Logical Ability to solve any technical or programming issue
Likes: Indian Classical Music
Dislikes: Modern Rap songs
Claim to Fame: Attended the same school as a Punjabi singer
Biggest Tech Blunder: Built an entire project on the wrong stack and ended up redoing the entire thing
Wannabe: Social Servant

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