Studies show that up to 80% of a company’s IT budget is used to keep aging infrastructure running. In an environment where IT leaders are increasingly encouraged to reduce spending, having legacy applications that eat up your budget makes it tough for an IT team to adapt to new technologies. And without modernization, you’re likely to spend more on overhead expenses for technologies that don’t move the needle on your largest initiatives.
Fifty-six percent of digital leaders also said delaying application modernization resulted in failure to meet compliance requirements and 51% reported inability to scale critical services when required. Clearly, delaying modernization and holding on to legacy systems has a high price for business.
What Is a Legacy System?
A legacy system is an information system that may be based on outdated technologies, but is critical to day-to-day operations. Replacing legacy applications and systems with systems based on new and different technologies is one of the information systems professional’s most significant challenges. As enterprises upgrade or change their technologies, they must ensure compatibility with old systems and data formats that are still in use.
The Modernization Challenge
Businesses undergo application modernization to bring older software up to speed to current computing standards. The effort usually fits into larger digital transformation goals. If there’s one overarching driver for the process as a whole, it’s the need for the flexibility and agility required to integrate IT technologies in a way that aligns with business demands.
But barriers persist. For 28% of respondents to a survey of 1,420 IT decision-makers, the fear of impacting customer experience is the top hurdle delaying modernization, 26% said entrenchment of legacy IT systems, and 24% said the need to work within budget constraints. But the price is high for caving to these barriers.
7 Reasons to modernize legacy systems
Nearly 70% of organizations say at least one in four of their applications are undergoing modernization, according to that same survey. For 24% of organizations, half of applications are in ongoing modernization as well. Here’s why it’s important for business to continue making headway on modernization efforts:
It helps create and maintain a competitive advantage by building a solution that helps you stay ahead of competitors.
Provides reliable processes with reduced risks, improves the system’s functioning, and improves performance.
Ensures satisfied customers and happier employees by meeting UX and performance standards.
It helps you scale in the future by transforming your IT stack into an agile platform for future change.
Secures your IT infrastructure from internal security breaches and external threats.
Addresses the financial inefficiencies of legacy systems.
It helps realize growth opportunities, exceed customer expectations, and gain new customers by staying ahead of the enterprise software curve.
Three steps to modernization
Gartner, an information technology research and consultancy company, recommends a three-step process to evaluate how to approach application modernization:
STEP 1: Evaluate legacy systems
There are six main drivers for application modernization. These are the issues, concerns, or impediments that have been created by the legacy application as a result of its technology, architecture, or functionality.
Three of these drivers come from a business perspective—business fit, business value, and agility. If the legacy application is not meeting the new requirements imposed by digital business, it needs to be modernized to fit properly, and should be upgraded to provide greater business value. Applications that lack the agility to keep pace with the demands of digital business may be a cost or risk liability.
The three other drivers come from the IT perspective, and involve cost, complexity, and risk. If the total cost of ownership of a legacy application is too high, the technology too complex, or security, compliance, support, or scalability are being compromised, it’s time to modernize.
The best modernization opportunities are those with multiple drivers from both a business and an IT perspective.
STEP 2: Evaluate modernization
Once the opportunity is selected and the problem is identified, look at modernization options. Gartner has ranked seven options by ease of implementation—the easier it is, the less risk and impact it will have on the system and the business processes. The harder, the more risk and impact it will have.
Encapsulate: Leverage and extend the application features by encapsulating its data and functions, making them available as services via an API.
Rehost: Redeploy the application component to other infrastructure (i.e., physical, virtual, cloud) without modifying its code, features, or functions.
Re-platform: Migrate to a new runtime platform, making minimal changes to the code, but not the code structure, features, or functions.
Refactor: Restructure and optimize the existing code to remove technical debt and improve nonfunctional attributes.
Rearchitect: Materially alter the code to shift it to a new application architecture and exploit new and better capabilities.
Rebuild: Redesign or rewrite the application component from scratch while preserving its scope and specifications.
Replace: Eliminate the former application component altogether and replace it, considering new requirements and needs at the same time.
STEP 3: Choose the modernization approach with highest effect and value
Ultimately, modernizing legacy applications means choosing between rearchitecting, rebuilding, or replacing. Rearchitecting has medium costs and risks, whereas rebuilding or replacing provides best results with higher costs and risks. The key is to weigh all options to help identify the extent to which each will have the desired effect—with the minimum effort and maximum positive impact.
Of course, modernizing your legacy systems requires something more than competent developers and designers. There’s a significant project management component as well—you have to build and release the new thing without breaking the old thing. It’s like rebuilding an airplane mid-flight, which is exactly as hard as it sounds. Companies who choose the wrong development partner are likely to experience frustrating product failures, angry customers, and ultimately a loss of revenue.
How can we help?
10Pearls is a world-class digital transformation partner, building custom automation solutions. We support the entire development lifecycle including creation/revision, planning, and execution. Our digitalization work harnesses the power of technology to make your business process faster, more efficient, and more accurate.