A Guide To Modernizing Legacy Systems & Processes

Organizations must constantly innovate and adapt to remain competitive in today's rapidly evolving digital world. However, many businesses still rely on outdated, inflexible legacy systems that hinder their ability to meet modern demands.

To overcome these challenges, legacy applications must be modernized. This modernization unlocks your existing IT infrastructure's potential and propels your organization toward digital transformation. 

Unfortunately, the common recommendations for modernization fail the test: 

• Moving to a standard ERP system — like SAP — results in attempting to squeeze your unique business into a box defined by a software vendor who doesn’t understand your industry, let alone your business methods, processes, and culture. Moreover, these implementations are incredibly expensive, time-consuming, late, and often fail to successfully replace legacy systems, leaving you with two legacy systems to maintain: the old one and the new one. 

• Building new software with traditional methods fails to provide a foundation for success for your new modern business applications.  You need software that responds to the needs of your team, your customers, your market, and your operations.  Traditional software development houses fail to step up to this need. 

• Further customization of your legacy systems will also only continue to paint your business into a future dead-end, while presenting risk to your operating processes, and running at an increased cost.

• Upgrading to the latest version of your legacy system won’t address the fit to your business operations, and it will likely be very expensive to bring forward your non-standard customizations into a new version of legacy software. All too often, software vendors provide new versions of software without being fully attentive to the migration path for older versions.

How, then, should you go about modernizing your systems? The answer, as we’ll discuss in this paper, is to start with a business process lens for modernizing your legacy applications. You'll take into account your business processes and methods, your team, your culture, and your market — not to mention your landscape of systems and operations. In doing so, you’ll build a system that supports and reinforces the elements of your business that add value.

This comprehensive guide explores how to modernize legacy systems, discusses various approaches, and provides practical insights to help you choose the right strategy for your organization.

What Are Legacy Systems?

A legacy system is a term that refers to an old or outdated software application or technology that is still in use by an organization. More broadly, a legacy system is one that is holding you back from achieving your goals for your business, rather than enabling you to achieve your goals. 

These systems often lack a modern technology stack and don’t integrate with modern technologies, making them inflexible, costly, and increasingly challenging to maintain. As a result, an outdated system can hinder your growth and set back your digital transformation efforts.

What Is Application Modernization?

Application modernization is the process of updating and transforming legacy systems to meet the demands of modern business environments. You’re not simply migrating to the latest technology. You’re leveraging advanced tools such as Kubernetes and Jenkins, and modern IT architectures like microservices, serverless computing, and cloud-native infrastructure. At the same time, you’re adjusting your team’s behaviors and reshaping existing functionalities to better meet your business needs.

Updating or replacing outdated software systems with newer technologies isn’t good enough.  You can’t optimize and streamline your operations, nor enhance user experience (let alone support innovation) if you don’t take a process-led and design-led approach to application modernization. If you take on modernization the right way, the benefits of modernization are clear.

Benefits of Legacy System Modernization

Legacy system modernization offers several benefits that can positively impact your organization:

• Improved efficiency and productivity: By streamlining processes and eliminating bottlenecks, modernized applications enable employees to work more efficiently, thereby boosting productivity.
• Enhanced scalability and flexibility: Modern applications — organized around business processes and user experiences — can adapt to changing business needs, allowing your organization to scale its operations seamlessly and respond to new market opportunities.
• Increased cost savings: Modernizing legacy systems can reduce maintenance and operational expenses by eliminating legacy system support costs which have continued to escalate without adding more business value. For example, adopting a microservices architecture reduces the cost and complexity of maintaining large codebases. This approach streamlines the updates and maintenance cycle, leading to increased efficiency and cost savings. Reducing legacy costs frees your resources for allocation in more strategic initiatives.
• Improved security and compliance: Modern, up-to-date technologies offer better protection against new and emerging security threats and ensure future compliance with industry standards and regulations as these evolve.
• Greater innovation potential: Modernized applications can more easily integrate with emerging technologies — such as generative AI. It gives your organization the tools to innovate and stay ahead of the competition.
• Culture of continuous change and improvement: Modernizing offers an opportunity for your organization to transition from the mindset of performing large upgrades every few years to continuous, incremental updates. By fostering a culture comfortable with constant change and improvement, your business will become more agile.
• Less disruptive with reduced risk: When you modernize your system the right way — with a process lens —  it’s easier to make smaller, more frequent updates. These updates are more manageable and less disruptive than a one-time overhaul. It also reduces the overall cost and risk associated with massive organization-wide upgrades.

Approaches to Modernization: Business vs. Technical

Modernization approaches are not always straightforward. You need to carefully evaluate the business and technical aspects of the application modernization in relation to your organization. The truth is, it isn’t business drivers versus technical drivers. The secret to success for application modernization with a process lens is that you need both business and technical drivers aligned to achieve your best results. Business and technology are not in opposition, they’re in alignment when we do this the right way. The right approach is to help create that alignment and build the excitement of working together on your highest priorities.

Understanding the Business and Technical Drivers of Modernization

A successful application modernization strategy considers both business and technical drivers. A few common business drivers include:

• Enhancing user experience to improve customer satisfaction and retention
• Reducing operational costs and risks by eliminating obsolete technologies, as well as outdated business processes embedded into those applications that are no longer relevant or efficient
• Increasing revenue by enabling innovation, new go-to-market opportunities, new customer journeys, and new customer experiences
• Complying with regulatory and security standards in the current business landscape

Several technical drivers that spur legacy app modernization are:

• Improving the quality and reliability of the system by eliminating bugs and vulnerabilities prevalent in the outdated system
• Enhancing scalability and availability by adopting modern architecture that can handle increased demand and load
• Making the system interoperable and compatible with other systems by using modern protocols, formats, and APIs
• Eliminating high yearly costs for legacy system upkeep
• Ensuring the system's maintainability in the future, even after current team members retire
  

Evaluating the Benefits of Modernization From a Business Perspective

Successful modernization efforts are characterized by a simple evaluation approach. Your modernization efforts should evaluate the following factors from a business perspective to understand the true benefits of legacy modernization to your business.

First, you should analyze your business's current state and future goals. This can help you identify the gaps and needs that legacy system modernization can address.

Next, you must compare the costs and benefits of different modernization approaches, such as rehosting, re-platforming, refactoring, rearchitecting, or rebuilding. This can help you choose the most suitable option for your organization's budget and objectives.

Finally, you should evaluate the risks and challenges of application modernization projects. These may involve organizational resistance to change, legacy system vendor dependency, or regulatory compliance.

By evaluating these business aspects in advance, you can make informed decisions and achieve successful outcomes from legacy system modernization.

Modernization Strategies and Technologies

Modernization strategies involve identifying the components for modernization and adopting advanced technologies in the modernization process.

Creating Alignment and Excitement

Involving key stakeholders in your organization early and frequently in the process is essential to gain support and prepare everyone for the change. Communicate with everyone involved, seek regular inputs, and ensure the modernization process meets everyone's needs.

We recommend getting cross-functional teams aligned and excited about the common goals for a future roadmap.  The best way to achieve this is to run an innovation workshop focused on goals and alignment. We have observed that companies that undertake these workshops have a: 

• Higher probability of successful production deployment
• Higher degree of adoption of new software 
• Lower cost of change management and training
• Higher degree of cultural cohesion and buy-in

Organizing around Business Processes and Customer Journeys

A clear approach to understanding your business needs is a key element of success: 

• Map out your end-to-end business process from the perspective of your internal team as well as from the perspective of a customer. Map as well how you want these processes to work in an ideal future state if your systems are supported the way you really want your business to work. 
• Note every human interaction inside and outside your organization, and note every system dependency inside and outside your organization. 
• Note the information requirements to support each of these interactions, and the actions or choices that will be presented at each step along the way. 
• Note key decisions 
• Note key pain points for any party involved, or key systems that are an impediment rather than an accelerant to your processes. 
• Note opportunities for automation, and systems to be mothballed or improved, or left alone. 

This analysis leads to a road map for implementation that will lead you to a successful outcome. 

Identifying the Components of a Monolithic Application for Modernization

Monolithic applications often consist of tightly coupled components. Such tight integration often makes it difficult to update or scale individual parts.

To modernize these applications, it's best practice to identify and separate (or isolate) the components that can benefit from modernization, such as adopting microservices architecture or containerization.

Adopting Advanced Technologies in the Modernization Process

Embrace advanced technologies such as cloud computing, artificial intelligence (AI), robotic process automation (RPA), intelligent document processing (IDP), and workload automation. Much has been written on these subjects, that is not repeated here.  It should be apparent that having access to the right expertise in these technologies is a real asset to successfully planning the use and leveraging of such technologies.

This will help enhance your application's capabilities and ensure seamless integration with modern IT ecosystems. As a result, your applications communicate more effectively with other systems, facilitating data exchange and collaboration across various platforms. Moreover, a well-integrated ecosystem reduces the risk of data silos and redundancies, thereby improving data consistency and accuracy.

Choosing the Right Modernization Approach for Your Organization

Selecting the best modernization approach requires a thorough understanding of your organization's unique needs and objectives. Consider the following factors when choosing a modernization strategy:

• Business goals and priorities: Align your modernization efforts with your organization's strategic objectives, and ensure that the chosen approach addresses key business needs.
• Technical constraints and opportunities: Evaluate your legacy systems' technical limitations and identify opportunities to leverage modern technologies and architectures.
• Available resources, including budget and expertise: Assess your organization's available resources — such as budgetary constraints and internal expertise — to determine the most feasible approach to modernization.
• Risk tolerance and potential impact on ongoing operations: Consider the potential risks associated with each modernization approach and their impact on your organization's day-to-day operations.

Legacy application modernization is critical for organizations looking to enhance efficiency, foster innovation, and remain competitive in today's fast-paced digital landscape. To guarantee the success of a modernization initiative, it is crucial to first develop a comprehensive plan that outlines objectives, scope, timelines, and expected outcomes. This plan will serve as a roadmap for the entire modernization journey.

Remember: monitoring progress — and adjusting as needed — is an important aspect of a successful modernization initiative. Keep track of the progress, measure the outcomes, and make necessary adjustments to achieve the desired results.

What’s Nex?

You’re now well on your way to being more prepared for your application modernization journey. The advice in this paper is distilled from thousands of projects we’ve successfully delivered for our clients.

BP3 can help you get started on the right foot with your application modernization journey as well. We’ll start with a focus on your business processes and desired outcomes, and how we can get you there faster by getting your team aligned, excited, and organized.

Want to learn more?