How to Approach Legacy Systems Modernization

Legacy systems, built at the outset of businesses, operationalize important data and serve as information containers critical to everyday operations. Yet, at some point, a legacy system can no longer keep up with the emerging business demands and accommodate technologies.

Stats show that enterprises spend a disproportionate amount of investments on keeping the old systems afloat: the federal government spent over 75% of its FY15 IT budget on operations and maintenance. 

At the same, modernizing legacy applications can help your company realize up to 35% infrastructure year-over-year savings and 30-50% lower application maintenance and run costs. 

Considering the savings factor and the mounting competitive pressure, that’s why legacy software modernization becomes imperative.

When is the Right Time to Update Legacy Software?

Technologies always forge ahead. Many legacy systems are nearing the end of support. Migration to a newer stack can give a competitive advantage in terms of access to new technologies. Your IT legacy system should be able to cope with the expanding load and support new operations without any compromises in terms of performance. Otherwise, there’s a risk of falling behind the competition, facing a lack of flexibility, and having more costly company’s business processes.

Now maybe the right time to update your legacy software as: 

  • 4 in 10 CIOs name complex legacy technology as the main roadblock to digital transformations.
  • Operations switched digital post-COVID, and businesses need to expand their services/products online.
  • Many legacy systems are standalone and don’t support integration with other software. That, in turn, may impact your organization’s flexibility and scalability.
  • Security risks should be taken very seriously today. Outdated systems aggravate security risks since some may no longer receive updates and patches.
  • The omnichannel business model is on the rise, and it requires companies to be agile to respond to the emerging market demands making their product available across different channels.

Once you come up with the decision to update your current software, be ready for the challenges that may come along.

What are the Challenges of Modernizing Legacy Software?

Legacy software is old, complex, and oftentimes incredibly hard to decouple without disrupting your entire operations. So if you are assessing the possibility of modernizing your legacy setup, mind the following risks: 

High Risks

Changing your tech core translates to a multitude of business risks: 

  • Data loss during migration 
  • Operational post-deployment failures
  • Budget and timeline overruns 
  • Non-compliance issues 

In fact, as much as 74% of organizations failed to complete legacy systems modernization projects last year. The disconnect of priorities between technical and leadership teams here is the main reason to blame. 

The key takeaway: high stakeholder engagement, critical planning, technical roadmaps, and risk assessment are critical elements of a successful legacy software modernization project.

Costs and Uncertain ROI

The payback period and realizing the benefits of legacy modernization may take a long time. Deloitte states that the companies could initially face a marginal or even a negative ROI. The estimated payback period may take upwards of 2 to 7 years. On the other hand, when you invest in keeping your legacy software afloat, you leave less room for innovations, which in the long run, can eat up a heavy part of your annual budget.

Integration Issues Between New and Legacy Systems

Integration can get extremely difficult when endpoints vary, or you need to deal with different data standards and formats (e.g., ANSI X12, JSON, XML). Depending on the data volume and your team capabilities, you can either abandon it (if it is not critical for your company) or proceed to work with that data by encapsulating it.

If you’re still in two minds about whether to invest and update your legacy software now, here are a few scenarios and approaches to modernization that can help you make the right call. 

How to Best Approach Legacy Systems Modernization

strategies for legacy systems modernization

If you do not modernize your software, you eventually lose more money by losing customers, competitive advantage, and access to new technologies. That’s a fact. What’s more the longer you wait — the more expensive it becomes to upgrade. After three years of neglect the costs to upgrade or replace systems increase exponentially.

No doubt, getting into the nuts and bolts of your old system may not be an easy task, but you gotta do it as a business. Here are several legacy systems modernization strategies that can come in handy.

Strategy 1. Wait-And-Watch Approach

There are situations where the ROI of legacy application modernization isn’t worthwhile at the moment. So companies chose to observe the industry without taking any further action. This makes sense when your stack is still relatively up-to-date and handles the required load levels well. 

Yet, playing the wait-and-watch approach for too long can be detrimental. Firstly, technologies always forge ahead. That means you inescapably need to make systematic revisions and modernize your software to keep it stable and secure. Here are a few tell-tale signs meaning you should change the wait-and-watch strategy to another one:

  • Your software system cannot cope with the load and fails to perform as expected.
  • The system lacks speed, crashes, or have performance glitches
  • The technology you use becomes obsolete
  • The software cannot keep up with your business growth
  • Your software system faces security threats

So it’s best to control the system and its flexibility to handle the growth. As soon as you notice one or more of these signs, you need to opt for more proactive measures.

Strategy 2. Existing System Improvements

To modernize existing system architecture and get rid of the technical debt (which may severely limit your IT function’s ability to innovate), you can choose to either refactor or re-architect certain applications within your system. 

  • Refatoring means restructuring and optimizing the current codebase without changing its external behavior. It’s a good option when you need to remove technical debt and improve the component’s features and structure.
  • Rearchitecting means altering the code itself so you can port it to a new application architecture (for example from monolith to microservices) to fully exploit new and better capabilities and grow agility of the platform.

Mind that there are no eternal technologies, and every system comes with an expiration date. Refactoring, rearchitecting, or small system improvements can help you keep your legacy application afloat for a few more years. So it’s better to spend that time strategizing on further improvements.

Strategy 3. Duct Tape or Patchwork Approach

As the name implies, the patchwork approach means performing small, localized changes in the legacy application using the old tech stack. Since the legacy system may not be compatible with new tech stack, a company relying on this approach may build a new application and then sync it with the legacy one to bridge the gap in functionality. You can perform synchronization by encapsulating legacy software components and connecting them with new applications or components via an application programming interface (API). Usually, the core architecture and technology of the main application remain untouched. 

Such an approach doesn’t require huge investment. Thus, companies often use it to make hotfixes and small-scale changes. Yet, the cost of making multiple modifications may be higher compared to rebuilding functional blocks or the whole application. Ideally, you should view the duct tape approach as a temporary measure, taken to gain enough time for planning proper modernization.

Strategy 4. Gradual Replacement

Legacy systems often have overly complex and monolithic structures. Hence, the first step should ideally be detangling a monolithic system and migrating it to a microservice architecture. That, in turn, will make possible breaking your huge legacy application into smaller blocks. Once done, you’ll be able to take one functional block at a time, rebuild it using new technology, and deploy as a separate application. Another option is to leave the code in its current environment. Then connect it to the new access layers via an API. 

Gradual replacement is often considered to be a lower risk way to transform the entire system. As you are working ‘one block at a time’, ensuring business continuity is easier. On the other hand, not every legacy system can be effectively decoupled into individual microservices. 

Strategy 5. Complete Transformation

Fully transforming your legacy systems is risky and complex as the 74% failure rate proves well. Notwithstanding, complete legacy systems modernization may be worth a shot when: 

  • You are running software, written in an obsolete programming language (think COBOL). 
  • Critical elements of your core are nearing EOS and will not be supported any longer by the vendor. 
  • You cannot adopt critical technologies that can help launch new digital offerings and customer-facing solutions. 
  • Over 80% of your IT budgets are allocated to maintenance and support. 
  • You have already tried all of the strategies mentioned above and still didn’t get close to your performance goals. 

The complete transformation may be done in two ways:

  • Rewriting the application with modern tech stack preserving original scope and specifications
  • Building a brand new system by taking new requirements. So you need to identify the crucial features you need to bring to the new app, and the ones that you no longer require.

To ensure business continuity, it is better to approach your system transformation iteratively and stick to agile development frameworks rather than the waterfall model. Yet, in some cases (e.g. obsolete technology) you need to take extreme measures and shut down the old system to avoid security breaches, data loss, or system downtime.

To Conclude 

Each of the proposed approaches to legacy software modernization has its advantages and, if handled right, can help your business forge ahead of the competition. Before choosing the one, you should carefully evaluate your legacy system versus the outcomes you want to achieve. Sometimes companies will likely need to employ a mix of approaches to handle the task. To understand how to move forward, you should perform an in-depth analysis of your legacy software and develop a move-forward roadmap with short- and long-term goals that need to be achieved.

Whether you decide to take small steps and make routine support and localized fixes, gradually move to a new platform, or replace the entire application system at once — any action aimed at modernizing your system is better than none at all. 

Our extensive experience and rational approach to legacy systems modernization help our clients come through this process as smooth as possible. Contact Edvantis today and we’ll be pleased to discuss options that will best fit your business needs.

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