Legacy Application Modernization: Key Steps, Benefits & Best Practices

This blog post was co-authored with Riaz Merchant, President and CEO at Mertech.

In the fast-paced software world, 'legacy' often signals a warning. 

If your business is still anchored to legacy software, you might risk inefficiency, profit loss, and security vulnerabilities. 

While switching systems is a significant investment of time and resources, pouring more into software that's lost its edge means you're at a huge disadvantage. 

This is where legacy application modernization comes into play, steering your business back into the competitive lane with modern, efficient technology solutions.

The forecast is that about 78% of custom applications will be modernized within a year, with most companies aiming for enhanced security and efficiency. 

But what does legacy application modernization entail, and how does it help overcome the limitations of outdated systems?

Let’s explore all about legacy app modernization, including the process and main reasons to modernize your legacy systems. We'll also cover the key benefits, challenges, and future trends.

What is a Legacy Application? 

A legacy application or system is software that has become outdated but is still in use. These systems often rely on older technologies and may not integrate well with current software solutions.  

Signs of a legacy system include using tech stacks like: 

• COBOL with Btrieve
• C 
• Visual Basic 
• .Net 
• Delphi 
• Object Pascal 
• Fortran 
• Perl 

They are typically monolithic, meaning their various functions are interdependent and compiled into a single platform, often making them inflexible and difficult to update. 

Legacy applications also pose challenges such as: 

• Difficulty integrating with modern systems 
• High maintenance costs 
• Limited support 
• Incompatibility with new hardware 
• Security vulnerabilities 

So, who's still holding onto these digital relics?  

You'll find them in places like government agencies, managing crucial tasks from taxes to unemployment benefits. Banks like the Royal Bank of Scotland also still entrust their transactions to these applications. Even in healthcare, where patient data is gold, these systems are still at work. 

What is Legacy Application Modernization? 

Legacy application modernization is the process of updating and transforming outdated software systems. It typically includes transitioning from older programming languages, frameworks, and infrastructures to more advanced, efficient, and secure technologies.  

The transition to more modular designs like microservices helps businesses align better with current technologies and trends. 

But how exactly do you upgrade an outdated legacy system? 

The process can include rehosting applications on new platforms, re-engineering software, refactoring code, or completely rewriting applications. It often incorporates cloud technologies for improved scalability and flexibility. 

Legacy system modernization ensures your software is still relevant and valuable in today's rapidly evolving digital landscape by: 

• Enhancing system functionality 
• Improving security and compliance 
• Increasing scalability and efficiency 
• Ensuring the software meets evolving user expectations and business requirements 

Why Modernize Legacy Applications? 

An increasing number of software solutions are becoming available directly over the Internet, thanks to the Cloud. That's because cloud-based software and infrastructure are cheap, flexible, and scalable. 

Even Microsoft has recognized that it’s time to move away from desktop-only software, proving that the Cloud and the SaaS model are here to stay. 

Here are some of the main reasons why it's time to modernize your legacy applications:  

Maintenance and Support Concerns 

Legacy systems often incur high maintenance and support costs. That's because they often have extensive codebases and are built on monolithic architectures, making even minor updates a significant challenge.     

In turn, each update can require extensive time and effort. For instance, the U.S. Federal Government spends over $100 billion annually on IT investments. Over 80% of these expenses are dedicated to operations and maintenance, primarily for legacy systems. 

As legacy data is often dispersed across multiple databases, it also requires significant effort to reorganize and migrate. Additionally, these systems frequently depend on specific hardware environments, leading to higher operational costs compared to modern, cloud-based alternatives. 

Integration and Compliance Concerns 

Contemporary applications frequently utilize APIs for enhanced functionalities like AI-powered recommendations or real-time data processing. In contrast, legacy systems struggle to integrate with such modern technologies due to their outdated architecture.  

Integration limitations also lead to data silos, hampering seamless data flow and utilization.   

Additionally, modern regulations, such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act), impose strict data protection standards.  

Legacy systems, often built without these security and privacy considerations in mind, find it increasingly difficult to meet these requirements. For example, about 42% of organizations view legacy IT as a significant hurdle in achieving compliance with these regulations.  

Lack of Expertise 

As IT professionals increasingly focus on mastering new technologies for better career opportunities and compensation, finding skilled personnel for legacy systems becomes more difficult.  

Additionally, there's limited community support for obsolete technologies. Modern tech workers rely on resources like libraries, frameworks, and tools available in online communities, which are scarce for legacy systems.  

This means that organizations that rely on legacy solutions are compelled to invest in more experienced and often more expensive senior staff, as junior and mid-level professionals are less inclined to work with outdated programming languages and systems.  

Security Concerns 

As legacy software ages, its vulnerabilities become more apparent to hackers, increasing the risk of cyberattacks.  

One major issue is that vendors often stop providing updates and patches for outdated software.  

This leaves legacy systems exposed to new threats and non-compliant with current security standards.   

Continuing to patch up these systems is not only resource-intensive but also ineffective in the long term. Each new patch is a temporary fix that won't be able to safeguard the software as new vulnerabilities continue to emerge.  

This constant need for patching results in escalating maintenance costs and security risks, underscoring the urgent need for legacy application modernization. 

Poor Performance and Lack of Agility 

Legacy applications struggle with scaling across multiple platforms, especially on mobile devices, which is crucial given that a significant portion of web traffic now comes from mobile users.  

For instance, in 2023, over 58% of website visits were on mobile devices, yet many legacy systems are not optimized for mobile usage. 

But why is that the case? 

Legacy systems usually have outdated features and limited integration capabilities. 

This also impedes innovation and reduces employee productivity.  

Benefits of Legacy Application Modernization

By updating and transforming legacy systems, companies can unlock a host of benefits, including:  

• Optimized business processes: Modern systems significantly improve performance and reliability, leading to faster processes and reduced downtime. This minimizes potential losses and cuts down on manual labor, saving both time and costs.  
• Happy customers: Enhanced user experience from modern systems improves customer interactions. Updated technology means a more intuitive and reliable interface, enhancing overall customer satisfaction and engagement.  
• Cost savings: Modernization can reduce infrastructure and maintenance budgets by up to 50%. It aligns better with current regulations, reducing the risk of costly compliance violations and eliminating expensive patchwork fixes.  
• Resilience and future readiness: Modernizing legacy systems prepares businesses for future growth and technological changes. It creates a foundation for continuous improvement and adaptation to evolving tech landscapes, ensuring business agility.  
• Competitive advantage: Modernized applications can distinguish businesses in industries dominated by outdated systems. McKinsey reports most executives prioritize digital transformation, and 79% of CIOs believe process transformation is key to outperforming competitors. This strategic move positions businesses as innovative leaders, attracting new customers and fostering growth. 

Main Steps to Modernize Legacy Applications 

The legacy application modernization process involves utilizing different techniques and best practices.  

Let's delve into these key steps: 

1. Analyze Your Current Legacy System 

The first critical step is a thorough analysis of your current legacy systems. This involves assessing both business and IT aspects to determine how well your legacy software aligns with your current and future needs. 

Business-related factors

• Business fit: Does the application align with your new business objectives?
  
• Business value: How much value does the application bring to your organization? 
• Business agility: Can the application adapt quickly to evolving business requirements? 

IT-related factors

• IT cost: Is maintaining the application financially sustainable? 
• Application and implementation complexity: How challenging is it to manage and update the application? 
• Risk: Does the application pose any security threats or compliance issues? 

This comprehensive assessment will give you a clear picture of the state of your legacy systems, helping you prioritize actions for modernization. 

2. Evaluate and Select the Suitable Approach 

The next vital step in legacy application modernization is selecting the most suitable modernization approach. This decision should align with your business objectives, technological needs, and the insights gained from your initial assessment. Here are several strategies to consider: 

• Encapsulate: Use APIs to leverage the application's data in other systems. 
• Rehost: Redeploy the application to a new environment, like the Cloud or a hybrid-cloud setup. 
• Replatform: Make minimal code alterations and migrate to a new platform. 
• Refactor: Update and optimize existing code to reduce technical debt. 
• Rearchitect: Transform the application architecture for enhanced capabilities. 
• Rebuild: Develop a new application from scratch, tailored to current specifications. 
• Replace: Completely replace the legacy system with a more efficient solution. 

Choose a modernization strategy that offers quick value delivery and fits your unique requirements. For some scenarios, readily available SaaS products may suffice. However, for specialized needs or to add bespoke features, custom software development might be more appropriate.  

3. Plan Your Modernization Scope 

When planning the scope of your legacy application modernization, prioritize simplicity and functionality. Legacy systems often suffer from complex architectures that hinder performance. In modernization, you should:

• Focus on key features: Initially, integrate only the most essential features.
  
• Embrace microservices architecture: Consider a microservices modernization approach for scalability and flexibility. 
• Ensure compatibility: Ensure the updated application aligns well with existing business tools. If you anticipate changing these tools, factor in the requirements of potential replacements. 
• Streamline architecture: Simplify the architecture to enhance maintainability and reduce complexity, thereby improving overall performance and user experience. 

4. Benchmark Your Data and Technology Stack 

Selecting the right technology stack is crucial for delivering optimal performance and user experience. Consider these steps:  

• Evaluate current needs: Assess your product's specific requirements to determine the most suitable technology stack. 
• Consult experts: Engage with your IT team or seek advice from professional tech consultants for insights on the best technologies to use. 
• Future-readiness: Choose a technology stack that not only meets current needs but is also scalable and adaptable for future advancements. 
• Quality assurance: Implement robust testing and quality assurance processes to ensure the reliability and efficiency of the modernized application. 

5. Build Your Team and Setup Documentation 

In this step, you should form a team comprising IT professionals, operations leaders, and department heads. This ensures a comprehensive approach to modernization. 

To ensure the team functions optimally, you can involve team members at various levels to foster a sense of ownership and reduce resistance to change. 

Additionally, you should adopt coding standards and internal processes for clear and maintainable code. This will ensure thorough documentation for future system growth, making the software easier to understand, extend, and maintain. 

6. Set Up Your Timeline and Define Increments 

It's vital to recognize that modernization is not an overnight fix. Instead, it requires careful planning and execution. The complexity of your project and the selected modernization approach should guide the duration set for each phase.  

Alongside creating this timeline, it's equally important to define clear success metrics. They will serve as guideposts, helping you measure the effectiveness of the modernization at each stage.  

7. Plan Training and Adoption Initiatives for Customers 

When transitioning to a modernized legacy application, it's critical to plan for the training and adoption of these new systems by your customers. A DAP (digital adoption platform) can be a valuable tool in this process. DAPs offer a range of features, such as guided onboarding tours, interactive step-by-step flows, and in-app support, making the transition smoother for end-users.  

Also, consider allocating a budget for:  

• Employee training: Employees accustomed to the old system may require guidance to effectively utilize the new software.
• Regular system updates: These are essential to maintain the efficiency and relevance of the modernized system.
  

Key Challenges in Modernizing Legacy Applications 

Modernizing legacy applications is a crucial step towards technological advancement, but it's not without its hurdles:

• End user adjustment curve: Transitioning from old systems to new ones can be difficult for workers used to existing workflows. This shift requires not just technical updates but changes in daily routines, that could lead to resistance or slower adoption rates. To overcome this obstacle, you can incorporate adequate training and offer ongoing support. 
• Code complexity and skills gap: Modernizing complex legacy code demands expertise in older technologies. But as professionals move towards newer tech stacks, there is a scarcity of such professionals. As a result, finding the right talent for refactoring legacy code is becoming increasingly difficult. 
• Security and data access: Assessing and managing financial, operational, and security risks is critical in legacy modernization. It's also vital to clean and reorganize existing data to ensure it aligns with new business objectives and doesn't bring legacy errors into the modernized environment. 
• Cost: Legacy application modernization involves weighing the immediate costs against long-term benefits. Decisions need to be made on whether to completely overhaul systems or update specific aspects, considering the costs of new infrastructure, training, and transition-related disruptions. 

How to Modernize your Legacy Application the Right Way? 

App Modernization Example: Increasing E-Commerce Sales by 5X with Mertech 

Context: J.Renee, a shoe retailer, sought to revitalize its online store to meet evolving market trends and customer expectations. Partnering with Mertech, they embarked on a journey to modernize their digital platform. 

Process: The overhaul centered around redesigning J.Renee’s website for better aesthetics and functionality, with an emphasis on mobile responsiveness. We also upgraded the site's infrastructure to enhance performance and accommodate more traffic. 

Result: The revamped site now loads products almost instantly, compared to the previous four-second delay. This upgrade significantly increased customer engagement, with a 5x surge in sales per year. The site also witnessed a leap in page views from 200K to 1.1 million and a customer count from 5,000 to 15,000 between 2014 and 2016. Check the full case study here.

Conclusion 

Legacy application modernization helps businesses enhance their efficiency, security, and customer satisfaction, ensuring they remain competitive and agile.  

Interested in transforming your legacy applications?  

Mertech offers specialized application modernization services to guide and support your journey towards a successful legacy application modernization project. Contact us to explore how we can help revitalize your legacy systems and propel your business forward. 

Frequently asked questions

Have any other questions regarding legacy application modernization? Here are the answers to some commonly asked questions: