Application Modernization: The critical change your business needs in order to grow

2 min read

The modernization of developed applications will help businesses to improve their corporate scope and analyze new environments. This will not only provide businesses with new opportunities but also reduce bottom line costs, maintain top-of-the-range revenue growth, and increase profit margins.


Legacy applications uses a text-based interface which users need to learn (not a comprehensive format). These applications navigate through fixed structures. This provides standalone applications which make the integration task difficult. Legacy applications are large and are often found with a single code base wherein any change is a change to the whole application. The application is constrained by device type and require specific IT expertise to make changes.

Organizations that use application modernization system will see some of the business benefits such as –

  • Closer integration with partners and suppliers
  • Ability to exploit commercially off‐the‐shelf products
  • The reduced total cost of ownership
  • Improved data quality, operational efficiency, customer service, security management, and control

Legacy applications are complex and require heavy maintenance cost. Systems based on obsolete languages and hardware makes them difficult to be integrated with new technologies. Legacy systems cannot meet growing customer requirements.

Signs that indicate an application needs modernization

Some of the common factors that drive an organization’s need for an application modernization, that includes Market Drivers, Business Drivers, and IT Drivers:

Market drivers

  • Mergers & acquisitions or divestiture driven integration
  • Regulatory compliance requirements from the SEC, Sarbanes Oxley, or Basel II
  • Competitive and customer pressures to add function, performance, and capacity
  • Opportunities related to innovation

Business drivers

  • Integration with other business systems
  • Optimization of products or services
  • Increased focus on customers
  • Time‐to‐time market deadlines
  • Budget constraints
  • Resource availability, risk & compliance

IT drivers

  • Extended development cycles
  • Consolidation of legacy systems
  • Lack of IT expertise in application maintenance
  • High vendor lock‐in and maintenance costs
  • Data warehousing and business intelligence
  • Security audit compliance and access issues
  • ERP/CRM deployments and Master Data Management

Strategies for Application Modernization

Successful software or legacy reengineering demands a strong modernization strategy. After conducting a thorough assessment, the system provides the best results but with higher costs, higher risks, and greater attention to detail. The organization can have five key migration options – 5 R’s of application modernization: Rehost, Refactor, Re-architect, Rebuild, and Replace

1. Rehost

The lift and shift model is used to redeploy an application component. This involves moving an application’s underlying resources from an on-premise data center to the cloud as-is (cloud migration journey). In this option, without recompiling, modifying features and functions, or altering the application code, an application component can be shifted across various infrastructures (physical, virtual, or cloud).

2. Refactor

In this approach, the application codebase remains the same, and the infrastructure is migrated to cloud Infrastructure-as-a-Service (IaaS). This includes cloud-based storage and network resources. The programmer can restructure and reuse the existing code without changing its external behavior. This will improve the component’s features and structure.

3. Re-architect

This involves materially changing or decomposing the application code into services to migrate to a new application which delivers enhanced application platform capabilities. This strategy involves segmenting one’s monolithic application into a collection of services according to the microservices model. This approach provides benefits such as business agility, reduced costs, and an opportunity to reinvent the customer experience.

4. Rebuild

The application component is rewritten from scratch without compromising on its scope and specifications. Rebuilding or starting afresh can sometimes be more cost-effective. However, it provides better results as compared to a remodelling project. Here, the application is rewritten as a cloud-native application while offering many benefits such as helping to accelerate innovation, release value faster, and reduce the overall operational costs.

5. Replace

The former application component or the custom developed softwareis terminated and needs to be replaced with an agile cloud-based solution. The replacement approach always runs on the latest version, offers lower initial cost and faster adoption. The solution can help reduce the level of customization and specialization while offering potentially better security, cost savings and shifting the support burden outside of the organization.

Sample Modernization Strategy

Integrated Human Resources System
– Finalize top-down designs
– Failure of redundant functions/data
– Transition functions/data to clients/servers
– Phase deactivation of legacy systems
Accounts Payable
Accounts Receivables
Cash Disbursements
Review/Acquire Accounting Package
– Assess underlying package functionality
– Migrate/failure of redundant legacy data
– Shut-down of legacy systems
Customer Tracking
Order Processing
Phased Transition to New Billing System
– Stabilize existing applications
– Develop integrated clients/server designs
– Assess current systems
– Employ phased migration to target architecture

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