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Get Future Ready with an Application Modernization Strategy

A global survey of IT leaders found that investing in an application modernization strategy or digital transformation is set to increase by 46% in 2022-23. The survey also found that 79% of enterprises have already made significant improvements to the end user experience through legacy system modernization approaches.

What does this mean?

This means that companies that are not developing strategies to update their systems are falling behind. With the advancement of technology infrastructure and changing customer expectations, the adoption of digital technology has become a priority, not an option. However, true digital transformation, which includes migrating to the cloud, cannot be successful without modernizing or updating legacy applications. In other words, application modernization enables digital transformation.

Why is an application modernization strategy important?

Modernizing or updating legacy applications has many advantages, including making apps more secure, enabling anytime/anywhere access, and reducing maintenance costs. It also allows organizations to accelerate innovation and go to market faster by updating business processes and making data more accessible. And perhaps, most importantly, application modernization can enhance customer experiences. When done properly, an application modernization strategy can keep you ahead of the competition and have a direct positive impact on the bottom line.

In fact, a study by the Economist and DXC Technology found that 68% of senior executives have already seen an increase in profitability in the last three years due to digital transformation, and 74% predict there will be a rise in profitability due to legacy system modernization approaches. But what exactly does this involve?

An application modernization strategy involves taking legacy, on-premises software applications that address business processes and converting them to cloud-based, mobile-friendly applications that use modernized code and capabilities. These legacy systems are often written in antiquated, highly customized code that is no longer efficient or productive. However, even though these software systems are outdated, they are critical to operations.

According to America’s SAP Users’ Group (ASUG), 91% of SAP enterprise companies use customized code that is hard to maintain and update, yet they are critical to operations.

When businesses evolve, the applications that once provided competitive advantages or operational efficiencies tend to become less and less effective. To stay ahead of the competition, enterprises need digital systems that are agile, scalable, and flexible. So, it’s no surprise that developing an application modernization strategy is a top priority for today’s businesses.

Why not just enhance existing applications and add new features through change requests?

As stated in a recent article in Forbes, many companies have accumulated a “technical debt,” due to years of patching and upgrading systems. Although this patchwork approach may seem like a quick fix solution, it can cost far more than redesigning and redeveloping applications using newer technologies. It also makes innovating more difficult – upgrading one system can “break” or disrupt another. Additionally, modernizing legacy systems provides new features and functionalities that can not be replicated in older systems.

In most businesses, it’s the norm to find IT departments struggling to fix the defects in legacy applications and often spending disproportionately more time and resources on troubleshooting rather than focusing on value-added activities such as supporting digitization and automation.

However, the biggest benefit comes later: When you apply an application modernization strategy using the latest technologies and platforms, you minimize the time and resources required to maintain and manage these applications. Let’s look at an example.

A leading company in the manufacturing industry modernized a legacy on-premise application and built a web app using Microsoft Azure App Service, which offers auto-scaling and high availability. After the legacy system modernization approaches were complete, their IT department no longer had to worry about managing the infrastructure. Functionalities such as Managed Cloud Backups and Disaster Recovery as a built-in service also reduced the time required by IT for maintenance, thereby freeing up time and resources to focus on reskilling and contributing to the strategic goals of the organization. Wouldn’t you rather have your IT team implementing AI, leveraging Business Intelligence technologies for better analytics, and bolstering data security to protect the organization from cyber-attacks than performing maintenance and putting out fires?

And speaking of security, 74% of CIOs now feel vulnerable to cyber-attacks, per The Harvey Nash/KPMG CIO Survey 2019. Storing encrypted passwords is the least efficient way to manage information security. Employing an application modernization strategy can ensure multi-factor authentication for all applications. This becomes even more critical for those in the healthcare industry, who must also stay HIPPAA compliant.

Why You Need an Application Modernization Strategy

The following pain points make a compelling case for modernizing your legacy systems and retiring applications built on obsolete technologies.

  • Rigid architecture – lack of flexibility and scalability
  • Lack of agility
  • Expensive to maintain and enhance
  • Require skilled resources to maintain and manage, which may be in short supply
  • Limited hardware and software options

How can an application modernization strategy address remote work?

One of the reasons application modernization is gaining traction as a business priority is the need to integrate applications so they share data and functions within a single user interface. To make the recent shift to remote working effective, there must also be a change to applications that were previously used only behind a firewall. To better serve your customers, your employees need to have access to business-critical applications across all their devices, including laptops, tablets, or mobile phones.

An application that was designed specifically for a PC now needs to be compatible on multiple mobile devices. This requires powerful web and mobile apps that ensure you continue to interact with your customers and harvest meaningful data to understand changing preferences and behaviors.

How can legacy system modernization approaches enhance data-backend decisions?

According to The Harvey Nash/KPMG CIO Survey 2019, of the 3,645 CIO and technology leaders surveyed across 108 countries, “almost two thirds (64%) allow business-managed IT investment and 1 in 10 actively encourage it.” This means that decisions concerning IT will be made by a cross-functional team of stakeholders from business/operations and technology. So, what will the priorities be for such a full stack team of decision makers? Data-backed decisions rank high on the list.

While the board and the C-level executives recognize the importance of data-backed decisions, it’s imperative to assess whether your applications provide the necessary data and have the capability to analyze data and drive insights. This data must also be easy to access and understand. For instance, data may be visually represented through dashboards so management teams in all areas of the company can easily see data, and more importantly, use it to make effective decisions. This ability alone can empower businesses to make faster, more accurate decisions and move forward with disruptive changes that puts you ahead of the competition.

How can we move forward with an effective application Modernization strategy?

While there is no doubt that successful companies must implement legacy system modernization approaches, you must proceed with some caution. There are challenges to any digital transformation. In fact, Cloudbase Research found that 81% of enterprises had application modernization projects fail, suffer delays, or be scaled back in the past year, at an average cost of $4.12 million. They also found that 82% were prevented from pursuing an application modernization strategy due to factors such as lack of resources or funds, a lack of skills to deliver the project, or the complexity of implementing technologies.

To avoid costly missteps and delays, it’s important to begin with a overall assessment and strategy. Before you embark on your modernization journey, you need to understand the steps involved and plan for multiple decisions along the way. For instance, what infrastructure and platform will you use? What security and compliance requirements do you need? Which applications are low hanging fruit which could be immediately rebuilt? Which applications are impacting customer experiences? You may also want to adopt a strategy of incremental upgrades, prioritizing departments or processes that are most critical to operations. Finding the right partner to assess, plan and implement your digital transformation can save your company both time and money.

There’s never been a greater need for businesses to become more agile through legacy system modernization approaches. If you haven’t begun the process of transforming your legacy applications to newer languages, frameworks, and infrastructure platforms, as well as cloud computing and shared services, the time is now. After all, nearly two thirds of organizations (65%) said their digital transformation is actively in progress.  

Stay tuned for our next post that will discuss the steps involved in developing an application modernization strategy.

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