How should you know when to modernize your legacy systems? Definitions, challenges, approaches, and step-by-step guide.

Legacy System Modernization: The Ultimate Guide

Nowadays, advanced technological solutions replace outdated ones because of many external factors, including the recent crisis. Many organizations face certain difficulties with adopting those technologies. Legacy systems are involved in many businesses. The current situation stresses their vital role. Modernization of these systems is of utmost importance as they should correspond to the “new normal,” which is about choosing distant work. On-demand citizen services grow in their popularity, and it makes legacy software modernization twice as important.

Legacy systems were not initially developed to cope with such high digital demand. Organizations face issues like lack of skills, expensive hardware, and aging mainframes. They keep on asking themselves how to achieve a balance between current solutions and future-proof foundations. Will transferring data from a legacy system to the new system be worth it? Spoiler alert: Yes, for sure!

In this article, OpenGeeksLab reveals pros and cons of legacy system modernization and provides some useful hints. Keep reading!

Contents hide

What Is a Legacy System?

Defining a legacy internal system. What are its main characteristics and what makes it outdated?

A legacy system refers to outdated computing software/hardware that is currently in use. It meets initial requirements and goals. Some legacy application software examples include banking, background checking systems, and outdated retail systems.

However, a legacy system offers no opportunities for development as it makes communicating with updated technology solutions impossible. Such systems don’t have support and maintenance any longer. One option is replacing them. Organizations with old tech should start searching for solid operations tools now, otherwise, they risk disruption tomorrow.

Legacy system modernization is an innovation that organizations can implement to improve their processes. Several reasons exist for system modernization:

  • Handle technology constraints
  • Obtain operational efficiencies
  • Support integration with up-to-date systems
  • Enhance customer experience

Organizations realize that it’s time for legacy system modernization once they get stuck with outdated equipment that cannot interact with up-to-date solutions. Software modernization process is critical for achieving the set business goals. It should start with estimating the time required to modernize application and hardware. Planning is another integral stage necessary to predict and eliminate possible pitfalls. System modernization is about improving performance and implementing innovative technology ideas.

Negative Impact of Legacy Systems on Business Organizations

The main problems with outdated software and hardware inside the company. Why do they hold business back?

Maintaining legacy applications is not cheap and easy. Not all recent tools are compatible with them. Those are two major drawbacks.

Incompatibility with contemporary solutions slows down business development processes. Upgrading legacy systems will cost you a thing in any case, and ongoing support may cost even more. That is why sources like Deloitte call legacy system modernization one of the most challenging missions for many businesses.

Dealing with outdated software/hardware requires not only extra expenses but a waste of time. More than 50% of CIOs waste almost 60% of their time on outdated legacy solutions.

Logicalis also mentions in the same report that organizations should better spend that time creating and implementing modernized tech strategy. Experts recommend updating applications every five years on average. Below you can find all factors that hold businesses back when they use legacy applications.

1. Compatibility Issues

Outdated technology is not compatible with most new software. Finding a way to integrate existing applications into a new system is not simple. IT teams risk breaking some essential business processes when making older solutions fit modern ones. Three possible ways out exist:

  • Remain happy with where you are, but risk losing even loyal customers
  • Introduce new software solutions without getting rid of the older approaches (staff will find it challenging to sync data and woking processes)
  • Start legacy software upgrade

The last option is a preferred one. Businesses should not delay this process.

2. Restricted Flexibility

Handling the changing industry’s rigors is difficult for organizations that apply legacy systems. Businesses need new solutions that can adapt to tech innovations and novelties.

3. Functionality Issues

Old application means outdated features. Customers are looking for legacy software companies that are ready to offer innovative functionality and modernization solutions to minimize their pain. For example, Comair airline software malfunction cost them nearly $20 million and almost ruined the brand’s reputation.

4. Old Interface

An interface should be clear and simple, but old in no way. Would most consumers today choose Dandy over PS5; VHS over high-resolution movies online? That’s the same. The poor interface means a rapid drop in sales.

5. Costly Maintenance

As mentioned above, support of legacy systems might cost more than switching to a brand new solution. Choosing application modernization means cutting costs significantly. As Statista fairly admits, for more than a quarter of businesses today, an hour of server downtime may achieve around 400,000 USD.


6. Security Vulnerabilities

Don’t think that while technologies advance, hackers hold back. These intruders keep in touch with all trends, knowing how to hack well-protected data. Legacy systems are sensitive and most vulnerable to cyberattacks. It’s because of different errors.

With every patch released, certain threats to security pop up, so one should update applications regularly and carefully.

7. Employee Demotivation

Motivating staff by equipping them with outdated tech solutions is hard. Who would prefer working with regular bugs, long loading times, and data saved in various locations? Companies with an outdated application and hardware experience certain difficulties with hiring and retaining employees.

8. Drop-In Productivity

Most of the points mentioned above result in low productivity. Legacy system upgrade is one effective way to boost productivity shortly.

9. Inefficient Operations

Companies that are still using Word and Excel instead of cloud-based solutions and modernized apps like CMS and CRM suffer from inefficient operations. Employees may leave, getting sick and tired of using old manual approaches.

10. Low-Quality Customer Service

Clients of any company expect to obtain responsive, top-quality support. Many users prefer using their mobile devices, and older software solutions are not mobile optimized. Thus, businesses without proper mobile optimization and support risk losing these customers.

11. Loads of Unstructured Data

To read/interpret information initially generated by legacy systems, converting an outdated format to a new one (for instance, doc → docx) is necessary. After that, structures or even parts of data can be lost. It becomes difficult to manage.

12. Reputational Damage

Finally, it’s all about your company’s image. If you have an outdated application, equipment, or tools, do not expect customers to choose you. Most people today trust only modern technologies.

You know every risk you might face now. While many companies still believe they can keep their legacy systems, we should discuss how much it might cost if you refuse to optimize them.

How Much May Keeping a Legacy System Cost?

Real costs of keeping, supporting, and maintaining a legacy system: how to estimate them.

While when you hear “cost” you may think about money first, more things are there to consider. In the US alone, ten of the government’s legacy systems cost around $337 million annually to run and support.

You face losses whenever your company’s rivals apply tech that you cannot afford. It’s known as a lost business opportunity: every dollar your rivals make is the one your business loses. In addition, consider these potential costs:

  • An increasing quantity of support tickets
  • Support, which price goes up annually
  • Integration with new solutions
  • Handling archaic code
  • Product scaling processes
  • Supporting numerous data centers at a time

For many information technologies organizations, banks, and insurance agencies, that results in up to 75% of the budget. One question remains relevant: is it worth staying with legacy systems or removing them with modern software?


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How Should You Know When It Is the Right Time for Your Legacy System Modernization?

Signs that should tell you whether your legacy systems have to be improved immediately (and why).

To avoid wasting precious time, decide whether it’s necessary to optimize your insurance legacy systems at all. Sometimes, maintenance alone would be enough. A tight budget will not let you replace your existing software with a worthy solution. Business goals also matter while making such decisions. Overcoming threshold is possible by implementing and using new tech and adjustments.

Here are the signs that you have to implement current system modernization:

1. They do not meet the company’s objectives

The system might do well with solving issues at the initial steps, but it may soon become a liability. Preventing a company from losses is possible via modernization.

2. They do not support business growth

No system is effective if it does not support business expansion. Analyze both short-term and long-term goals to understand whether modernizing solutions will prevent the business from possible setbacks. Keep in mind that COVID-19 pandemic forces people to work from home, and legacy systems cannot support efficient distant work.

3. They result in increased technical debt

Many companies waste plenty of their budgets on tech debts caused by outdated systems. Without paying off those debts, maintaining everything later is difficult.

4. They lack security updates

Safety patches assist with protection from malware attacks and other security problems.

If you have some doubts left, don’t be in a hurry. You may, for example, consult companies that specialize in legacy system modernization to find out if legacy application migration is a must.

The Benefits of Legacy System Modernization

The primary advantages of legacy system modernization that you should keep in mind while dealing with this process.

Culture, complexity, and compliance are what create certain challenges. The advantages of modernizing legacy system platform are still obvious.

1. Speed

Outdated systems work slowly, being unable to cope with data created by employees and consumers. After an upgrade, handling large amounts of information without heavy loads becomes possible. This process provides capacity as the final outcome.

2. Simplicity

Diverse tech ecosystems are of utmost importance in the modern world. IT staff agree that by focusing on interoperability, simplifying new solutions is possible.

3. Security

Implementing an up-to-date system allows minimizing state IT risks. All your company needs is access management, multi-factor authentication, and improved safety measures.

4. Operational Efficiency

Modernization allows for quicker time-to-market, enhanced performance, and improved customer experience.

5. Reduced Costs

Wish to cut hardware/software and licensing costs? Decommission data center space, monolithic applications, and physical servers.

6. IT Agility

Up-to-date systems allow adapting to any conditions, handle seasonal fluctuations, optimize business processes, leverage data across your departments, and overcome rivals thanks to the implementation of recent innovations.

Challenges Associated with Migrating Legacy Systems

Challenges with migrating legacy systems: obstacles that decision-makers should be aware of.

At the same time, no one will tell you that optimizing your system is a hassle-free process. It offers plenty of benefits only when done correctly. Otherwise, you might face consequences of the challenges described below:

1. Business Legacy Transformation Resistance

That is the first thing that a stakeholder should keep in mind. Nothing will work if a business executive fails to plan how it should be, rethink processes, and train staff based on new goals and technologies. Better focus on business processes in favor of technologies. Decision-makers should get ready for all possible consequences of redevelopment and changing organizational processes.

2. Balancing Risk

For some companies, finding correct information to make a proper decision is hard. They should do their best when evaluating all possible threats before acting.

3. Data Management Constraints

It should start with collecting and assessing underlying data. Think about various approaches to managing it to maintain the company’s objectives. Do not forget to update governance guidelines.

4. Compliance

If you optimize a legacy data system, it may cause different problems associated with the incorrect transmission, reposition, or usage.

5. Complexity

By presenting new services, a company creates certain obstacles as a staff has to adapt to new technologies. It may require time, effort, and training costs. Digital transformation legacy systems are familiar to employees, so it might be complex for some of them to switch to new tech.

6. Culture

Managers should get ready to present end-user utility to drive enhanced adoption. Removing the barriers that prevent personnel from mastering new tools and equipment will help.

Finally, increased demand for data-driven decision-making might be the last issue. Companies can overcome it by developing new approaches to legacy systems transformation strategies.


Different Legacy System Modernization Approaches

Exploring and discussing the major legacy system modernization approaches to help you pick one or few.

It might cost you a thing, but this onion is worth peeling. Without modernization, a company risks eventually losing more funds by losing clients. The longer you wait – the more it will cost to optimize. Thus, have a look at some effective methods.

1. Encapsulate

This approach means reusing outdated app’s elements. The process connects the existing code to the new presentation. It allows for expanding the list of features. API is involved in this process. While modifying codes a bit, the risks decrease. It is a quick, cost-efficient approach. If you aim to get rid of such cases as problems with maintenance and upgrading, this option is not for you.

2. Rehost

It refers to transferring a mainframe app in the same shape to virtual, physical, or cloud infrastructure. This process is not time-consuming. It is almost risk-free. Your legacy information system will not change much.

Experts recommend choosing migration from legacy systems to cloud or SQL-based x86 environments. Cloud migration is all about flexibility. This approach guarantees greater security of data, stability, and ongoing updates. One of the success cases is Shopify that used to build their cloud with Google, create a Shop Mover database migration tool, and leverage Docker containers. Shopify has been able to transform its data center to raise customer support levels, enhancing their experiences.

3. Replatform

You should not initiate something large-scale if you choose this approach. It is enough to add automated scaling or use a managed database offering, for example. The idea is to adjust the existing code to a new legacy platform. It does not require removing current features. No extra resources are needed for refactoring. Not all apps need all the advantages of being cloud-based.

4. Refactor

A business owner might want to refactor codes. It is almost rewriting them from scratch. It’s an effective way to enhance functionality and fix tech issues. Thanks to this approach, apps can benefit from cloud-native features and increase operational cost efficiency by maximum.

5. Rearchitect

The risks and costs are medium. The outcomes are average. This process stands for altering the code to exploit new legacy platform features. Rearchitecturing allows improving integration by using recent tech advancements. That is how your organization can benefit from using tech-based partnerships.

6. Rebuild and Redesign

If you strive to obtain more features and options, as well as implement up-to-date design, think about rebuilding your legacy application. It means rewriting its elements from zero, still leaving the same scope and peculiarities. That’s how you can launch processes that leverage opportunities of contemporary technologies.

7. Replace

It’s about selecting a new solution after getting rid of the older one. One of the examples could be eliminating outdated customer relationship legacy system management with popular Salesforce. You should first check the requirements of the tech that you plan to implement. IT experts have to identify the ways of transferring information and decide how to train staff on new legacy computer systems. Companies should assess enterprise services that meet the current business requirements, and host them in an up-to-date cloud environment.

8. Retire

Retire the solution fully to prevent adverse consequences like damages. This approach allows preventing data loss and speeding up the system’s work. Reengineering makes no sense when the original software cannot handle core business tasks.

Mind that to achieve a high level of efficiency, you should combine these methods. The best idea is to mix all of them. Consider every aspect: from mainframe upgrade finishing with cloud adoption.

What Are the Popular Legacy System Modernization Methods You Can Use?

Describing top legacy system modernization methods: look through this list to choose the right option for you.

Many factors impact how outdated software evolves. Sometimes, adding a single line of code might be enough while you may have to fully reimplement the solution another time. You should initially decide on your method. A couple of them exist: revolutionary and evolutionary. Let’s compare them both.

1. Big-Bang

It takes place when your business should come up with full removement of the existing solutions. It’s like doing anything from scratch. If you believe that updating an existing system is risk-free, you may move to the next type, but this approach is for businesses that risk facing security issues, loss of critical information, or system downtime. Then, building a new solution makes sense. The revolutionary method suits perfectly if the original software cannot handle business processes or solve issues effectively.

2. Band-Aid

This approach is about upgrading, not ruining to create everything from zero to hero. It requires less time and stress but is not always the best idea. The risks are lower, however. This method is more focused on solving issues rather than detecting and eliminating the roots of those problems.

Think about what and how you plan to achieve. The next section will help with choosing an effective approach or several of them.


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Selecting the Most Effective Modernization Strategy for Your System

Tips for analyzing and selecting the best modernization strategy for your system.

Stakeholders should first ask themselves some questions to define a proper strategy for upgrading a legacy system. Ask yourself several questions off you go.

1. Which features require no changes?

Your existing solutions should not necessarily work badly. It’s just that it might not integrate well with modern solutions necessary for your business growth. Does it take a while for your employees to complete daily tasks? Create a list of features that you’re satisfied with. Start with replacing elements that hold back your system instead of those that work well.

2. What is the expected project’s deadline?

Before legacy system transformation, you’ll have to stop some operations. Mind that some of them might be core activities. Estimate the time you believe you’ll need to upgrade the legacy system platform. Businesses that are in a rush may decide to pick an off-the-shelf technology for replacement rather than create a custom module.

3. What are some objectives that you plan to hit with your system modernization?

Implement this procedure for various reasons. While some organizations strive to cut support expenses, others wish to speed up their processes. Some may implement artificial intelligence while others prefer machine learning. Depending on the reasons, you’ll be able to choose the most suitable approach.

4. What are some stages that you should consider to achieve your objectives?

Once again, it depends on why you want to modernize legacy systems. Whether you require new tech or models, modernized equipment and software must align with your organizational goals. Contact professionals to decide which tech advancements will solve your issues best of all.

By knowing the answers, one can choose how to optimize any system best of all. Another question is how the process typically looks like.

How the Modernization Process Looks Like

How the process of legacy system modernization looks like: discover how this procedure flows step-by-step.

Our next section serves as a how-to guide for those who are ready to make changes. Pay attention to every single step below. Try not to miss any of them!

1. Evaluate Your Matureness

The primary step is to evaluate maturity. Focus on multiple instances of your application. Take into account various apps that relate to the same field and have similar features. That is in case your business has never dome software migration before and is at a beginning maturity phase.

2. Come up With a Plan

You’ll have to collect and define how legacy system migration can bring the highest ROI. For this, collect info concerning funds, timeframes, and business goals. The IT department is not enough to finish this process. Involve other experts like security, data, and compliance staff. That is just about getting ready.

3. Plan Ongoing Legacy Data Migration Stages

What is modernization about? This process refers to providing and supporting infrastructure that is up-to-date, rich in a variety of features. It will touch every aspect of IT and business processes. Remember that there is always room for improvement, no matter what field.

4. Decide on the Purposes of Your Business

You should know your project by heart, understanding where it’s heading. Do your existing IT solutions meet all business goals? Once you define your objectives, contact business analysts and application architecture experts so that they help.

5. Analyze Your Existing Legacy Software Systems

The next step is performing a code audit. It will help to define whether you should rewrite or reorganize your apps. This process involves detecting problems that prevent your company from prospering.

6. Outline Modernization Requirements and Make a Plan

It’s about time to choose top strategies for financial legacy system modernization. In-depth analysis of tech state allows for finding time-tested ways. New features and requirements are part of this stage. From business goals to essential processes, you should consider everything. The final stage of this phase is accomplishing and sign the necessary documentation.

7. Elaborate and Improve

With a plan in your pocket, start the development stage. That is when you’ll need experts like data analysts, devs, and architects. They must examine alterations made to existing code to protect business processes from any obstacles. Experts should provide modifications and upgrades based on a confirmed plan.

8. Mind Quality Assurance

Quality assurance (QA) is an essential step, which involves complete regression testing. Mind that checking licenses, quality of work, and connectivity is important.

9. Set Up Training Sessions

So, your technology is ready after multiple audits. Now, making sure that your employees know how to use it hassle-free is vital. Create training guides and user manuals.

10. Provide Maintenance and Support

Replacing legacy systems is not over yet without proper maintenance! You should not forget about your project once it’s done, ensuring there are no bugs.

That is how you can extend the life of your new legacy technology solution.

Transform Your Enterprise with OpenGeeksLab!

Now, you see that legacy IT systems upgrade is a time-consuming, more-or-less expensive procedure that possesses certain risks. Sometimes, you gotta roll the hard six, especially when it comes to your business. Companies should not fall behind new technologies if they want to stay on the wave and compete fairly. Modernization is not a single-time project; only through ongoing support and maintenance, achieving excellent results and expanding the business significantly is possible.

Avoid missing a critical thing by using this checklist from our team:

  • Evaluate where you are and plan what you want;
  • Choose a method that would fit your goals best of all;
  • Make simplicity your top priority when rethinking the architecture;
  • Select the tech stack for delivering desired performance and user experience;
  • Plan further business expansion;
  • Come up with a support and retirement schedule;
  • Estimate the funds necessary for employee training and legacy IT systems updates.

If you’re still unsure or have any questions left, find a reliable legacy modernization company or counseling organization with vast experience to lend you a helping hand. OpenGeeksLab has already assisted plenty of organizations with selecting proper approaches and legacy system modernization strategies. From evaluating the current software and assisting with choosing an effective business strategy to completely rebuilding your product, our pros know everything concerning this topic. We possess all skills required to help you achieve success. Our team will deliver trackable results without disrupting the regular flow of operations.

Simply contact us or schedule a free online consultation. We are here to help any business ready for changes!

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