The business challenges of legacy system modernization

According to Heraclitus, a famous Greek philosopher, "the only constant in life is change". Over 2000 years later, we can still observe how true this sentence is. The world is evolving and, in order to catch up, we need to evolve too. Changes in the world have inevitably led to a mindset shift, provoking entrepreneurs to take actions towards modern, user-friendly, intuitive digital products reflecting the shape of the market nowadays. Leaving the old-fashioned software behind is, however, easier said than done, as legacy system modernization involves several challenges. And, contrary to popular belief, many of them are not necessarily tech-related.

What is legacy system modernization all about?

The first adjective that comes to mind when thinking about a legacy system is usually “old” - old software, old tools, old architecture. And, without a doubt, this is one of its main characteristics. However, age isn’t the only factor that matters. What also does matter is that the legacy systems significantly slow down processes, preventing the companies from growing and meeting the market needs.

Due to the huge impact the system has on daily operations, its modernization usually requires much more than a small upgrade or a lift. It’s rather an advanced procedure bringing a whole new value to the business.

User needs and expectations have changed over the years and will continue to evolve in the future - it’s only natural. Legacy modernization is about updating the IT stack in your company to better adapt to this dynamic context and accomplish the business goals. Keeping up with the digitized world, addressing customers’ needs and their changing behavior enables companies to remain competitive. Platforms powered by older technologies simply don’t provide them with this opportunity.

One thing to remember is that the legacy system modernization doesn’t require an all-or-nothing attitude - changes may be introduced gradually, involving only the parts of the software that are crucial for daily operations. It may entail refining or replacing the old system. The size and complexity of changes strongly depend on existing issues, the company strategy and long-term goals, which we’ll touch upon in a second. 

Never underestimate the importance of software modernization

Legacy system modernization is a back-breaking task - it takes both time and money and needs to be based on a well-thought strategy in order to ensure the security of data and operations. There’s no room for mistakes. However scary and demanding the modernization endeavor seems to be, its benefits cannot be underestimated and the change is often necessary for a company to stay profitable. 

Nowadays, flexibility and scalability are among the crucial factors leading to a company’s success. The progress is, however, impossible if outdated software stays in the way. Legacy software doesn’t support modern tools and cannot be connected to newer systems, causing serious maintenance issues. The problems appear also on the user experience level, as old systems don’t meet expectations of the customers who are now used to concepts like cloud services, machine learning, AR/VR, microservices, or big data. Integrating legacy software to third-party services requires a lot of resources and customization activities, which can be avoided with modern, performant, easily-adaptable software. Finally, sometimes the app’s code is simply not optimized for the growing traffic.

Modernizing the legacy software opens the door to new business opportunities, contributing to a significant revenue boost. On the other hand, holding on to an outdated system for too long exposes the business to multiple risks, such as low performance or security issues, leading to the loss of customers and, as a result, revenue. 

Money, money, money

Finances are one of the most important factors when considering legacy system modernization. While the process can be costly and lengthy, the longer you wait, the more expensive it actually becomes. It’s also worth remembering that maintaining an outdated system generates a lot of additional costs and it’s due to many different factors. First of all, more time is required to add features and make improvements. Older programming languages and tools are not supported anymore, which makes it difficult to introduce any updates and integrate the old system with any modern solutions. Similarly, legacy systems lead to higher maintenance costs. Finally, there are simply not enough developers specialized in the outdated technologies, which makes it hard to find experts who would be able to introduce any changes to the current system. As a result, the recruitment process becomes tedious, long, and expensive.

source: ssa.gov

It’s not all about the code

It is often assumed (quite wrongly) that the primary focus of system modernization should be put on the software itself. However, technical aspects are only a part of the process. Software modification entails changes in the whole organization, including its structure and current processes. Depending on the size or complexity of the modernization, the company may face changes in different areas, such as information exchange, reporting, team structure, or logistics. Transformation on the architecture level should be strongly aligned with the business strategy, and introducing modern solutions should serve rather as a means to an end, not as the goal on its own. Processes and operations around the technology are crucial for successful modernization. This is also the area when most of the challenges appear.

It's the business needs that drive modernization - if the current software is outdated, it may slow down the company’s growth and limit the opportunities. And it was actually noticed by entrepreneurs - according to the Legacy systems and modernization report by Deloitte from 2017, what’s led to the decision about software modernization was product objectives and strategy.

Legacy system modernization is a major endeavor - it requires proper planning, deep analysis, and creating a strategy. There is a lot at stake, which makes it even more important to define WHY you do it, HOW you do it, and WHAT exactly you want to gain. And please, be warned - you will encounter difficulties along the way.

The business side of legacy software modernization challenges 

Defining the problems and setting objectives

Preparation is key, no matter how big the task ahead of you is. And when it comes to software modernization, it is usually quite complex. This is why it may be helpful to divide the process into smaller steps.

• Thoroughly analyze the problem and needs

Before coming on board with the system modernization challenge, it’s worth taking a step back and actually analyzing what you already have in your hands. It’s crucial to assess current issues in order to choose the best strategy to make things right. You may start by asking yourself a set of general questions: 

1. What is the value of the current system? 
2. What is lacking?
3. How are the users interacting with the current system? Which features are used the most/the least?
4. What problems are reported? Are they related to low performance, bugs, poor readability, high-complexity of the system?
5. What is crucial for day-to-day operations? What is less important? 
6. What is actually working well and shouldn’t be changed? 

Asking questions and going deep into the root of the problem allows you to create a well-thought modernization strategy, anticipate challenges, and think of solutions at a very early stage. This way, you are able to save time, financial resources, and nerves.

Defining current problems, both technology and business-wise, in a detailed way enables you to clearly see where is the room for improvement. There are certain areas worth focusing on, for example, system performance, user experience issues, languages, and tools used (where a common issue is the lack of support). Another step might be to perform market research and see in which fields your competitors are better positioned than you are. Taking a look at Google Analytics data might be a good option to establish what are the weak points of the current solution.

• Set measurable goals 

Implementing changes, either small or large, requires a clear definition of the current state of things and setting realistic, precise goals. What results do you expect to achieve by making the change? Checking if your strategy brings fruits should be based on measurable KPIs, enabling you to assess the activities and make improvements where necessary. Bear in mind that the modernization process comes in stages - plan ahead what you want to achieve in particular phases, compare scenarios, find alternatives and prepare for the future growth of the company, taking into account its internal capabilities.

Each company is different, thus requires a unique approach and planning. Setting reasonable goals may be focused on diverse areas, such as:

• reliability of processes,
• security management to avoid external threats and bulletproof the system,
• performance,
• customer satisfaction,
• number of customers using the product,
• navigation and intuitiveness.

Pro tip: Leave some time to prepare thorough documentation. It allows you to track progress and always keep in mind the big picture. Moreover, it serves as a reference point for future endeavors and further company growth.

• Choose the best modernization strategy 

Final decisions and particular approach should be dependent on what is the particular problem you’re trying to solve and where lays its source (technology, architecture, or certain functionalities). It should also depend on the final target you have. Each company has specific business needs, which will impact the decision made in terms of system modernization.

Adapting the modernization plan to the long-term business strategy

If a company’s technological transformation is supposed to generate benefits in the following years, it should be strictly linked with the long-term business strategy. In fact, it’s the business factors that determine tech solutions, not the other way around. Particular software tweaks should all lead towards a bigger target, which is accomplishing the company’s goals - this is actually the starting point of choosing the right modernization approach.

Legacy applications might serve current business needs and help a company retain its regular customers. However, they are not necessarily in line with future needs, such as attracting new customers, expanding offerings, reaching out to new markets, or leveraging emerging technologies. 

Modernization is a long-term investment necessary to future-ready your product. This is why it’s also important to include this process in financial planning. Be prepared that immediate revenue should not be anticipated - certain changes (especially such complex ones) take time. Benefits will come slowly but surely - you’ll be able to pick up the fruits of this hard work in the future.

Managing the process

System modernization is an advanced and tricky process. First and foremost, it requires a lot of planning and good organization in different areas. High-quality management of changes and risks turns out to be crucial. Leaders and managers play a key role in monitoring the progress - they make sure to ensure top-notch communication and step-by-step advancement. 

Legacy system modernization tends to be also quite dynamic. As mentioned earlier, it often leads to changes in other areas of the business, including the company’s structure. They may determine creating new positions or modifying the existing ones to address the current needs. 

Finally, the change-friendly approach should start from the management level. It’s the leaders who should inspire the company’s evolution and guide the other employees through the process.

Human factor

One of the crucial things to remember when planning the legacy system modernization is putting people in the center of changes. Any tweaks made in the current solution should respond to the needs of real users, be it employees or customers, ensuring the transformation is successful and practical. Modernization has to enhance their experience and facilitate the adaptation phase so that the new software can work well in practice.

Introducing changes has to be well-thought and gradual, especially if the system has been in use for several years and has become indispensable for daily operations. It’s only natural to feel apprehensive and unsure about the unknown - changes, especially such big ones, might be scary and discouraging. It takes time to get used to novelties. Some people even suffer from a so-called “baby duck syndrome” which makes them unwilling to embrace new technologies, so much they are settled in the current system and used to the existing processes. It must be taken into account when incorporating new features in order to make the modernization as seamless, user-friendly, and painless as possible. Limiting fear and facilitating the transition are possible thanks to transparent communication and smooth onboarding. It’s essential to inform all people involved why the changes are made, what steps will be taken and what results are expected so that the users understand the global vision and are prepared to step out of their comfort zone.

Lack of resources

As mentioned earlier, difficulties finding people who would plan and perform the modernization process is a common blocker. It’s linked to several challenges. 

First of all, the company’s engineers tend to have limited knowledge about the newest technologies, having lived in a bubble of the old system and not being able to look past it and implement changes. Sometimes their skills are sufficient, but they simply don’t have enough capacity to tackle both the modernization and existing processes. Finally, programming skills are not the only ones needed. Complex change to the legacy system should also involve UX and DevOps perspectives, which are often key success ingredients, being strongly connected with market trends and user expectations. And, in many cases, companies often lack the necessary skillset in their internal teams. 

If any of these problems appear, the most reasonable solution seems to be looking for additional resources that would handle the work around the system modernization. However, recruiting people only for the transformation phase seldom pays off - it’s complicated and time-consuming. What’s more, it’s often difficult to find suitable talent.

💡 Team Augmentation, Dedicated Product Team, or maybe a mixed model? Check how you can cooperate with IT partner and which of them suits your needs

When introducing advanced changes, it’s beneficial to get fresh, external insights that would expedite the process. This is why it’s worth looking for a reliable, experienced software partner, who’s already built successful, digital projects for clients from your business vertical. Choosing the right company should be based on your long-term goals and main focus (for example, implementing only partial changes, rebuilding the system from scratch, introducing cloud infrastructure etc.). A competent partner will be able to find the weak points and advise the best tools for the job. What is your main issue? Low performance? Lack of intuitiveness? Security threats? Outdated look and feel? Whatever it is, it should become your reference point for any changes to be made moving forward.

Legal constraints

However important, technical and business perspectives are not enough when preparing yourself for system modernization. All changes also need to be adjusted to legal restrictions being in force in your country. In fact, staying compliant with existing regulations is one of the reasons companies decide to perform software transformation in the first place, as lack of modernization may lead to a higher risk of data leaks due to outdated security mechanisms. Systems that used to be pretty simple have to evolve to meet new regulatory requirements.

There are industries dealing with sensitive, personal information requiring an even more thoughtful approach to software modernization. Data security plays a key role here. Among numerous examples, you may find insurance, healthcare, or finances. Legal constraints directly impact all activities of companies representing these verticals, legacy system modernization included. 

A newly build system needs to be compliant with rules included in major legal regulations, such as GDPR, HIPAA or FERPA. They determine how user information should be acquired and stored. Should these be not respected, companies will face significant consequences and pay large fines. Moreover, not sticking to the data-privacy rules may jeopardize their growth and trustworthiness. 

Final thoughts

Legacy system modernization is a long, complex process, and certain business challenges are inevitable. Being aware of them gives you a huge advantage at the start. With proper organization, well-defined strategy and support of an experienced software partner, it’s possible to optimize the process in order to benefit the most from what modern technologies have to offer. 

Do you think seriously about software modernization? See how we helped businesses like yours streamline their software towards business growth!