Attention all IT Executives!
Every organization looking to embrace digital transformation must carefully consider the optimal strategy for legacy system modernization. While easier said than done, this article explores the various challenges of various legacy system modernization strategies and how low-code technology can simplify the development of new, customized business applications that can replace, supplement, or enhance existing systems.
In today’s ever-evolving technological landscape, where advancements are embraced with open arms, it may surprise you to learn that pager technology still holds a significant role in various industries. Although countries like Japan and the UK are gradually phasing out this communication device, a substantial three-quarters of US organizations continue to support at least one type of pager.
Despite its outdated nature, the continued use of pagers can be attributed to the sheer difficulty of replacing certain systems, particularly those that play a vital role in essential business processes within organizations. This phenomenon is commonly referred to as “legacy systems”, which extends beyond healthcare and permeates other sectors such as banking, finance, insurance, and transportation.
Hence, it becomes imperative to recognize the intricacies surrounding the pervasive presence of legacy systems and technologies. While the cost and obsolescence associated with pager technology are indeed notable, understanding its continued implementation can provide valuable insights into the larger landscape of technology integration and operational dependencies within your organization.
3 Legacy System Modernization Trends in 2023
Trend No 1: Embracing the Cloud for Legacy System Modernization
Just as moving your elderly parents into a condo presents a unique chance to eliminate years of accumulated belongings, transitioning to the cloud offers a similar opportunity for organizations. While many organizations are adopting cloud-first strategies, it is uncommon to be able to seamlessly migrate legacy applications directly to the cloud. Instead, cloud-native approaches such as containers and microservices present technology teams with fresh possibilities to replace outdated functionality with modern applications. Let there be no doubt: cloud-native approaches pose a challenge. The intricate nature of the technology, coupled with scarcity and high cost of skilled professionals, can impede a smooth cloud-native migration.
Trend No 2: DevOps for Effective Legacy System Modernization
DevOps, a crucial automation-driven model, promotes collaboration across the IT organization – spanning development, quality assurance, operations, security, and even customer-facing roles. Today, effective legacy system modernization calls for breaking the barriers created by the “throw it over the wall” mentality. DevOps empowers cross-functional teams to make informed decisions, such as modernizing existing applications in their operational environments, even utilizing microservices. To achieve success, IT executives must embrace DevOps. By leveraging automation, cross-functional collaboration, and empowering teams, organizations can confidently decide whether to rewrite, migrate, leave alone, or modernize legacy systems. Take charge and drive transformative results – it’s time to embrace the power of DevOps.
Trend No 3: Low-Code for Efficient Legacy System Modernization
Given the multitude of new platform choices available, the task of modernizing a monolithic legacy app is no longer insurmountable. Today, it is imperative to consider the third trend: Low-Code Platforms. Historically, IT managers have been deterred from embarking on modernization projects due to the exorbitant costs, time constraints, and inherent risks associated with hand-coding replacement functionalities. However, low-code technology revolutionizes this landscape by reducing both the time and risk associated with application development. While not all low-code vendors prioritize legacy modernization, bespoke app development is often the focal point for such platforms. Moreover, low-code tools can shield organizations from complexities while capitalizing on a myriad of highly sought-after cloud-native services, providing all the benefits without the struggle of relying solely on traditional tools. In response to this need, a specific niche within the low-code market, what we refer to as enterprise low-code, exemplified by vendors like ACCRO Computer System Design, empowers software teams to modernize legacy applications while also facilitating the development of new ones, all with the flexibility to deploy them on premises, private cloud, or in a cloud-native environment. Elevate your company’s technological prowess with enterprise low-code, delivering unmatched agility and efficiency for your IT landscape.
Why do you require a Legacy System Modernization?
Legacy systems are not solely defined by their age. Rather, they may result from inadequate support or an inability to meet the evolving needs of a business or organization. Such software tends to be arduous (if not impossible) to maintain, support, enhance, or integrate with modern systems, due to its underlying, outdated technology used, architecture, or design. Disturbingly, according to Logicalis’ survey of Chief Information Officers (CIOs), over half of them find themselves devoting 40 to 60 percent of their time to managing legacy IT instead of focusing on strategic endeavors. Hence, it is evident that legacy technology poses a significant barrier to achieving digital transformation.
Reason 1 for Legacy System Modernization : Maintenance and Support
Updates and Changes: Legacy systems are complex and interconnected, making updates and changes a daunting task. Even a minor update can trigger conflicts throughout the system, necessitating significant time and effort to resolve. Additionally, legacy systems often lack comprehensive documentation, adding a certain level of risk when modifying the source code.
Infrastructure: Aging legacy systems also pose infrastructure challenges. As the software ages, the underlying infrastructure becomes more difficult and costly to maintain. Legacy systems often rely on specific technical environments and hardware requirements, leading to ongoing infrastructure maintenance expenses that surpass modern cloud-based solutions. Furthermore, managing legacy data scattered across multiple databases and storage resources, optimizing storage space, and transferring data to a whole new system or database is a time-consuming and costly process.
Staff Training: Maintaining and supporting a legacy system often necessitates expertise in obsolete technologies. However, as developers retire or move on to newer technologies, finding and retaining the right talent becomes increasingly difficult. Staff training to keep up with legacy system demands adds an additional layer of expense.
Reason 2 for Legacy System Modernization: Integration and Compliance with Modern Software & Technology
Third-party APIs play a crucial role in accessing essential capabilities like geolocation, user authentication, data sharing, and transactions within modern software platforms. For example, Uber relies on the Google Maps API to provide navigation for drivers and journey visualization for customers. By leveraging existing, tried and true solutions, organizations can save costs and streamline operations. Modern technologies are designed for seamless integration and typically offer out-of-the-box support for various programming languages and frameworks. However, compatibility issues may arise when dealing with obsolete or uncommon technologies.
Integrating a legacy software with a third-party tool or service often requires significant custom coding and carries the risk of suboptimal integration or even failure. Compliance is another critical consideration, especially in heavily-regulated sectors like politics or law. Achieving compliance with regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) can be challenging and costly. According to the Capgemini Research Institute, legacy systems remain one of the primary challenges (42%) that organizations face in preparing for the CCPA.
Reason 3 for Legacy System Modernization : Data Security & Privacy
Security breaches and compromises are on the rise, raising grave concerns about the vulnerability of the healthcare ecosystem. Shockingly, almost 70% of respondents in the 2019 HIMSS Cybersecurity Survey are still exploiting legacy systems, perpetuating the threat. This alarming situation, however, is not limited to healthcare alone. Legacy systems, due to their long existence, are highly susceptible to cyberattacks, malware, and harmful programs. Attackers, given ample time, can easily exploit the vulnerabilities ingrained within the existing code itself. Compounding the issue is the lack of vendor support, leaving the software outdated and non-compliant with the latest security requirements. Even if you possess the resources to maintain a custom-built system, each patch further amplifies the investment in security. Without proper measures in place, the situation resembles a leaky bucket, where new breaches occur as quickly as the previous ones are rectified. Therefore, it is crucial to proactively address these potential risks and prioritize robust security measures.
Reason 4 for Legacy System Modernization : Missed Business Opportunities
Embracing new technologies and innovative business models is crucial for staying competitive in today’s ever-evolving market. However, by investing in legacy software support and maintenance, you limit your capacity for innovation, hindering your ability to seize new opportunities. This leaves the door wide open for your competitors to outperform you and gain a larger share of the market. Consider the current landscape where digital channels, exemplified by industry leaders like Citigroup and mobile banks such as German N26 and American SoFi, are driving substantial growth in deposits and consumer lending. As a result, a competitor with an attractive website or a user-friendly mobile application can easily lure away your customers, which is already happening in the mortgage and personal loan markets. Nonbank digital lending providers like Quicken Loans have successfully captured a significant market share.
In the finance industry, business logic for embracing digital transformation is driven by business growth, competitiveness, and, most importantly, greater efficiency and cost reduction. A compelling case for this shift emerged as early as 2013 when Javelin Strategy & Research found that the average cost of processing a mobile banking transaction was 42 times less than conducting the same transaction offline at a physical bank, with costs amounting to 10 cents compared to $4.25, respectively. Furthermore, the hidden costs of missed opportunities associated with outdated point-of-sale (POS) terminals and manual assistance should not be overlooked. While forward-thinking organizations swiftly adopt digital and remote channels for seamless and cost-effective transaction processing, relying on obsolete systems can weigh you down and lead to unnecessary expenses.
Reason 5 for Legacy System Modernization : Organizational Agility and Efficiency
Organizational agility and efficiency are imperative for businesses to thrive in today’s fast-paced market. The ability to respond promptly to challenges and swiftly adopt new technologies is paramount. Unfortunately, many businesses burdened by legacy systems lack the necessary agility needed to tackle upcoming obstacles. However, research conducted by the prestigious Harvard Business Review highlights the significance of IT and system modernization strategies, digital M&A, and collaboration with digital startups in fostering agility within organizations.
Agile methodologies have proven to expedite the delivery of IT services by a staggering 30 to 50 percent, making them particularly suitable for transformations characterized by uncertainty. Therefore, a recommended approach to initiate modernization efforts is by integrating product development with IT operations, also known as DevOps.
Undoubtedly, the transition from cumbersome legacy IT to agile and digitally-enabled IT is a complex undertaking. Nevertheless, it is indispensable to meet the demands of modern IT. Legacy systems hinder innovation due to their lack of adaptability, resulting in substantial losses. Additionally, outdated software adversely affects employee productivity, emphasizing the urgency for change.
One noteworthy example of innovative optimization is machine-reengineering, which leverages machine learning to automate business processes. By capitalizing on the predictive capabilities of machine-learning algorithms, constant process changes can be achieved. This entails system redesigning in response to environmental factors and migrations across platforms, databases, and operating systems.
According to further research by the Harvard Business Review, a significant number of early adopters have witnessed remarkable bottom-line performance improvements by utilizing machine-reengineering. Cost reductions of 15% to 70% have been achieved in certain processes, while workforce effectiveness and value creation have experienced tenfold enhancements. For instance, a financial services provider successfully implemented a biometrics solution based on voice recognition, eliminating the need for a four-step authentication process. This innovation led to a 50% increase in efficiency.
5 Questions to ask yourself before planning Legacy System Modernization
Suppose an organization is considering a legacy application modernization project. In that case, the first crucial step is to assess the problem addressed by the legacy application and its effectiveness in solving it. Let’s delve into the following key questions that require consideration:
Which features of our legacy software demonstrate effectiveness?
What modernization strategy for legacy applications do we aim to employ?
What are the objectives of the modernization process for enterprise applications?
How would modernization facilitate the achievement of these objectives?
What are the subsequent stages involved in modernizing our legacy systems?
By answering these questions, companies can mitigate the common risks associated with legacy system modernization, such as a failure to grasp the necessity of this transformation.
Top 3 Legacy System Modernization Approaches
When assessing the compatibility of your home with your current lifestyle, relocation isn’t always the sole option. Often, there exist opportunities to enhance and optimize your house to align with your desired way of living. This analogy extends to today’s businesses and their legacy software.
In recent years, numerous organizations have encountered the pressing need to revamp their legacy systems. Some applications have reached the end of support, giving rise to unaddressed concerns regarding security, compliance, and more. Furthermore, the scarcity of skilled professionals proficient in maintaining outdated systems has compounded the challenges. Aligning with both customer expectations and the demands of a competitive, agile, and mobile-first landscape necessitates a comprehensive functionality overhaul.
Nonetheless, it is vital to acknowledge that your legacy systems continue to deliver value, akin to a well-maintained house. Many still fulfill their intended core functions flawlessly. Instead of investing substantial time and resources into a complete rip-and-replace modernization approach, a more prudent strategy would be to develop a modernization plan that capitalizes on their existing value, potentially extending their usefulness well into the future.
1. Extend the Legacy System
If your legacy systems have stood the test of time, faithfully performing core functions, there may be alternatives to replacement. Consider modernizing it by expanding capabilities. For instance, if your legacy software lacks out-of-the-box integration with new and better capabilities, data sharing and productivity might suffer. Integrating legacy systems with newer technology poses challenges. However, extending systems or leveraging low-code solutions for end-to-end process automation enables modernization without embarking on exhaustive software replacement projects.
Expanding legacy software yields additional benefits. Successful modernization upgrading outdated software sets the stage for future digitization. Furthermore, when employees witness improvements to their work lives, they become more receptive to pursuing further advancements. Moreover, your IT team will no longer be burdened with reactive maintenance and can shift focus to growth and innovation. Resolving long-standing issues with legacy systems fosters a mindset conducive to organizational progress. While initially viewed as pleasant but optional, these soft benefits establish a robust foundation for digital transformation, especially for tech-savvy IT Executives.
2. Migrate the Legacy System
If your organization urgently requires a transformation of key processes and encounters limitations in legacy software’s adaptability, or if the legacy application’s user experience no longer meets the requirements, legacy migration presents an optimal solution for your needs. Furthermore, if your legacy applications are functioning adequately but are hindered by outdated infrastructure, a lift-and-shift or legacy apps migration may be appealing. In this scenario, your IT team would rebuild the existing application on a modern app architecture.
Migrating legacy software modernization and systems can enhance performance and adaptability, providing your employees with a more dependable version of the familiar systems, while also granting them the flexibility and scalability offered by modern infrastructure. This enables your organization to optimize the effectiveness of its legacy software and strategically expedite the digitization process.
3. Replace the legacy system
In certain instances, it may be necessary to completely replace your system. This “rip and replace” approach can be highly disruptive, especially when faced with substantial organizational or technology-related changes and limited internal capacity for additional change.
As stated by TechTarget, replacing legacy systems can be cost-prohibitive, but there are situations where it becomes the optimal choice. If your legacy software is no longer dependable and consistently impedes business productivity, or if it has become so outdated that obtaining adequate technical support is no longer feasible, it is advisable to consider a replacement.
Given your evolving business model, if your current systems no longer align with your strategic direction and upgrading them to provide the necessary support for future growth is not feasible, it may be prudent to transition to an entirely new solution.
Legacy Systems That Demand Modernization
The outdated business systems, applications, and processes that once revolutionized industries 30+ years ago are no match for modern technology. Despite their continued operation and critical role, these legacy systems monopolize IT resources and prove incompatible with new software. Put simply, these outdated legacy systems are hindering business progress.
There are many legacy systems out there, but there are some that are generally identified as the most common:
SAP
.NET and Oracle
Lotus Notes and HCL Domino
Sharepoint
Many organizations depend on legacy systems to support their core business processes. Low-code development offers an opportunity to bring them up to date quickly, without the risk and cost of traditional development.
With ACCRO Computer System Design, your IT team can quickly build intuitive apps on top of your legacy applications and make them available where employees need them most. With AI-powered visual development, out-of-the-box integrations, and world-class UI patterns and visual components, we empower IT to easily extend, refactor, and rebuild existing systems for the future.
Legacy System Modernization with ACCRO Computer System Design
For optimal outcomes and minimal disruptions, collaborate with industry-leading specialists who have a track record of successful legacy system modernization ventures in various sectors and regions. Leveraging over three decades of cloud expertise, ACCRO Computer System Design is primed to assist your organization in modernizing your legacy applications, transforming your IT operations, and streamlining your business processes.
Our dedicated team will support your team throughout the entire modernization journey, encompassing assessment, development, implementation, and seamless integration of modernized technologies, all while maximizing your IT resources. By leveraging the right tools, techniques, and expertise, we empower your organization to embark on the ideal path of systems modernization.