Legacy software modernization: When, why, and how to part with legacy systems

As time passes by, any system becomes outdated. There is no avoiding that, and the time to rework and modernize your system will come sooner or later. Failure to modernize might result in the increasing cost of software maintenance, poor customer satisfaction, lacking competitive edge, and security vulnerabilities.

If you are reading this, you have probably thought about software modernization already, and you may wonder whether it is the right time to modernize. Today, we will look at modernizing legacy systems, the red flags that point at the system getting old and rusty, and the ways a reliable software engineering partner can help with software modernization.

What is a legacy system, and how can it undermine your business?

The simplest way to explain the legacy software is to say that it is a system that does not perform the way it was designed to. It is not always about the system’s age, it is more about the system’s performance. Sure, technologies get outdated with time, but even a solution implemented yesterday can become a legacy one tomorrow if executed poorly. Such a system cannot keep up with your business objectives.

Legacy systems can cause inefficiencies and disruptions within critical business processes, affecting critical operations. You might have already experienced problems maintaining it: such a system drags down the user experience, is hard to support, and cannot handle the increasing amounts of data. You do not benefit from the system, and its flaws already hinder your business performance. That is where legacy software modernization comes in.

Apart from poor performance, outdated systems are quite expensive to maintain. There are several expenditure points that may already drain your budget if you don’t opt for legacy software modernization:

• Maintenance and support. The cost of maintenance frequently exceeds the cost of development in just five years after the system launch.
• Integration and compliance. Most regulations get updated on a yearly basis and failure to meet the requirements posted by regulatory organs may cost you millions in penalties.
• Security. Outdated security protocols are a major concern for most businesses. Data breaches may cost millions of dollars to a business that does not invest in security updates.
• Lost opportunities. Lack of innovation may impact the long-term profitability of your business. Not being able to adjust to evolving market standards (customer demand, safety regulations, quality standards) will result in lost business opportunities.
• Lack of agility and efficiency. Modernization and automatization can improve the efficiency of most processes, and in some cases, efficiency growth reaches 50%.
• Brand reputation. Nobody likes outdated software. It lags, it crashes, it looks bad. Poorly performing software may damage your brand reputation.

Running your business on a legacy system becomes more challenging the more you delay legacy software modernization. Some businesses run on legacy systems for years, but the red flags might already be popping up all over the place. So, what are these red flags, and how do you know when the time draws near to make a run for software modernization? Let’s see.

Why modernize existing systems?

Modernizing existing systems is crucial for businesses to stay competitive and agile in today’s rapidly evolving digital landscape. By modernizing existing systems, businesses can improve efficiency, reduce costs, and enhance customer satisfaction. Moreover, modernization enables businesses to take advantage of new technologies, improve data integrity, and support future growth.

Is that a red flag? If you see any, it's time to modernize:

As said, many businesses continue to work on outdated software systems through sheer inertia and do not pursue changes until it is too late. It is vital to cement the idea of any system getting outdated with time, and even if you have already invested millions of dollars into it, there’s no way it would stay relevant for years without any changes. So, how do you know your system is getting outdated and the time for legacy software modernization draws near? There are three red flags to watch out for:

1. Hard to find experts with the necessary skills. For instance, many old systems run on COBOL programming language, invented back in the 60s. Though it has been updated numerous times throughout its long history, most businesses try to transition their systems from COBOL to Java or other programming languages. What is more problematic here is that it is hard to find COBOL developers these days, probably because most of them spend more time playing with grandchildren than coding. This is just one example, but not being able to find any experts working with your system’s core programming language is a big red flag.
2. Expensive support and maintenance. You used to pay $100 for a day of system support, and now you pay ten times that. The old cumbersome servers are expensive to maintain, you pay ever-increasing electricity bills, system administrators charge more because of the growing complexity, and you constantly look for more room to store all your servers. All of those are signs of an outdated system.
3. Expensive scalability. Another problem with legacy systems is that they are too expensive to scale up. Rolling out the new features takes too long, new data takes additional servers, work requires more human hours, and fixing problems takes huge amounts of reworks and resources. Sometimes, it might even be impossible to introduce innovative features to your system as it runs on an outdated programming language or utilizes old tech that is no longer in use.

So, if you’ve been noticing those red flags, you most likely have an outdated system on your hands, and the time has come for legacy software modernization. Acknowledging the problem is the first step. Now, you need to see where the root of the problem lies and how you can begin to solve it.

You might also be interested in reading Application modernization strategy: Executive’s handbook

Typical challenges related to legacy system modernization

Cost and budget constraints

Modernization can require a significant upfront investment, especially if it involves replacing entire systems or re-architecting complex applications. This can strain budgets, particularly for small and medium-sized businesses.

Risk of operational disruption

Legacy systems often support critical business functions, and any disruption during the transition can have serious consequences. A poorly executed migration or downtime could lead to revenue loss, customer dissatisfaction, or operational delays.

Complexity of legacy systems

Legacy systems are often highly customized and integrated into various parts of a business. Understanding the full scope of dependencies, data flows, and interactions within these systems can be complex, making modernization harder.

Data migration issues

Migrating data from legacy systems to modern platforms is challenging, especially if the data is unstructured, inconsistent, or stored in obsolete formats. Ensuring data integrity and accuracy throughout the process is a significant challenge.

Resistance to change

Employees who are used to working with legacy systems may resist new technologies due to unfamiliarity or fear. This will slow down modernization efforts, create friction, and reduce adoption speed.

Technical debt management

Modernizing a system with significant technical debt requires careful planning to avoid perpetuating the same problems. When tech debt is not addressed during modernization, inefficient processes may be transferred to the modernized solution.

Security concerns during the transition

Software modernization can expose vulnerabilities during the transition phase. For example, systems running in parallel (legacy and modern) or improper data migration processes may create security gaps.

Balancing innovation with stability

While modernizing, companies must maintain operational stability, which can limit their ability to fully embrace innovative technologies such as AI, IoT, or Machine Learning. The need to keep critical services running can slow down the adoption of modern capabilities.

Typically, all of these challenges can be addressed with a properly planned assessment and project scheduling.

Don't skip the Discovery Phase: 5-step assessment process

Software product modernization can be costly and time-consuming, but for the reasons discussed above, it has to be done. System evaluation is mandatory for the legacy system modernization process, especially for ones running for several years. This process might look rather frightening if you don’t know how to do it right. That is where you might need the assistance of a technology consulting partner that can help you evaluate and prepare your IT infrastructure for the software modernization process.

Here at N-iX, our experts focus on bringing innovation to your business with respect to your budget and needs. However, no software product modernization project could be possible without a prior evaluation of the legacy system. This process allows our experts to identify the weaknesses in your infrastructure and potential risks of running on a legacy system, estimate the severity of these risks, and define the necessary solutions. These steps help the engineering excellence department at N-iX define legacy system modernization strategies that match the needs of a specific business.

Step 1: System assessment

The first step in legacy system modernization strategies is to analyze the problem areas of your IT infrastructure. The following are the most widespread pain points we find in our partners that require software product modernization. Answer the following questions to see whether your system requires modernization: 

• Stability and reliability. Does the system guarantee continuous performance, or does your team deal with downtimes on a regular basis?
• Compatibility. Does your system integrate with new software? Is it compatible with other systems within your organization? Can you introduce new devices to the system?
• Maintainability. Is your system easy and cost-efficient to maintain? Does the software vendor who developed your system still support it? Does maintenance provide reliable results?
• Outdated functionality. Do all of your system functions work as intended, or do your teams struggle with constant manual workarounds?

If you have problems in at least one of the areas, legacy software modernization is due. 

Step 2: Estimate the severity

We've already established that legacy systems drag serious business costs, and these costs can be both direct and indirect. At this point, we need to put numbers under each of those to see how severe the financial impact of a legacy system is for your business.

• Missed opportunities. What kinds of opportunities are missed during downtimes? How much money do you lose for each such opportunity?
• Cost and possibility of maintenance. Is there a technology vendor who can support your system? How much does that service cost?
• Wasted time. How much time is wasted fixing bugs? How much money does it cost?
• Customer acquisition/attrition. Does poor user experience influence customer attrition rates?

We need to analyze each problem area and put real numbers in front of each problem. Business owners often don't realize just how much money they lose because their system is outdated. The goal of business analysts here is to understand how severe the financial cost of the legacy system is for your business and then find effective legacy system modernization strategies to mitigate those costs.

Step 3: Gather feedback

To identify and understand the problems on each level, we need to gather feedback from both internal and external users. We want to know whether the outdated processes within your infrastructure affect the team's performance, and if they do, we need to know exactly in what way. Getting feedback from a sufficient number of users will help us see what works and what does not work.

Step 4: Complete the SWOT analysis

SWOT analysis is used widely to analyze the performance of the systems and their impact on the business. 

• Strengths. What works well in your system, which of its aspects are satisfactory, and what parts of the workflow do your users enjoy? Knowing this will help you avoid redundant reworks. As they say, don't fix what isn't broken. 
• Weaknesses. What are the main problems with your system? We need to know what aspects of the system's performance cause the most problems for the users. This knowledge will allow us to focus on the problem areas first. The software modernization process takes time, so we will first focus on fixes that would make the lives of your users easier.
• Opportunities. Can any of the existing solutions be improved with minimum effort? This, of course, does not include cutting corners, but some parts of the system can be revitalized with just a couple of twitches. If there's a chance to fix something quickly without compromising the quality, we must take it.
• Threats. What happens if you fail to innovate? Will you lose clients? Will you fall behind the competition? All of these threats need to be specified and addressed accordingly.

Step 5: Define your options and make an informed decision

Now that we have outlined all of the issues and built a precise understanding of your system's flaws, we can move to pick the options for software product modernization. It is paramount to choose a set of solutions that match your specifics, as your business most likely requires a unique solution to address its unique needs. 

N-iX engineering excellence department and technology consultants will match your needs with the relevant and the most efficient solutions. We don't throw fancy tech and buzz-wordy solutions at a problem. Instead, we pick solutions that fit your case, the specifics of your legacy applications, the needs of your users, your future business objectives, and your budget. Legacy software modernization at N-iX is about making real change, making it fast and efficient, and bringing real value to your business.

Select the right approach and a reliable partner for software modernization

Your business and your system have their unique features, so your modernization journey will also be unique. Modern technologies can enhance functionality and maintain compliance with regulations like GDPR and CCPA. Depending on your particular case, modernization might include a number of different steps. But in most cases, you will need to go through the following essential stages of modernization.

1. Select the right modernization strategy

After identifying the problem areas of your legacy system, it is necessary to discuss the possible options for modernization. Modern systems offer scalability, flexibility, and compliance benefits, allowing businesses to adapt to growth and regulatory changes effectively. There are three popular approaches to the software modernization process, each offering its benefits and risks:

1. Replace. As the name suggests, this approach entails a complete replacement of the legacy system with the new one. This is the most expensive, the most time-consuming, and the riskiest approach. You’ve probably invested millions of dollars in your old system, first to develop it and then to maintain it over all those years, and now you have to throw it away. The decision to replace the system may be painful, but sometimes, it is the only option. At N-iX, we consider system replacement to be the last resort, but sometimes, it must be done.
2. Rebuild. Another option is rebuilding certain components of the system while keeping its specs. It is possible to maintain the core of the system intact while improving all of its aspects and enhancing the user experience.
3. Rearchitect. This approach is applicable when it is not possible to improve the system by simply recording some of its parts. For instance, you undergo a dramatic increase in the data flow, and your previous application architecture cannot handle such amounts of data. In that case, we can rearchitect your system so that it can process the increasing amounts of data.

There are other legacy system modernization strategies like rehosting, encapsulation, refactoring, and replatforming. They mostly serve as additions to the previous three as they touch on lesser aspects of the system’s functioning and are not associated with significant risks. Our goal here is to select an approach that matches your business case and gives the most impact with adequate effort.

2. Find a reliable team 

Finding a reliable partner for software modernization is the essential step for any business that lacks eternal talent for such a project or wants to allocate its resources to other projects. This is mostly relevant for non-IT businesses that have limited technical expertise on board. Finding a reliable software partner might prove to be a challenge in its own right, but you need to be sure of the technical skills of the people you partner with for legacy modernization. Ranking websites such as Clutch may help you narrow down the search list. Then, you can proceed to contact potential vendors and select the right partner for the job.

Read more: 15 best software engineering companies 

3. Map a modernization timeline

After selecting among the appropriate legacy system modernization strategies, we need to come up with a reasonable timeline. Modernization cannot take five years because, by the time you finish, the system will require modernization all anew. That is why the modernization timeline must be realistic and as swift as possible at the same time. N-iX experts will make sure to select an approach that guarantees the required results fast without cutting corners.

4. Start small and test with a focus group

Legacy software modernization can begin on a small scale. You can start to rework certain features of your IT infrastructure or replace them with new ones. Our team can roll out and test new features on a limited scale. You will observe the changes in a smaller focus group, see whether the new solutions work or not, and then decide whether the modernization works the way you have envisioned. That way, you can gradually improve the performance of your system,  getting rid of problematic areas and enriching your system with innovative functionality. 

5. Scale

As the new features add up, you will begin to see changes in your system’s outlook. The scale of modernization will grow, but this must happen in accordance with the predefined plan. You can implement the new features on a small scale, in one of your facilities or departments. Upon observing the results and evaluating the efficiency of the changes, you can scale the modernization up to all of your departments and facilities to increase their efficiency as well.

Our engineering excellence experts will map out the modernization strategy to make sure all the changes occur in the right order. A structured approach to legacy modernization software will decrease the discomfort for your teams and produce gradual and effective changes for your infrastructure.

6. Document all the changes

We will need to maintain all of your data and documentation regarding the legacy system and its modernization. This information will be vital for continuous business performance, and we have to map out the required documentation and find reliable and secure storage for it. 

The modernization process is unique for every business as each faces its own set of challenges. Here at N-iX, we work with clients across many industries and have experience in legacy software modernization in different business verticals. Software product modernization services by N-iX have proven to produce a timely and positive impact on leading businesses and large enterprises.

Need help with finding a reliable vendor? Here are top 15 application modernization companies 

How industry leaders modernize their software through reliable tech partnerships: Featured success stories

Let us take a look at how leading businesses benefit from timely and swift software modernization. Outdated technology often leads to slower performance, restricted functionalities, and increased susceptibility to security threats, making modernization crucial. Here are two select cases of legacy software modernization services from our portfolio:

Software modernization for a European retail giant

The client decided to partner with N-iX for the digital transformation journey to redefine and automate some of the internal processes and systems. One of such projects was a legacy promotion management system. The client required a new application that would help in the creation of a unified end-to-end promotion process with all the necessary features attached to it. The client also required a new web application that would automate the proposal management system to cut manual tasks. 

The solution offered and implemented by N-iX was to design the architecture for promotion and proposal management systems. Our team then replaced the multiple legacy apps used by the client with a unified and convenient promotion management system. We worked together with the client's QA office and implemented the custom QA automation process to improve the quality of the application. Additionally, our experts have set up the CI/CD pipeline along with the following results:

• Developed a promotion management system that simplifies and speeds up the creation and management of promotions; 
• The modernized system is scalable and can withstand any massive high-load events such as Black Friday;
• Integrated the new system with more than 40 services that align our development with the client's internal processes.

Legacy logistics platform modernization for a global Tier 1 manufacturer

The client used a legacy logistics platform that did not meet the company's expectations and could not be scaled according to the business' growing needs. Despite the client wanting to refactor the legacy platform, there were no developers in-house with the right expertise to conduct the migration to microservices and redevelop the existing computer vision solution. The client, thus, partnered with the N-iX team to modernize the logistics platform using AI and then scale it across their global facilities.

The solution provided by the N-iX team is a complex yet comprehensive logistics management system that combines the capabilities of Big Data, IoT, AT, and ERP. We have also created a multiplatform mobile app that utilizes the capabilities of computer vision, NLP, and OCR for convenient document processing. Our team has redeveloped the legacy platform and introduced microservice architecture and cloud-native infrastructure.

Wrapping up

To wrap things up, let us return to the benefits of software modernization and see what you get from it. Naturally, the benefits of software product modernization services would reveal themselves depending on what prerequisites you start off with. The goal of modernization is to solve ongoing problems and give your business a fighting chance in the ever-fiercer competition on the market.

1. Reduce costs and gain higher ROI. Modernized software might be a considerable investment, but it is necessary for the long-term cost efficiency of your business. In some cases, businesses double their efficiency by switching to new software and generating enough ROI to cover the cost of software modernization services and more.
2. Improve customer satisfaction. Improve your brand image and give your customers a better experience. This will boost customer retention and acquisition rates.
3. Outdo the competition. Innovate and evolve faster and outdo your competitors who fail to modernize. 
4. Strengthen security. Enhance the security of your IT infrastructure, prevent hacking incidents, have a backup strategy, and have control over data access. All of that is possible thanks to modern security solutions.

The benefits of modernizing the legacy software with N-iX

To achieve the objectives of software modernization, you will need a partner with relevant experience, market insights, industry expertise, and a sufficient talent pool. N-iX offers you:

• 21 years of experience in custom software development and a talent pool of over 2,200 experts specializing in different technology domains.
• Expertise across industry sectors like manufacturing, retail, logistics and supply chain, fintech, healthcare, and more.
• Global presence across 9 locations in the US and EU to supply your needs for innovation and software modernization services from a convenient destination.
• A network of technology partnerships with the world's leading companies. N-iX is a Microsoft Solutions Partner, AWS Advanced Consulting Partner, and Google Cloud Platform Partner.
• Technology office for identification of areas for improvement, detailed assessment, and delivery of legacy software modernization services in accordance with the industry's highest standards.