Legacy Application Modernization: The Complete Guide

Legacy applications can be an Achilles heel for growing SMBs. Slow, vulnerable to attacks, challenging to maintain, and they are major roadblocks to future-proofing operations. In fact, a recent survey found that of 100 companies surveyed, 79% said legacy applications were hindering their organization’s digital transformation.

So what can SMBs do to modernize their legacy systems and their businesses in the process? Read on to learn everything you need to know about legacy application modernization.

In this article:

• What is legacy application?
• Why do businesses still use legacy systems?
  • What is application modernization?
• Why should you modernize legacy applications?
• What are the most common app modernization issues, and how do you solve them?
• How to modernize legacy applications step-by-step 
• How do you choose the best application modernization companies?
• The right team for your legacy application modernization projects

What is a legacy application?

Akin to long-standing traditions in the tech world, legacy applications are outdated software, methods, and technologies that persist despite shinier, speedier upgrades. They generally fall into one of four categories:

• End-of-life (EOL) systems – EOL applications have been abandoned by their developers, receiving no further updates or support, or they have been replaced with a new product or rendered obsolete. Though they still function, they become progressively incompatible with newer platforms and increasingly exposed to new security risks.
  
• Low-scalability systems – As your business grows, so do its data and performance requirements. Low-scalability applications cannot be expanded to handle this increased demand.
  
• Heavily-patched software – These legacy applications have been patched extensively to stay current, effectively making them a mishmash of fixes rather than a coherent whole. Constant patching creates instability and introduces security weaknesses.
  
• Hard-to-maintain systems – These applications require unique and often outdated maintenance knowledge, making it difficult to find IT professionals who can maintain them. Relying on a dwindling pool of experts can put your business at risk of significant downtime and high maintenance costs.

Why do businesses still use legacy systems?

Despite their many weaknesses, legacy systems continue to be used not just by Small And Midsize Businesses (SMBs)  but also by enterprises and even governments. Did you know the IRS has depended on the same computer code for 60 years? 

These familiar “classics” are often seen as significant investments that are just too difficult to replace because doing so may cause disruptions to regular operations. There’s also a fear that newer technology can’t do the job properly. Plus, finding a competent team capable of effectively and efficiently updating legacy systems can be difficult.

These concerns are valid because app modernization failure rates are high, at around 74%. But that shouldn’t deter you from upgrading your systems. After all, legacy app modernization is a matter of when not if. Everyone has to upgrade at some point.

In fact, tech leaders are prioritizing legacy application modernization, with global spending expected to reach $3.4 trillion in 2026.

The good news? Having a clear application modernization roadmap can ensure a smoother transition, letting you upgrade your systems while reducing risks, disruptions, and inefficiencies.

What is application modernization?

Application modernization transforms outdated software to match new computing technologies. It often involves updating the codebase with newer languages, adopting efficient frameworks, and aging software migrating from on-premise servers to cloud-based infrastructures. 

The goal is to enhance aging software’s efficiency, security, and adaptability to make them relevant in an evolving digital context.

 Below are some of the key technologies for legacy application modernization:

• Cloud technology – Transitioning legacy applications to the cloud improves scalability, agility, and cost-effectiveness. Whether public, private, or hybrid, cloud environments offer a robust platform for new applications.
  
• APIs – APIs facilitate seamless data sharing between your modernized applications and legacy systems, fostering better communication and integration.
  
• DevOps – Embracing DevOps fosters rapid application deployment and updates through automation and continuous delivery.
  
• Microservices – Breaking down monolithic legacy applications into smaller and more manageable microservices enhances their adaptability. These microservices can be deployed and updated independently.
  
• Automation and orchestration – Automation streamlines repetitive tasks while orchestration binds these tasks to create efficient workflows. Together, they expedite deployment, scaling, security, and networking, making managing modern applications at scale easier.
  
• Containers and Kubernetes – Perfectly suited for multi-cloud and hybrid cloud environments, containers offer a lightweight, portable means for deploying and running software. You can effectively manage these containers with Kubernetes to maximize containerization’s scalability, portability, and operational efficiency.

• Blockchain – Blockchain’s inherent security, immutability and traceability make it an excellent choice for legacy application modernization. For example, incorporating blockchain payment systems into modernized apps can make them more efficient and secure for businesses and users alike. Blockchain technology can be leveraged to enhance operations within industries such as supply chain management, healthcare, real estate and copyright protection. 

Why should you modernize legacy applications?

When you modernize your legacy applications, you’re not merely updating your technology — you’re transforming your operations to reduce running costs and improve overall resilience. 

Let’s look at some of the biggest benefits:

• Cost-effectiveness – A recent IBM study says that app modernization can bring a 15% to 35% increase in yearly infrastructure savings, save 30% to 50% in application maintenance, and cut hardware, software, and staff costs by 74%.
  
  Beyond that, it can boost operational efficiency by 10% and annual revenue by 14%. And because modern systems are better equipped to meet compliance requirements, they also minimize the risk of expensive penalties.
  
• Streamlined business operations – Old, faulty systems can cause unexpected issues, frustrating both customers and employees. Modernization addresses these pain points and fills in security gaps to safeguard your intellectual property, your business, and your clients. This reduces downtime while minimizing losses.
  
• A better work environment – Employees will appreciate the intuitive user interfaces, superior UX design, and robust data protection new technologies offer. With modern systems, you can hire IT staff with relevant, up-to-date skills at competitive salaries. Modern cloud infrastructure also allows seamless remote work, letting you recruit from a wider pool of available talent.
  
• Business intelligence – Harnessing big data through an integrated cloud-based infrastructure can provide valuable insights for making well-informed decisions.
  
• Enhanced security – Newer technologies offer better protection against breaches. For example, cryptographic techniques and distributed consensus mechanisms in blockchains create immutable ledgers that prevent data tampering.

Given all of these benefits, it’s clear why the following enterprises have chosen to modernize their legacy applications:

• Walmart moved a large portion of its operations to the cloud as part of its digital transformation efforts.
  
• Bank of America invested heavily in cloud migration and AI to improve services and enhance cybersecurity.
  
• Target has been adopting modern DevOps practices and microservices while embracing the cloud.
  
• DBS (Southeast Asia’s largest bank) modernized its tech stack and adopted an API-driven architecture to quickly create new services and integrations.
  
• CarMax enhanced customer experience with cloud-native technologies, data analytics, and automation.
  
• The US Department of Defense has also been updating many of its legacy systems with a big push toward cloud adoption and cybersecurity enhancements.

What are the most common app modernization issues, and how do you solve them?

As we mentioned, around 3/4 of firms that try modernizing old systems end up falling short. For budget-conscious SMBs, that kind of failure can be a major blow. But don’t worry — proper preparation can turn the tide. 

Lay a firm foundation for success by recognizing and addressing the following problems before your legacy system modernization project starts:

Navigating staff pushback

Despite the obvious benefits of application modernization solutions, it can be difficult to push for them — especially in companies where change is met with resistance.

After all, modernization can be scary. It often requires staff retraining, adjustment periods, and even new hires. It can trigger changes in multiple departments and divert resources from core operations. It may even threaten the job security of IT personnel who run legacy systems.

Managing these cascading transformations is a formidable challenge. But with a thoughtful approach, comprehensive training, and clear communication, you can bring your team on board with the changes.

Balancing costly investments

Investing in new tech is often costly, with each update requiring a significant outlay. The challenge lies in choosing which updates are worth your hard-earned cash.

To ensure a sufficient life cycle for your investment before the next update arrives, prioritize functions that promise to provide an ROI. Maintain clear priorities to navigate the complexities and adjustments during the transition. It’s also important to approach modernization incrementally (rather than all at once) to make the process more manageable and cost-effective.

Tackling legacy code challenges

Debugging and refactoring someone else’s code can be a headache — even for the most seasoned engineers. To smoothen the transition, work with an application modernization service provider that can manage both the old code structure and new coding standards. 

How to modernize legacy applications step-by-step 

While each modernization journey is unique, this comprehensive nine-step guide can provide a solid start to shaping your strategy:

Step 1: Build a case for modernization.

Any major initiative requires a solid business case. Start by evaluating current applications and ranking them based on their benefits, costs, and risks. Focus your business case on several key drivers, such as the following:

• Driver #1: Unlocking growth – Legacy applications hinder digital transformation because they run on outdated hardware and programming languages. They lack integration with modern databases/open APIs and fall behind cloud computing standards. Emphasize how modernization improves customer satisfaction, reduces costs, and increases agility and scalability.
  
• Driver #2: Enhancing security – Underscore that legacy applications are vulnerable to cyber threats. Their inability to support current security best practices — like multi-factor authentication, robust encryption methods, and comprehensive audit trails — makes them attractive targets for exploitation.
  
• Driver #3: Ensuring regulatory compliance – Legacy applications house sensitive data that falls under regulations such as GDPR, CCPA, and HIPAA. Emphasize that non-compliance — whether due to a data breach or audit — exposes your business to significant financial penalties.
  
• Driver #4: Safeguarding reputation – Non-compliance poses financial risks and damages a company’s brand image. Highlight the importance of legacy application modernization in protecting the company’s reputation.

Consider these drivers and outline their impact, and you can build a compelling business case to justify legacy application modernization.

Step 2: Take inventory of existing data and processes.

Once your business case is approved, catalog all your IT assets — including applications, systems, business processes, and databases. The goal is to know where your data is and which applications use it. Automated inventory methods can reduce the chance of errors.

Step 3: Decide on a modernization strategy.

There are several approaches to modernizing legacy applications, each with its advantages and considerations:

• Lift and Shift – Also known as rehosting, this refers to relocating an existing application from an outdated environment (like an on-site server) to a newer infrastructure (like a public cloud platform). This method involves moving the application as is, making minimal or no changes to its core code or architecture. It’s usually the least labor-intensive approach but might not always be the best solution.
  
• Refactor – Refactoring involves reengineering significant parts of a legacy application’s core code to improve performance in a new environment (typically cloud infrastructure). This method may require rewriting code and significantly restructuring the current code base. It’s a solid strategy for splitting a monolithic application into smaller, independent microservices, which can enhance the benefits of cloud-native infrastructure and tools (including containers and container orchestration).
  
• Replatform – This strategy is a middle ground between the lift-and-shift and refactoring methods. It doesn’t demand extensive code or architecture modifications as refactoring does, but it does require supplementary updates to allow the legacy app to use cloud platforms. It might involve modifying or replacing the application’s backend database.

Step 4: Choose your architecture.

With the strategy in place, you can now determine the ideal architecture at three primary levels: application, database, and platform/server.

• Consider the application’s framework for scalability, flexibility, and interoperability.
• Next, evaluate database options (relational, NoSQL databases, or cloud-native) for optimal data storage, retrieval, and management.
• Finally, determine the best platform/server architecture (on-premises, public cloud, private cloud, or hybrid cloud environment) based on cost, scalability, availability, and security factors.

Step 5: Choose a development team.

C-suites usually spearhead the modernization effort in large companies. They determine who will be part of the enterprise architecture team, which reconciles business needs with IT capabilities.

For SMBs without comprehensive IT departments, hiring third-party application modernization companies is the best choice. 

Keep reading for our tips on choosing the right partner below or head to our blog to learn about our unique approach to development.

Step 6: Decide on success metrics.

Tie your success metrics to your original motivation for undertaking the project. Key outcomes might include improved customer satisfaction, increased employee efficiency, and better use of data insights.

Step 7: Develop employee training plans.

Employee training is pivotal to a successful transition. It equips employees with the necessary skills to use new technologies, minimizes disruptions, and encourages system adoption.

Training also strengthens security and guarantees compliance with new standards to reduce risks. It boosts employee confidence and morale, preparing them for change and increasing job satisfaction.

Step 8: Automate the process.

Automated migration (which often uses refactoring to convert legacy code) lets you tackle modernization incrementally without disrupting operations.

But while it increases efficiency and speed, it might not be applicable in every scenario. Some legacy systems are so complex that automated modernization won’t be possible without first disentangling the existing system’s logic and functionality. Be sure to analyze the feasibility of this approach in your specific context before using it.

Step 9: Monitor and optimize iteratively.

Modernizing your legacy applications doesn’t automatically guarantee success, nor will the benefits be immediately visible. Monitoring and optimization are essential final steps. Compare the baseline performance of the legacy system with the improved solution to identify areas that require optimization, so you can make targeted improvements.

Looking for a long term partner to help you monitor and optimize your apps? Cheesecake Labs can help! Get in touch to learn more about our Optimization and Maintenance services.

How do you choose the best application modernization companies? 

Given modernization’s inherent complexity, choosing a capable partner is important. Here’s what to look for when making your selection:

• Experience in similar app modernization projects – Past performance often predicts future success, and experience with similar projects enhances their ability to navigate potential pitfalls.
  
• Understanding of your business – The best partner is aware of the unique challenges in your industry. This is crucial for tailoring the app modernization roadmap.
  
• A comprehensive approach to system architecture – Look for a partner that can confidently and clearly outline their approach to designing and building your new system. This is a telling sign of their expertise.
  
• Technical knowledge – They should have the technical proficiency to convert or re-engineer your legacy code to run on modern platforms. Verify that they have experience with the technologies involved in your modernization project.
  
• Dedicated team structure – The dedicated team model is a more business-centric solution than staff augmentation. It goes beyond just adding new talent to fill skill gaps in your company. Instead, you get an established team of app modernization experts working exclusively for you, and their sole focus is achieving your specific objectives.
  
• Knowledge of compliance and security best practices – In an age of stringent data privacy regulations, you need a partner knowledgeable about GDPR, CCPA, HIPAA, and other related regulations.
  
• Nearshore development – Nearshore partners can provide affordable and efficient app modernization services, plus you’ll benefit from similar time zones and easier communication. Latin America offers a lot of benefits for outsourcing software development, and Brazil is a great choice if you ask us! 
  
• Service Level Agreement (SLA) for post-launch support – Finally, make sure the company offers a maintenance SLA. This indicates their willingness to stand by their work and assist you even after completing the project.

Choose Cheesecake Labs for your legacy application modernization projects

Cheesecake Labs can turn your legacy systems into future-ready tools for growth. We offer cost-efficient application modernization solutions for all organizations, from SMBs to enterprises. You can count on our experience and technical proficiency to make the transition seamless and successful.

Get in touch today to tell us about your project. We can’t wait to bring your application into the modern era!