Legacy modernization: Strategy, steps & cost – upgrade or replace 

What is a legacy system?

The legacy systems are computing systems, hardware, or software used for an extended period that sometimes might be a barrier to growth. It often has the following common characteristics: 

• Out-of-date: Legacy software uses technologies incompatible with modern standards and the need for speed and adaptability. For example, a program designed to run on Windows 7 may be unable to run on Windows 10. 
• Inefficient performance: These systems have slow response times that limit the operation flow. It also can’t deal with a growing amount of data or access at once. 
• Security flaws: Legacy apps are vulnerable to cybersecurity threats because of outdated security mechanisms and a lack of upgrades.  
• Limited scalability: Scaling these systems to meet increasing demand can be difficult and expensive.   
• Poor adaptability: Legacy programs are built on old code and infrastructure, meaning they might struggle to adapt to new business requirements and technology such as cloud, microservices, blockchain, IoT, or AI. 
• High maintenance expenses: As it becomes older and older, maintenance also increases. 

What causes legacy system?

There are objective and subjective reasons; we have broken them down into 4 categories for you: 

1. End-of-life (EOL) legacy applications are those for which a manufacturer or developer has discontinued support or upgrades or are no longer available for purchase.  
2. Inability to scale because these legacy systems are no longer scalable to meet a company’s rising data, performance, or security requirements.  
3. The heavily patched one since many legacy software applications are out of date and have been frequently patched in the past to keep them current. Extensive patching, particularly insufficient patching, can render software more vulnerable to security breaches than modern applications, resulting in its discontinuance.  
4. There is a lack of qualified developers who know how to deal with the system. We all want to learn new technologies instead of looking back, making it challenging and expensive to locate an IT specialist who understands the outdated infrastructure. 

Using these legacy systems for a long time can do more harm than good. It kills your performance and still costs a certain budget to manage and maintain. And this is why we need an upgrade – a modernization of the legacy system.   

Legacy application modernization is an approach to turn outdated apps into better-performance ones. It includes adding catch-up technologies to improve the app performance, or integrating it into a new infrastructure, or replacing it with an entirely new solution. 

The benefit of legacy software modernization

Besides the downside ones of outdated system that we stated, there are other considerable benefits you should have a look to stay competitive and efficient: 

1. Modernization can considerably improve the performance and operational efficiency of outdated programs, resulting in faster response times and a better user experience.  

2. Modernization requires upgrading security measures and assuring compliance with industry standards. This reduces the chance of security breaches and prevents costly compliance difficulties.  

3. Modernization frequently entails redesigning to have a better user interface and experience, which leads to increased consumer and staff satisfaction.  

4. Organizations can cut maintenance costs and improve hosting. Modernization would lower maintenance costs while increasing employee productivity by speeding up the process.  

Why choose legacy modernization instead of buying new software?

The legacy system is built with a monolithic architecture.   

Meanwhile, modern apps with modular design, serverless models, and DevOps practices have more advantages in performance, flexibility and scalability. The best part is that you can immediately buy one off the market and use it.   

If buying new software is much easier and cheaper, why should we undergo such a lengthy legacy modernization process?  

1. To avoid vendor lock-in: Most legacy systems are on-premises or core systems that were bought years ago. While modern apps are mostly as-a-Services type. No businesses want to rely on a third-party for too long. 
2. High level of data protection: The legacy system contains a large amount of data, which is difficult to migrate and can be lost during the process. That’s why many of them stay as storage hubs. Business modernizes them for better security, automation, and processing capabilities.  
3. Durability and reliability: The legacy system has stayed with you for years. It required less support from the vendor, so even if they have dropped the product, it still can work with minimal changes. At the same time, your business has been used to the system and evolved around it. A big change will take time to train new regulations. 

When is the best time for legacy modernization?

Legacy modernization is as complicated as building software from scratch. To not throw your money out of the window, you must identify which part to “modernize” first.   

According to Gartner, there are 6 drivers that lead to software modernization, falling into 2 main categories:   

• Business-related: If the legacy system is not powerful and scalable enough to support your business in the following years, it’s time to consider legacy modernization.  
• IT-related: If the legacy system has become costly to maintain, complex to manage, and contains security holes while being underperforming, have you thought of an upgrade? 

And here’re the top reasons why businesses opt for legacy modernization, based on a report by Statista in 2023:

A to Z guide on creating your legacy modernization strategy

Step 1: Analyze your legacy system

After understanding which part to modernize using the Gartner model, you should conduct an audit to identify weak links.   

The goal is to collect the necessary data to develop a strategic modernization plan in the following stages. Here’s what you need to find: 

• Evaluate the legacy software’s current usage, including the number of users, usage time, typical usage patterns, and so forth. Consider sketching out the business processes that include the legacy system to ensure that modernization initiatives match the users’ needs.  
• Identify how much you have spent on the legacy system, including software licenses, maintenance fees, third-party integrations, and technical assistance.  
• Evaluate the health of the software infrastructure that houses the legacy system, including the processing capabilities, data storage, security, and integration.  
• Conduct a thorough risk assessment of interrupting the business process during modernization and the opportunity cost of keeping the legacy system the same. 

Step 2: Choose your “weapon” – 7 legacy modernization approaches

You have your problem. What should you do with it now?  

Legacy modernization has 7 approaches (usually known as the “R”), each with its strategies and pros and cons. The trick is to select the best choice to make your system speedy and cost-effective. Let’s take a look: 

	What To Do	Cost	Complex	Pros	Cons
Retain	You discard the non-function code, reuse the core and connect them to a modern system via API.	Lowest	Moderate, require some development	– Change is minimal.  – The legacy system can continue functioning without interrupting modern tools.	It won’t solve maintenance issues.
Rehost	Move your entire system to new hardware, cloud, or virtual environments without much code modification.	Low	Low, primarily involves migration and configuration	– Favored by enterprise to improve the performance and to not interrupt the workflow.   – You can move to the cloud without having to re-engineer your systems.  – Low risk	All cloud-native tools cannot be used to their full potential.
Replatform	Migrate the legacy system’s code and components to a new platform.	Low to moderate.	Low to moderate. Additional coding is required to ensure compatibility.	– Improve app performance without much investment.  – Users don’t have to learn the new system all over again.	Limited flexibility. Only compatible components can work on the new system.
Rearchitect	Changing the application code’s architecture to address performance and scalability difficulties.	High.	High. You must redesign the application	– Give more flexibility to alter the system, making it suitable with technological trends  – More futureproofing	Required careful planning and advanced development.
Refactor	Changing the application code’s architecture to address performance and scalability difficulties.	Vary	High, you have to modify the codebase	You improve the internal (back-end) components without changing the external (front-end).	– Less disruptive.   – Great choice if you only want to improve your code quality and fix technical issues.
Rebuild	The software is outdated but still resonates with the business’ requirements. So, you rewrite an entirely new application from scratch with the legacy system’s feature.	Vary	High, custom build from scratch	A fresh start that you can use any technology or framework of choice.	– Required advanced development. – High risk since there’re lots of changes.
Replace	Much like rebuilding, you start from scratch with a custom-built tool or OTS. But this time you add new features, expand its function and performance since the legacy system is very out-of-step.	High	High, custom build from scratch and various testing to make sure it meets the needs	A fresh start that you can use any technology or framework of choice.	– Required advanced development. – High risk since there’re lots of changes.

How to know which is the best one for your business case? 

As you can see, each “R” approach represents a level of legacy modernization from simple to complex. To know which level is best, we have a few questions that can clear the fog:  

• What technical expertise does your organization already possess?   
• What amount of time do you have for the upgrading process?   
• Do you have detailed technical documentation on the changes your legacy system has undergone?   
• Do you have a platform in mind to switch to?   
• Is your legacy system active or in “life support” mode?   
• Do you intend to update and add integration points frequently?   

Step 3: Create your development roadmap

To build a practical roadmap, here are 2 things to keep in mind: 

1. Write in simple terms that both technical and businesspeople can understand. You can make a specialized document for your development team, but the roadmap should be straightforward and accessible.  

2. A plan or roadmap shouldn’t just steps and milestones but also includes: 

• Software development methodology, technologies, and tools used for each stage 
• Schedule overview: Monthly check or weekly check? 
• Human resources: How many people are there for each stage (design, development, deployment)? Who is in charge of what, and what team works on which part? Do you leverage outsourcing team?  
• Budget for each stage. 
• The metric for quality and development velocity to know if your team is on track. Remember to be realistic and set a reachable number. 

Step 4: Inventory and protect your data before transition

Legacy modernization is a good time to examine your data quality and how you are currently managing it. Get rid of the data you no longer need to free up the space for new ones.  

The remaining data should be cleaned and categorized in a warehouse that matches the new infrastructure. At the same time, this modern data warehouse also safeguards new data created during the modernization, ensuring the data flow is not interrupted and accessible.  

We recommend taking this step as soon as possible, right after you have your plan. 

Step 5: Create your new solution

What to do?

With a roadmap in mind, the development process can be divided into 2 stages: implementing new program components and updating outdated ones.   

Based on the legacy modernization framework, you can determine which tech stack is best for the new application: 

• If you plan to rehost, rearchitect, rebuild, or replace, you can pick any technology you prefer. Just update the legacy part you want to attain to be compatible with the new one. 
• If you’re leaning towards retain (also called encapsulation), replatform, or refactor, go for the technology that works well with your existing legacy system. 

Technologies that Futureproof your Legacy Modernization

• Cloud: Cloud is safe, scalable, cost-efficient, and more flexible than on-premises. Adopting a cloud-native approach will bring you the agility to deal with changes in customer behavior, market, and technology. A private cloud offers more security but comes with high cost and demanding resources, while a public cloud is the cheapest option. To balance between price, control, and security, many opt for a hybrid cloud.  
• Containers: You can containerize the codebase for better portability between old and new systems, ensuring a seamless transition between environments. 
• Microservices: By breaking down your application into modular components, it’s much easier to maintain and modernize. Instead of upgrading the whole system, you can focus on separated parts and not interrupt the app’s operation.  
• DevOps: Leveraging this IT development and management approach will keep your software up-to-date, instead of using software for the long run and undergoing a lengthy legacy modernization afterward. 
• API: This enables legacy software to share functionality and data with other apps and devices safely. A well-designed API reduces the need for refactoring.  
• Data warehouse: This tool can store, secure, and organize enormous volumes of data. As new applications generate and use more data, a data warehouse ensures the data is easily accessible and safeguarded.   
• Use frameworks: Frameworks are pre-defined sets of libraries, tools, and conventions that serve as a foundation for constructing applications. Depending on your requirements, you can choose a suitable framework for a ready-made toolset. For example, .NET is known for scalability and versatility, while Django is known for rapid development and ease of management. 
• Utilize emerging technologies, including AI, blockchain, IoT, and data analytics. Ultimately, you want your updated application to be usable for the next many years. 
• Low-code: Many legacy modernization approaches are highly risky and costly, making IT managers reluctant to change. Low-code empowers this by lowering the resource barrier, cost, and level of risk. With low-code, you can take advantage of its cloud-native services, customization ability, modular design, and openness to the CI/CD approach.    

Testing

Now that you have completed your solution, it’s time for some function and performance tests. Nowadays, to optimize development time, we usually test alongside development. Here’re the standard testing we did at Synodus for legacy modernization:   

• Unit testing: focusing on individual components to find issues in the smallest part of the modernized system.  
• Integration testing: making sure that the old ones seamlessly work with the new ones.  
• Functional and performance testing.  
• System testing: verifying the entire application function altogether.  
• User acceptance testing: ensuring the new solution meets the user’s needs. 

Step 7: Deploy and train

It’s time to wrap it up and fully replace the legacy system with your new solution.  

One tip is developing and deploying simultaneously using the DevOps approach instead of waiting for the modern solution to be finalized. If something does not work out as expected, the continuous approach will come in handy, saving you resources by switching it up instantly. 

Adopting new tools can take time, especially if your company has been used to the old ones for years. You should provide them with the necessary training and support on how to use the newly updated app. 

The tip is to create a change management strategy to support your staff during the shift, which can increase engagement and keep your team motivated.   

Real-life successful stories of legacy modernization

The story of how Walmart rehosted their eCommerce store from a separated cloud into an enterprise cloud (which they rebuilt to also power the retail, supply chains, and other core management) is the prime example of legacy modernization.  

This modernization created the largest hybrid cloud of Walmart’s Private Clouds, Azure and Google Cloud, which can process many orders (both online and in-store) while ensuring seamless operation.  

What they achieved: 

• A system designed for scalability and flexibility that can manage a daily data volume that is 1,700X larger than previous capabilities. 
• Reducing cloud costs by 10-18% annually, allowing the team to give more promotions to their customers. 

Then we have the use case of legacy modernization in banking where some of them adopted COBOL-based core banking software since early years. With the shortage of COBOL developers and lack of update, these systems are a nightmare to deal with, urging them to change.  

Synodus has worked with many businesses in legacy modernization, namely:  

• When we used the refactor approach to improve code quality and performance of Viettel’s mobile app – the largest Vietnamese telecommunications company. This change has increased the app engagement and contributed a little part of 10 million downloads.  
• When we rebuild an outdated ERP system with a modern one powered by Microsoft’s low-code platform for a Pharmaceutical Company, resulting in higher flexibility, 8-10x faster processing time and much bigger data storage. 

• Learn more on how Custom Development helped these businesses accelerate their performance: Story of McDonalds, Bamboo & Unilever. 

How much does legacy system modernization cost?

Legacy modernization costs from $40,000 to $150,000+, depending on your legacy modernization strategies and the extent of what needs to be fixed.  

The legacy software size and complexity, redesign requirements (front-end, back-end, or both), specialized technology (AI, blockchain, or IoT), chosen frameworks and infrastructure can all alter the final cost. 

At the same time, be mindful of the data migration cost, which can take up to $5,000 to $15,000 for medium-size workloads and $20,000+ for large-size workloads.  

The workflow might be interrupted during legacy modernization, leading to certain hidden costs. These accounted for the time and effort your employees spent without the application, how your process changed around the absence of the application, or the cost of alternative solutions during this time.  

What is the risk of legacy modernization & how to solve it

As legacy systems are complex, modernization won’t be a breeze. One wrong step can lead to specific risks in technical debt and exposure to security.  

Technical debt 

Technical debt occurs when you pick a quick solution over a comprehensive and detailed approach. In other words, you trade quality for speed and long-term expenses for short-term benefits.  

Of course, technical debt has its pretty and ugly side. A bit is fine to speed up your process, but too much can be a double-edged sword.  

Here’s how to manage this legacy modernization challenge: 

• Minimizing technical debt in legacy code by restructuring it to be more manageable and adaptive.   
• Moving to cloud-native systems can improve scalability and cost-effectiveness. You can choose a public cloud migration strategy or a hybrid cloud solution.  
• Companies that embrace DevOps methodology can be nimbler and more proactive, as they continually roll upgrades and new features to meet the growing demands. 

Security Concerns

Legacy modernization is an excellent opportunity to reinforce and update your app’s security. However, it can open many backdoors for attackers if you don’t carefully manage your security during migration.  

We suggest implementing it early, right when the legacy modernization process begins, and making it a top priority during development or when you assemble your tech stack. 

• Conduct a risk assessment to identify potential dangers that could arise during modernization.  
• Clearly establish the security requirements and expectations for the upgraded application. This should include data security, access control, encryption, and regulatory compliance.  
• Ensure compliance: Make sure that upgraded systems conform with applicable regulations.    

The best final tip: Let a reliable partner handle your legacy modernization

On the one hand, you want to create a better system with robust architecture and extended features. On the other hand, you have to protect your data while ensuring a linear transition and deployment.  

It’s complex, isn’t it?   

It’s why a reliable partner like Synodus can be the right sidekick for the task.   

With 5+ years of experience in modernizing legacy systems for medium-sized businesses to enterprises, we are ready to make your software high-performing and adaptive for upcoming challenges.   

Here’s our legacy application modernization services:  

• All-around Digital Transformation with dedicated IT Consulting, thorough IT assessment, and actionable roadmaps.   
• Software Development: working with on-premises to cloud-based apps, from websites to mobile apps.   
• Cloud Development & Migration  
• Enhance your app with the emerging technologies of Blockchain, AI, IoT, and Data Analytics  
• Low-code development for faster turnover and high flexibility  

The number said it all! With over 100 projects and 88% client satisfaction, let’s begin your journey with us!

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