Organizations today need to be able to move quickly, adapting to whatever change comes their way. Legacy systems present challenges to agility, as they embed old ways of working into a business. Outdated, inflexible and difficult to maintain, legacy systems hinder growth and innovation.

Legacy systems can become a serious problem when their functions are vital to the business but they cannot keep up with the required pace of change. Modernizing legacy technology is therefore essential for businesses to remain competitive and agile.

An effective legacy modernization strategy is critical to ensuring a successful transition to new systems and mitigating the risks involved. This article will provide an overview of the key considerations in developing a legacy modernization strategy, offering tips to help you choose the right strategy for your business.

Strategy considerations and critical success factors

  1. Explore options to accelerate modernization and reduce costs
  2. Establish strategic partnerships to create capability synergies and reduce project risk
  3. Consider the wider business and organizational implications when planning the transition
  4. Plan for the new normal post-modernization 

1. Explore options to accelerate modernization and reduce costs

There are several different options for modernizing, all of which can reduce the risks of a large-scale modernization project and accelerate time to value. The first step is to identify the different options and assess their costs and benefits.

Options include:

  • Use automated code conversion tools. These tools can convert very large code bases while preserving functional equivalence and reducing costs. One example is the automated refactoring of a U.S. Air Force mainframe to AWS, which was completed in 18 months, significantly faster than a manual conversion project. The project saved the U.S. Air Force an estimated $25 million per year.
  • Adopt cloud-based services to develop business functionality. For example, Neo Financial, a tech-driven Canadian financial services company, used modern cloud services from AWS to provide “simpler, more agile money management opportunities featuring rewards systems”. Using this approach, Neo cut the time to bring a new credit card to market by about 50%
  • Purchase and install packaged software that supports the business functionality, then migrate data to the new system. For example, several vendors offer core banking system software packages, including Oracle and FISERV.
  • Outsource the application to an external vendor. Migration of credit card processing applications to external vendors is a good example.

2. Establish strategic partnerships to create capability synergies and reduce project

Legacy modernization projects are typically complex and introduce substantial changes to business-critical applications. Success depends on deploying the right level of technical capability, industry knowledge and expertise in executing a project, so it is important to find the right partners to support you in the process.

The right partner should bring deep industry expertise, so they can validate the functionality of the modernized applications. They should have extensive experience executing projects of similar size and complexity in the same industry, so that they can apply best practices and lessons learned.

For example, the U.S. Department of Defense (DOD) partners with CGI to modernize its mission-critical supply chain and equipment support system used by 18,000 personnel at 260 global locations from mainframe to a modern platform on AWS. The modernization project delivered cost savings estimated at $25M per year.

3. Consider the wider business and organizational implications when planning for the transition

Legacy systems typically play a critical role within the business, supporting processes with a direct impact on business operations. Changing these systems can have wide-reaching consequences, so it is important to assess what impact the work will have and carefully plan for it.

Successful modernization projects anticipate the consequences of change and recognize its reach beyond evolving the underlying technologies. The leaders of these projects plan for the wider organizational context, and assess the impact on culture, organization structures, team and skill capacity and operating models. They apply appropriate organizational change management activities and techniques to manage these transitions.

4. Plan for the new normal post-modernization

It is important to plan for life after modernization, as the new technological environment can be very different from what came before. Planning for the new normal should focus on two key areas: ensuring that effective operating models are established, and using the new tools and technologies to support the business.

Modernization provides significant opportunities to use new capabilities for automation, monitoring, observation and integration. Using these capabilities effectively will improve the business outcomes and return on investments for the modernization project, while facilitating the adoption of modern development approaches and mechanisms.

Conclusion

Modernizing legacy technology can be a complex and challenging process, but it is essential for businesses to remain competitive in the digital age. By carefully planning and executing an effective modernization strategy, businesses can reap the many benefits that modernization offers.

Leaders should consider the best modernization option based on their organization’s strategy and business goals, carefully select and engage strategic partners with the right capabilities and expertise, consider the wider business and organizational implications of the transition and plan for the new normal post-modernization.

This article was co-authored by CGI and AWS experts. These authors include: