Modern-day business wouldn’t be what it is without applications. While technology has been a main driver of growth for decades, those early-stage systems can no longer address their original purpose. Too often, organizations invest money and resources into maintaining outdated applications—but there’s another way: application modernization.

Regardless of your industry, this article provides a baseline understanding of how application modernization works. Once you understand what it is, why it’s essential to success and the proven strategies for success, you can create your roadmap to modernizing legacy applications.

Why should you update your legacy systems?

Legacy systems are expensive and fragile. If high labor costs, resource scarcity and time-consuming customizations have weighed on your teams, it’s time to modernize applications.

Beyond being costly, maintaining outdated technology opens your organization to security vulnerabilities and compliance issues. Most legacy systems, especially those designed before modern cyber threats existed, often lack the required protocols, patches and vendor support, making them an easier target for attack. Modernizing applications is one way to mitigate these company-damaging risks.

With the rise of artificial intelligence and other IT advancements, the old code of legacy systems can no longer keep up with or integrate new tools, limiting agility. As AI becomes more prevalent, securing a system that can handle these high-tech programs is essential. Investing in legacy modernization enables your organization to maintain its competitive edge.

What is software modernization?

Modernization is the act of updating or transforming monolithic legacy software to align with modern standards. Designed to bridge the gap between older systems and new consumer demands, modernization improves overall performance, scalability, security and agility.

This process could manifest in different ways, such as moving data to the cloud, adopting microservices or replacing the system in its entirety. By fixing inefficiencies, aging systems can be transformed into high-performing assets that are curated and built for your organization.

The main types of software modernization:

  • Application modernization: Involves breaking down monolithic applications into independent services designed to be easier to update and deploy, often referred to as the “lift and shift” method
  • Mainframe modernization: Describes rehosting or refactoring legacy applications into new environments (such as the cloud) by optimizing old code and exposing mainframe functions through APIs to combine reliability with agility
  • Data center modernization: Includes moving away from on-premise data centers to private and public cloud servers to improve flexibility and protect data in more distributed environments
  • Infrastructure modernization: Covers replacing high-maintenance hardware, servers and storage with scalable, modern solutions and consolidating the number of physical sites

The 7 benefits of application modernization

  1. Competitive edge—Modernizing applications enables you to adapt to market changes and new technological advancements at rapid speeds, helping you to stay ahead of competitors. Integrating AI and ML programs is the key to streamlining operations and responding to emerging trends and consumer demands.
  2. Enhanced productivity—Modernizing legacy systems simplifies operations and lowers the intensity of the training process. Updated services are designed to automate repetitive tasks, freeing up time for your hard-working employees to handle other valuable and strategic tasks.
  3. Improved user experience—Modernizing applications improves the speed and efficiency of online systems, resulting in a seamless and responsive experience for both consumers and employees.
  4. Cost reduction—Unsupported systems require more maintenance and are prone to bugs and failure. Focusing efforts on incorporating new, clean code during application modernization frees up company resources and finances for innovation rather than upkeep. As you plan your legacy modernization strategy, remember that cost-effectiveness is crucial.
  5. Business agility—The more able you are to pivot and meet expectations with ease, the more agile your business becomes. Modernized applications are designed to streamline operations, making it easy to implement new functions when needed.
  6. Optimized security—Modernizing legacy systems is one way to ensure your organization’s infrastructure is up to date with the latest security standards and protocols. Reducing the risk of data breaches will make your company more valuable and trustworthy to stakeholders and users.
  7. Expanded revenue streams—Having updated systems enables businesses to explore innovative ideas and tap into new markets. Even small advancements can present new opportunities for increased revenue and modernization.

What are the main challenges to modernization?

Legacy modernization may be a critical priority for companies, but that doesn’t mean it comes without its challenges. When you start on your application modernization journey, encountering obstacles is expected. If you work with an experienced consultant, they’ll provide you with practical approaches for overcoming issues that might arise.

There are a few barriers that hinder application modernization. The first is that while IT leaders recognize the urgency of legacy modernization, the actionable steps often get stuck in high-level departments. In these cases, stakeholders may feel that the time and energy invested in modernization are not justified, resulting in stalled projects that slow progress. To avoid this, prioritize establishing alignment with all departments by framing legacy modernization as an investment and highlighting additional benefits.

Another common hurdle is that, because they are implemented on a large scale and require a large team, legacy modernization projects can become difficult to manage. To minimize these issues, we recommend tackling the project in smaller increments that are easier for managers to oversee to completion.

Considerations when modernizing systems:

  • Team resistance—Inviting any change into the workplace can lead to employee pushback (especially when it involves AI). The best way to combat these feelings and fears of job security is to involve your staff early in the process, before you take any steps towards application modernization. By providing comprehensive training and highlighting how new programs will augment rather than replace human workers, your team is more likely to get on board with legacy modernization.
  • Data integrity—To avoid transferring poor-quality, aged data to your new system, all data should be examined, cleansed and standardized at the start of the process. If this consideration isn’t taken seriously, risks of loss, corruption and inconsistency increase.
  • Cost—Though modernizing legacy systems will reduce costs in the long run, it often requires an initial investment. If ROI is your stakeholder’s main concern, remind them that app modernization will deliver greater savings than the alternative.
  • Security risks—Protecting assets during the transition from legacy systems to new infrastructure could expose new vulnerabilities if handled incorrectly. Preemptively embedding security measures, such as multi-factor authentication, into the system is one safety measure.
  • Strategy—Modernizing applications wouldn’t be possible without a well-planned strategy. Instead of solving immediate bottleneck issues, you and your business consultant should work in tandem to select future-proof technologies that can adapt and integrate with innovation programs.

Application modernization’s relationship with the cloud

Cloud technology has been around for years, and yet, some companies are not fully aware of just how powerful it can be in application modernization. To deliver seamless digital experiences to consumers, organizations must remain agile and innovative. The two ideas are intrinsically linked, and one cannot fully exist without the other.

Over 90% of organizations store data in the cloud. While it’s possible to pursue an on-premises application modernization, it’s not fruitful in the long term. Investing the resources into securing cloud technology as part of your legacy modernization leads to a more flexible system and improved performance.

With learning, practice and fine-tuning, you and your team can master cloud-native solutions and accelerate innovation. As you discuss your potential legacy modernization, consider partnering with a cloud service consultant to harness the technology’s full potential.

Cloud technologies used in legacy modernization:

  • Private cloud: A fully isolated, cloud computing environment reserved exclusively for a single customer or organization, preferred for its stricter security measures, ultra-tailored customization and consistent performance rate
  • Public cloud: A multi-tenant environment where multiple organizations share hardware on a pay-as-you-go basis, but their data remains isolated (such as Google Cloud or AWS)
  • Hybrid cloud: A blend of public and private cloud services and on-premises infrastructure, hybrid clouds run applications and store data in a private cloud, while handling less-sensitive workloads in public clouds during peak times, enabling flexibility and scalability
  • Multi-cloud: A strategy where a company uses cloud services from at least two public providers to avoid vendor lock-in, improve outage resilience and distribute workloads

How are digital transformation and application modernization connected?

While digital transformation and modernization are distinct initiatives, the two often work hand-in-hand to help businesses stay competitive. Where digital transformation refers to the actual changes made to processes, models and strategies, modernization is focused on upgrading or replacing existing infrastructure. Both encourage companies to embrace new technologies and improve operations—a good digital leader will understand how to blend the two for their business.

What is AI’s role in application modernization?

Before the introduction of artificial intelligence, employees would spend months analyzing code, researching various sources of information, and putting effort into projects that would inevitably fail. Human error and wasted time all but vanish when you introduce AI into legacy modernization efforts.

Key roles of AI in application modernization:

  • Discovery and documentation: AI analyzes outdated codebases to map outliers and dependencies, as well as create necessary design documentation
  • Coding and optimizing: AI refactors, translates and converts legacy code into modern language, such as Java or Python, to simplify complex lines and optimize an application’s performance
  • Testing and validation: AI tools design and run regression tests to reduce testing time and increase functionality during system migration and legacy modernization
  • Infrastructure management: AI accelerates modernization by automating repetitive tasks and defining cloud infrastructure as code (IaC)
  • Risk mitigation: Generative AI tools, specifically generative AI, analyze legacy systems to identify project risks early on in the planning process

Why should you use a consultant for application modernization?

It might be tempting to tackle your organization’s legacy modernization on your own, but unless you have internal teams specializing in cloud-native technology, you should consider hiring an outside consultant. Specially trained in implementing cloud solutions, improving IT agility and reducing operational expenses, consultants can help you navigate complex infrastructure changes and legacy modernization.

Insider tip: Consultants are also incredibly helpful to have on hand if you’re about to experience a major business transition, like a merger. With their outside perspective, consultants can provide an objective opinion and rapidly execute application modernization, taking the weight off your shoulders.

Examples of application modernization across different industries:

  • Government—Moving away from paper-based processes and siloed systems to data-driven and user-centric digital services, often by adopting cloud infrastructure and automating routine tasks with AI tools. Take CGI’s work on modernizing the Federal Aviation Administration’s Notice to Airmen, as an example. Our NOTAM platform was designed to boost the FAA’s capacity to provide safety alerts to aviation stakeholders with near-real-time data exchanges hosted on a cloud architecture.
  • Manufacturing—Accomplished by integrating digital technology, automation and data-driven insights to transform traditional production. When the proper tools are utilized, quality control improves and downtime lessens. The main focus is on enabling predictive maintenance to optimize supply chain flow.
  • Healthcare—In healthcare, the patient experience is a top priority, and legacy modernization supports that. With interoperability and data sharing, modernizing applications for healthcare organizations creates a seamless experience for patients, physicians and administrators. This could include software modernization, AI-driven diagnostic programs, telemedicine appointments, automated administrative tasks and more.
  • Energy and utility—Transitioning away from one-way infrastructure to a smarter, digitized grid enables the use of cleaner energy sources, such as solar and wind, rather than fossil fuels. By updating physical infrastructure to withstand extreme weather and increases in demand, energy and utility organizations can reduce outages and empower customers to manage their own consumption, costs and DERs.

Turn to CGI to handle your organization’s modernization

In the next few years, companies will not be able to flourish without modernizing their legacy systems—so why wait? Get in contact with our experienced consultants and partner with CGI to start your modernization journey.