A Complete Guide to Legacy Application Modernization

Legacy systems have been important in the growth and success of several organizations. However, as these systems and applications age, they slow down and become increasingly costly to operate and manage. As per the U.S. Government Accountability Office, operating and maintaining legacy systems consumes over 80% of IT expenses. 

Organizations must scale and update these systems to accommodate their evolving business needs. This is where legacy application modernization can help. 

What is a Legacy Application?

Legacy applications, often called legacy systems, are software programs or technology solutions used within an organization for a significant period. Despite their age, these applications continue to fulfill critical business functions.

However, legacy applications were often built on outdated technology stacks, including old programming languages, hardware, and operating systems that their vendors no longer support.  

When your applications and systems begin to age and transition into the status of legacy systems, you are likely to face eight primary issues and risks linked to outdated technologies: 

• Maintenance Challenges: As technology advances, maintaining older systems can become increasingly difficult due to a lack of support and expertise. 
• Code Bloat: Over time, legacy systems can accumulate excessive code, making them more complex and challenging to manage. 
• Compromised Integrations: Legacy systems may have unsecured integrations, which can threaten overall system integrity. 
• Lack of Third-Party Integration Support: Older systems cannot often integrate with newer third-party applications, limiting their functionality. 
• Performance Issues: Legacy systems can suffer from slow response times and other performance-related problems, affecting productivity and efficiency. 
• Security and Compliance Risks: Outdated applications are more vulnerable to security risks and may not comply with current regulatory standards, posing significant risks to the organization. 
• Inability to Adapt: Legacy systems may struggle to accommodate new tasks and workflows, hindering business growth and innovation. 
• Subpar Customer Experience: The outdated interfaces and limited functionality of legacy systems result in poor user experience, which impacts customer loyalty. 

What is Legacy Application Modernization?

Application modernization is the process of updating and optimizing legacy systems to align with current business needs and technological advancements. This process can involve replatforming, recoding, rehosting, or replacing existing applications. The goal is to enhance performance, improve security, ensure compatibility, and reduce operational costs.

Replacing applications and software that your team has been using for years, or possibly decades, might seem intimidating — and indeed, it can be. However, outdated systems can lead to more significant challenges for your team and customers.

Why Modernize Legacy Applications?

While robust and deeply integrated into an organization’s operations, legacy systems often lack the flexibility and features to meet contemporary business demands.

Modernizing these applications is essential for businesses to leverage the latest technological advancements, maintain security standards, and deliver a better user experience. Here are eight reasons to modernize:    

Enhanced Integration Capabilities

Today’s applications are designed to work smoothly with new technologies and platforms. This allows for effective data sharing and collaboration across an organization. By breaking down data silos, you can promote a more unified and efficient workflow. Leveraging an API-based application modernization strategy enhances a legacy system’s integration capabilities.

Cost Efficiency

While maintaining outdated systems can be expensive, modern solutions can reduce long-term operational and maintenance costs. These solutions are easier to update and maintain, and their components are more readily available, leading to significant savings. According to McKinsey, modernizing legacy systems helps organizations increase operations productivity by 40% and reduce IT costs per policy by 41%. 

Security

More than half of the companies surveyed by Statista listed increasing security as their primary reason for modernizing legacy applications and data in 2023. Modern applications regularly receive security updates, reducing the risk of cyberattacks and compliance issues. This proactive approach helps protect your organization’s data and operations.  

Scalability

Unlike legacy applications, modern solutions can adapt to increased demand and evolving business needs. This allows you to scale efficiently and support growth without technological limitations. For example, migrating legacy systems to microservices supports better evolution and maintenance. Modern systems take advantage of new technologies, enabling them to handle increased demands more efficiently. 

Software as a Service (SaaS) Applications

Modernizing legacy solutions, especially SaaS applications, provides greater flexibility to adapt to changing business needs. Legacy systems are often inflexible and complex to modify, whereas modern SaaS solutions allow customization to meet evolving demands. 

User Experience

Modern interfaces are intuitive and user-friendly, significantly improving the user experience. Legacy systems often suffer from outdated, complex, and non-intuitive user interfaces that can frustrate users and reduce efficiency. Modernizing these systems allows users to redesign the interfaces to be more intuitive, aesthetically pleasing, and easier to navigate.

In 2023, over 58% of website visits were on mobile devices. However, many legacy systems are not optimized for mobile usage. Transforming the interface of legacy web applications helps improve user experience and usability.

For instance, a legacy HR system with a cluttered and confusing interface can be redesigned with a clean, modern UI that uses clear menus, simple navigation, and responsive design principles, making it easier for HR personnel to manage employee records, track performance, and handle recruitment processes.    

Performance

Modern applications are designed for speed and reliability, minimizing downtimes and ensuring smooth operation, which enhances overall business performance. For instance, transforming legacy systems into microservices enhances performance and fault tolerance, supporting better operational efficiency.

Simplified Management and Maintenance  

According to the Government Accountability Office, the federal government spends an average of $337 million of taxpayer money every year on legacy operations and maintenance. Legacy systems also increase the cost of maintenance by 15%. Modernizing legacy applications can unlock enhanced and automated workflows, allowing you to improve process efficiency, streamline operations, and reduce manual intervention.

How to Modernize Legacy Applications

Modernizing legacy applications is a structured process that ensures a seamless shift from outdated systems to modern, efficient solutions. Here are the steps to modernize: 

Assessment 

Begin by evaluating the current state of your legacy applications. Analyze their functionality, their technology stack, and how they integrate with other systems. Understanding the limitations and capabilities of these solutions is crucial for planning modernization.

Planning

Once the assessment is complete, develop a comprehensive legacy application modernization plan. This plan should outline the timelines, resources needed, and cost estimates. Setting realistic goals and milestones helps track progress and ensures the project stays on schedule and does not go over budget. 

Prioritization

Not all applications need to be modernized at once. Prioritize which applications to modernize based on their business impact and technical complexity. Applications critical to business operations or pose significant risks if left outdated should be at the top of the list.

Execution

With a plan and priorities in place, move on to execution. Implement the chosen legacy application modernization strategies, such as encapsulating, rehosting, replatforming, refactoring, rearchitecting, rebuilding, or replacing. It’s essential to ensure minimal disruption to ongoing operations during this phase. 

Testing

After modernizing the applications, rigorous testing is essential. This ensures that the modernized applications meet all performance, security, and functionality requirements. Testing should cover all application aspects, including integration with other systems and user acceptance. 

Deployment

Once testing is complete, gradually roll out the modernized applications. A phased deployment approach helps avoid operational disruptions and allows for troubleshooting and adjustments based on real-world use. 

Monitoring and Maintenance

The legacy application modernization process doesn’t end with deployment. Continuous monitoring is necessary to ensure the applications perform as expected and to address any issues that arise quickly. Regular maintenance updates will keep the applications secure and efficient over time. 

What Factors Drive Legacy Application Modernization?

Six primary factors drive legacy application modernization, categorized into business and IT perspectives.  

Perspective	Driver	Explanation
Business	Business Fit	If an old application no longer meets the demands of the modern digital landscape, it needs to be updated to align with current business requirements. Modernizing ensures the application stays relevant and useful.
	Business Value	Modernizing can enhance the application’s value to the business by improving its performance, usability, and ability to support business objectives. An application that offers greater value contributes to better overall business outcomes.
	Flexibility	Applications that lack the agility to adapt to changing business needs may become liabilities. Modernizing increases flexibility, enabling the business to respond quickly to market changes and opportunities.
IT	Cost	When the total cost of ownership is too high, legacy application modernization becomes necessary. Reducing operational and maintenance expenses is a key driver for updating legacy systems.
	Complexity	Overly complex technology can hinder business operations and increase the burden on IT staff. Modernizing the technology stack can improve efficiency and reduce the need for specialized skills.
	Risk	Older systems can compromise security, compliance, support, and scalability. Modernizing reduces these risks by ensuring the application is up-to-date with the latest standards and can handle future demands.

What is an Application Modernization Strategy?

A legacy application modernization strategy outlines the approach and methodologies to transition from legacy systems to modern solutions.  

The best candidates for modernization are those applications with drivers from both business and IT perspectives. After identifying the need for modernization, the next step is to evaluate the available options. Here are seven legacy application modernization strategies that can make your system up-to-date: 

• Encapsulate: Enhance and extend application features by encapsulating its data and functions, making them accessible as services via an API. 

• Rehost: Move the application component to a different infrastructure (physical, virtual, or cloud) without altering its code, features, or functions. 

• Replatform: Shift to a new runtime platform with minimal changes to the code, preserving its structure, features, and functions. 

• Refactor: Optimize the existing code to remove technical debt and improve performance without changing its external behavior. 

• Rearchitect: Significantly alter the code to transition to a new application architecture and leverage improved capabilities. 

• Rebuild: Redesign or rewrite the application component from scratch while maintaining its scope and specifications. 

• Replace: Completely replace the legacy application with new components, considering new requirements and needs. 

Select the legacy application modernization approach that offers your organization the highest benefit and value. You must evaluate modernization strategies in terms of their impact on technology, architecture, functionality, cost, and risk. 

What are the Challenges and Risks in Modernizing Legacy Applications?

Modernizing legacy applications can have several hurdles that need careful consideration and planning. Here are the primary challenges and how to address them: 

Complexity

Legacy systems have been built and patched over many years, which can make the modernization process challenging. It’s essential to deeply understand the legacy system and the modernization needs to navigate this process. Detailed documentation can be instrumental in managing these complexities.

Data Migration

Legacy systems often use obsolete data formats or storage methods that don’t mesh well with modern applications. It’s crucial to ensure all data is transferred accurately and securely. A comprehensive data migration strategy, including data cleaning, validation, and testing phases, can help. You will need a solution to translate data from the old to new formats accurately.

Integration Challenges

Modern applications often need to interact with other software and systems within an organization. Achieving seamless integration requires careful planning and testing. Extensive integration testing can help identify and resolve issues early on. 

Security Risks

Older systems often lack modern security features, making them more prone to attacks when connected to external interfaces. Enhancing security involves implementing strong authentication and authorization mechanisms, conducting regular security audits, and monitoring to identify and mitigate potential threats. Encrypting data can further safeguard sensitive information. 

Performance Issues

Legacy systems may not be prepared for the additional load that modernization can bring. This can lead to performance problems, such as increased latency and slower response times. 

To address these concerns, optimize the legacy system where possible and ensure the new system layer is efficient. Caching strategies and load balancing can help manage the additional load. Monitoring system performance and making necessary adjustments can also prevent bottlenecks. 

Technical Debt and Legacy Constraints

Legacy applications come with technical debt and constraints that can limit the effectiveness of modernization. These constraints might include outdated programming languages, unsupported platforms, or proprietary protocols that are difficult to interface with modern technologies. 

To mitigate this challenge, carefully assess the legacy system’s limitations. In some cases, partial refactoring or encapsulating only specific functionalities of the legacy system might be necessary to make modernization feasible.  

Examples of Legacy Application Modernization in Various Industries

Each industry has specific requirements, goals, and constraints that influence its approach to legacy application modernization. By understanding these factors, organizations can choose the most suitable modernization techniques to achieve their objectives while effectively managing risks. 

Insurance

Requirements	Goals	Constraints
High security and compliance with industry regulations.	Enhance customer experience through digital channels.	Regulatory Compliance: Strict regulations and compliance requirements limit the scope of changes and necessitate extensive validation and auditing.
Robust policy and claims processing with data integrity.	Improve operational efficiency and reduce costs.	Data Security: High security and data protection measures are required to safeguard sensitive customer and policy data.
Integration with modern digital insurance services.	Ensure system scalability and reliability.	System Downtime: Minimal tolerance for downtime, as it can lead to significant losses and consumer dissatisfaction.

Example Use Case: Modernizing a legacy insurance policy administration system to expose its functionalities for digital insurance services. 

• Best Legacy Application Modernization Technique: Encapsulation 

• Why Encapsulation: Insurance companies often have stable but outdated core systems crucial for policy and claims processing. Encapsulating these systems to expose their functionalities via APIs allows the insurer to quickly enhance and extend application features without modifying the core application. This is particularly beneficial for integrating with new digital insurance services, improving customer experiences, and enabling faster deployment of new features. 

• Tools Required: API Management Tools, Integration Platforms, Service Mesh. 

Government Organizations 

Requirements	Goals	Constraints
Secure and reliable service delivery to citizens.	Improve accessibility and user experience for citizens.	Budget Constraints: Limited funding and budgetary constraints restrict the extent of legacy application modernization efforts.
Compliance with data protection and privacy laws.	Enhance system performance and scalability.	Regulatory Compliance: Adherence to strict data protection and privacy laws, such as GDPR.
Ability to handle large volumes of data and user interactions.	Reduce operational costs and improve efficiency.	Legacy Infrastructure: Older, often proprietary systems are difficult to update or replace.

 Example Use Case: Modernizing a citizen service portal to improve accessibility, performance, and scalability.  

• Best Legacy Application Modernization Technique: Rearchitecting  

• Why Rearchitecting: Government systems often need significant architectural changes to meet modern demands. Rearchitecting allows these systems to be rebuilt using modern technologies and architectures, such as microservices, to improve performance, scalability, and security. This approach can improve the user experience and ensure the system can manage increased traffic and new functionalities. 

• Tools Required: Application Development Frameworks, Microservices Tools, Cloud-Native Development Tools. 

Healthcare

Requirements	Goals	Constraints
High standards for data security and patient privacy (e.g., HIPAA compliance).	Improve patient care and data accessibility.	Regulatory Compliance: Compliance with healthcare regulations like HIPAA, imposing strict data privacy and security standards.
Reliable and continuous access to patient data.	Enhance system performance and reduce costs.	Data Sensitivity: Handling highly sensitive patient data requires rigorous protection measures.
Integration with various healthcare systems and devices.	Ensure system scalability to handle increasing data volumes.	System Availability: Continuous system availability is needed to ensure uninterrupted patient care and services.

 Example Use Case: Exposing healthcare data from a legacy Electronic Health Record (EHR) system using APIs to offer telehealth features.  

• Best Legacy Application Modernization Technique: Encapsulation 

• Why Encapsulation: Healthcare organizations often prefer to keep their data on-premises due to stringent security constraints and compliance requirements. Encapsulation allows healthcare organizations to modernize their systems while maintaining data control, compliance, and operational continuity. APIs wrap legacy systems with modern interfaces, minimizing downtime and facilitating seamless integration with innovative solutions. This approach ensures data remains secure on-premises, aligning with regulatory requirements like HIPAA, and enhances system interoperability by connecting with advanced tools like telehealth platforms.

• Tools Required: API Management Tools, Integration Platforms, Service Mesh. 

Banking

Requirements	Goals	Constraints
High security and compliance with financial regulations.	Enhance customer experience through digital channels.	Regulatory Compliance: Strict regulations and compliance requirements limit the scope of changes and necessitate extensive validation and auditing.
Robust transaction processing and data integrity.	Improve operational efficiency and reduce costs.	Data Security: High levels of security and data protection measures are required to safeguard sensitive financial data.
Integration with modern digital banking services.	Ensure system scalability and reliability.	System Downtime: Minimal tolerance for downtime, as it can lead to significant losses and customer dissatisfaction.

 Example Use Case: Modernizing a legacy core banking system to expose its functionalities for digital banking services.  

• Best Legacy Application Modernization Technique: Encapsulation  

• Why Encapsulation: Banks often have robust but outdated core systems. Encapsulating these systems to expose their functionalities via APIs allows the bank to quickly enhance and extend application features without modifying the core application. This is particularly beneficial for integrating with new digital banking services, improving customer experiences, and enabling faster deployment of new features. 

• Tools Required: API Management Tools, Integration Platforms, Service Mesh. 

Retail

Requirements	Goals	Constraints
High performance and availability during peak shopping times.	Enhance customer experience across all sales channels.	Seasonal Demand Fluctuations: Systems must handle high traffic during peak shopping seasons without affecting performance.
Integration with multiple sales channels (e-commerce, in-store, CRM, mobile).	Improve system scalability and performance.	Complexity in Data Integration: Complexity can lead to delays in legacy application modernization projects and increased costs due to the need for custom development and extensive testing.
Effective inventory management and data analytics.	Optimize operational costs and increase sales.	Security Concerns: Protecting customer and payment information from cyber threats and ensuring compliance with payment card industry (PCI) standards.

Example Use Case: Modernizing an e-commerce platform to support a multi-channel retail strategy and improve performance during peak shopping seasons.  

• Best Legacy Application Modernization Technique: Replatforming  

• Why Replatforming: Retailers must ensure their e-commerce platforms can manage high traffic and provide a seamless shopping experience. Replatforming the application to a cloud environment with minimal code changes allows the retailer to leverage cloud services like managed databases, auto-scaling, and content delivery networks (CDNs). This approach improves performance, scalability, and cost-efficiency. 

• Tools Required: Cloud Migration, Database Migration Services, Application Management Tools  

Modernize Your Legacy Applications with Astera

Legacy application modernization offers a pathway to transform outdated systems into agile, efficient, and scalable applications that meet your businesses’ evolving demands. However, modernization requires careful planning, the right strategies, and the right tools.  

Astera offers the ideal solution for legacy application modernization, providing powerful features designed to streamline and enhance the modernization process. 

• Comprehensive API Design: Develop APIs effortlessly using our extensive library of connectors, transformations, and query parameters. Create data-intensive pipelines and integrate external APIs for services like payment processing, social media, CRM, and ERP to enhance your application’s functionality. 

• Real-Time Monitoring and Analytics: Track real-time API usage to optimize legacy applications. Identify performance issues swiftly and enhance efficiency. Use our built-in dashboard for visual performance metrics, detailed reports, and logs to inform future improvements. 

• Streamlined API Lifecycle Management: Manage your API lifecycle from one platform. Oversee design, testing, publishing, and monitoring with ease. Modify endpoints, conduct runtime tracing, and benefit from instant data previews, automated testing, and immediate API deployment. 

• Powerful Data Processing: Design and implement integration processes quickly with our intuitive interface. Handle large volumes of data from various sources, including legacy systems and modern data warehouses like Redshift, BigQuery, and Snowflake. 

• Advanced Security and Compliance: Protect sensitive data with encryption and access controls, ensuring secure data access and transfer during modernization. 

• Automated Data Migration: Ensure smooth transitions from legacy systems to modern applications with automated data movement, reducing manual effort and minimizing errors. 

• Effective Data Quality Management: Address data quality issues during migration and handle format or structure disparities to ensure accurate outputs from modernized applications. 

Final Words

Legacy application modernization can help you enhance organizational efficiency, security, and scalability while reducing costs. By updating legacy applications, you can align with current business needs and gain a competitive edge. 

Astera offers comprehensive solutions for seamless legacy application modernization, including API design, real-time monitoring, lifecycle management, data processing, security, and automated migration. 

Take the first step towards modernization. Discover how Astera can modernize your legacy system within minutes – sign up for a free trial now!