5 Approaches to Legacy Modernization

Key Takeaways

• Legacy modernization market is doubling from $19.82B in 2024 to $39.2B by 2029
• Five strategic approaches exist - rehosting, refactoring, replatforming, re-architecting, and full replacement
• 64% of IT decision makers are investing in AI/ML cloud services, driving modernization needs
• Microservices architecture is essential for breaking down monolithic applications into manageable components
• Future-proofing requires comprehensive planning with clear roadmaps, timelines, and success metrics
• AI and ML are transforming modernization through automated code analysis, predictive modeling, and optimization
• Success depends on balancing technical, business, and organizational factors in the decision-making process
• Phased implementation minimizes risk while maximizing learning and adaptation opportunities

What is Legacy Modernization?

Legacy system modernization is a type of digital transformation that involves upgrading and transforming outdated technologies and infrastructure into current, more reliable solutions. When new advancements in technology are realized – or old tech is revamped and upgraded – legacy systems that were once the latest in business computing become liabilities in the form of maintenance costs, security and compliance risks, and performance inhibitors. The goal of such digital transformation is to augment business processes and enhance customer experiences.

What is Driving It?

Perhaps the leading driver of most legacy system transformations – regardless of the latest advancements in technology – is IT flexibility and agility to enable business innovation. With the advent of Artificial Intelligence, businesses are now fast-tracking these transformations and scaling business solutions at breakneck speeds. Just last year, 64% of IT decision makers reported plans to invest in AI and machine learning Cloud-based services in 2025. Such investments enable businesses to learn from their data through analytics, create through generative AI, streamline processes through machine learning, better serve customers through predictive analytics, and provide better customer support through natural language processing chatbots.

How is it Going?

Legacy modernization is poised to be a long-term, ongoing process for businesses that wish to stay competitive and, ultimately, survive. In fact, Application Modernization Services, a market with an estimated value of $19.82 billion in 2024, is poised to double to $39.2 billion by 2029. After all, cutting-edge technology is only as sharp as what's under development today. While certain strategies can help reduce the costs of transformation, businesses should plan to allocate budgets toward ongoing maintenance and enhancements of enterprise solutions.

What are Considerations for Modernizing Legacy Systems?

Ultimately, the budget and desired outcomes will determine the best course of action for modernizing legacy systems. Perhaps the most important step an enterprise can take is breaking down monolithic applications into microservices: smaller, easier-to-manage components set within well-defined boundaries that are essential to the maintainability of software systems. Per IBM, modernization strategies typically fall within the following 5 categories:

1. Rehosting: Migration with Minimal Changes

Rehosting involves migration of legacy applications to a new environment with little to no changes to the existing code. Best for when a swift transition is required but ultimately is a short-term solution to modernization. This approach, often called "lift and shift," allows organizations to quickly move applications to cloud environments while maintaining existing functionality.

2. Refactoring: Code Optimization

Refactoring involves restructuring existing code for optimized application efficiency without changing external behavior. This approach focuses on improving code quality, performance, and maintainability while preserving functionality.

3. Replatforming: Strategic Platform Migration

Replatforming involves migrating legacy applications to a different platform that would require code adaptation. This approach balances the speed of rehosting with the benefits of platform optimization.

4. Re-architecting: Comprehensive System Redesign

Re-architecting involves redesign of an enterprise's existing application architecture to meet modern standards. This approach fundamentally transforms how applications are structured and deployed.

5. Full Replacement: Complete System Overhaul

Full replacement involves a complete swap of legacy systems that could potentially cause disruptions to business processes. This approach starts fresh with entirely new systems and applications.

Why Does It Matter?

Legacy modernization is vital for businesses to stay competitive in an increasingly digital world. Where outdated systems can stifle innovation, hinder operations, and create security risks, a modernized IT infrastructure empowers businesses to focus their attention on harnessing the latest and greatest technology the market has to offer. It's no wonder that cloud-based AI/ML capabilities were cited by a third of ITDMs as top growth areas for cloud deployments.

With cost cited as the leading obstacle for cloud deployments and legacy modernization, it's important to partner with a team that not only understands the technical complexities of modernization but also delivers a forward-thinking, cost-effective solution that maximize ROI, minimize disruption, and align with long-term business goals.