Digital transformation – The introduction to legacy system modernisation

Digital transformation is crucial for improving efficiency, business performance, and customer service. However, it’s no easy task, especially for companies still relying on outdated legacy systems.

Businesses tend to stick with on-premise software. The lack of software engineering capability and capacity and the business criticality of specific applications are some of the main reasons companies get stuck with outdated software hosted in on-premise data centers.

That’s mainly because digital transformation is costly. However, what many usually don’t realise is that the longer they hold off, the more complicated, expensive, and resource-intensive the process becomes.

So, what are the biggest challenges of modernising legacy systems, and which strategies should companies prioritise? We break it all down in this article.

Understanding the challenges of outdated systems

Technology evolves rapidly, and without regular updates, even the most advanced software becomes outdated and difficult to manage. Simply put, no matter how modern a system is, if it isn’t continuously improved, it will eventually become obsolete.

Legacy systems also come with high maintenance costs. As they age, they become more expensive to support, updates take longer, and fewer experts remain who understand them well enough to keep them running efficiently.

For example, one of our clients had an on-premise payment system so complex that only one person knew how to manage it. This created a major risk, prompting them to migrate to the cloud. The result? Maintenance became significantly easier, and they eliminated their reliance on a single expert.

Another major drawback of legacy systems is their reliance on outdated technologies. This makes integration with modern platforms difficult, preventing businesses from fully leveraging new tools and innovations. Without the ability to adapt, companies risk falling behind in an increasingly digital world.

In the long run, outdated systems stifle innovation, drive up costs, and leave businesses struggling to keep pace with more agile competitors.

Integration issues expose security vulnerabilities

Outdated platforms often result in data silos, limiting information sharing and collaboration across departments, which leads to inefficiencies and hinders overall business performance.

And, the statistics prove the same. A SnapLogic survey found that 22% of IT decision-makers have data trapped in systems they don’t know how to move, while 79% have undocumented data pipelines they fear updating.

However, integrating legacy systems with modern technologies isn’t just a technical hurdle – it’s a growing security risk with serious business consequences. Without the ability to integrate with modern security tools, legacy systems create blind spots in cybersecurity, leaving organisations unable to detect or respond to threats effectively.

For example, did you know that many businesses in critical industries, such as healthcare, defence, or energy, are still running on Windows XP, for which Microsoft ended mainstream support? According to recent security reports, a wide range of internet-connected devices, such as MRIs, CAT scans, or X-rays still use this operating system. Without security updates and patches, these systems become more vulnerable to cyberattacks.

Legacy system maintenance costs are a major drain

With aging hardware, custom fixes, and a shrinking pool of skilled professionals, legacy systems represent a significant burden for companies. According to the SnapLogic survey mentioned above, nearly two-thirds of businesses invest over $2 million annually in maintaining and upgrading these systems.

In addition to direct expenses, legacy systems hinder progress by limiting integration with modern technologies. This forces businesses to rely on costly workarounds, while frequent downtime impacts productivity and revenue.

As maintenance costs escalate, organisations must weigh the option of continuing with outdated systems or investing in more efficient, long-term solutions.

The mechanics of legacy system transformation

Choosing the right approach for legacy system modernisation depends on multiple factors, including the current system’s complexity, available resources, and the level of disruption the company is ready to embrace.

Working with a technical partner can significantly ease the process of legacy system modernisation. The value lies in their expertise in navigating complex technology transitions, from initial discovery through to migration, testing, and final implementation. That way, companies can align their software modernisation strategy with their long-term business goals and, in that way, minimise risk and maximise the impact of the transformation.

Key legacy system modernisation strategies

Modernising legacy applications can take various forms, depending on your organisation's specific needs, budget, and goals. Here are several common strategies applied:

Rehosting

Rehosting, or "lift and shift," is a migration approach that transfers applications, workloads, or websites to a new hosting environment – often from on-premises infrastructure to the cloud – without altering their structure or functionality. This method focuses on quickly moving systems with minimal changes, ensuring a smooth transition with little disruption.

While rehosting may not fully leverage modern technologies, it allows businesses to reduce downtime, minimise disruption, and benefit from a more flexible environment faster. Understanding the code structure is essential for ensuring a smooth migration and setting the foundation for future enhancements.

Refactoring

Refactoring is the process of improving the internal structure of existing code without changing its external functionality. With the goal of enhancing software scalability, security, and performance, this process focuses on boosting code readability, maintainability, and efficiency while addressing technical debt.

Refactoring is not about fixing bugs but is a proactive measure to ensure the software's long-term quality and sustainability. Some techniques used in refactoring are simplifying complex logic, rewriting the code to use design patterns for solving recurring design problems and removing duplicate code.

Replatforming

Replatforming involves migrating legacy applications to a new platform or infrastructure, offering enhanced performance and scalability. While it usually requires some code adaptation to ensure compatibility with the new environment, this approach allows businesses to modernise their systems without a complete overhaul.

This approach improves efficiency, unlocks better resource utilisation, and sets a more flexible basis for future growth, all while minimising the risks and costs associated with a full system rebuild.

Re-architecting

Re-architecting involves completely redesigning the software architecture to align it with modern standards. This approach is more complex, as it often requires a phased strategy to address architectural challenges and ensure a smooth transition.

While it takes more time and resources, re-architecting provides long-term benefits, such as enhanced flexibility, scalability, and alignment with business goals. It allows organisations to fully capitalise on the capabilities of modern technologies, supporting future growth and innovation.

Full replacement

When legacy systems become too outdated or difficult to maintain, a full replacement may be the most viable solution. It offers the opportunity to implement modern technologies that better meet current and future business needs. While it provides a fresh start, it can also be disruptive, requiring careful planning and execution to minimise downtime and ensure a smooth transition.

Despite the potential challenges, replacing legacy systems can deliver substantial long-term benefits, including enhanced efficiency and the ability to leverage cutting-edge technologies for future growth.

Addressing the potential challenges of legacy system modernisation

Modernisation journeys vary from organisation to organisation, but many face these common challenges during the process.

Technical debt

Modernising legacy applications can be complex and often hindered by technical debt – the cost of choosing a quick, short-term solution over a more thorough, long-term one. Similar to financial debt, it reflects a trade-off between immediate benefits and future expenses.

Statistics prove the same. According to research studies, around 30% of CIOs claim that over 20% of their technical budget, initially allocated to new products, ends up being spent on addressing issues related to technical debt.

One of the most effective ways to manage technical debt is the transition to cloud-native systems that provide scalability and cost-effectiveness. Additionally, embracing the DevOps methodology helps streamline software delivery by automating and integrating development and IT organisations.

Security issues

Security is a key concern during legacy system modernisation – and the perfect time to strengthen and update security measures. That is where having a reliable tech partner can help – domain experts that would conduct risk assessments, define your key security requirements and ensure compliance with key regulations.

Future-proofing

To get the most out of the digital transformation process, make sure you have a detailed roadmap that outlines the goals, methodologies, timelines, and resources needed for both the transition and ongoing maintenance.

One of the most important steps in preparing your system for future growth is API development, which ensures smooth integration with existing systems and other third-party platforms.

Additionally, using frameworks can streamline development by providing pre-built solutions for common tasks.

It’s time to start transforming your digital ecosystem

Legacy system modernisation isn’t a one-time event – it’s an ongoing journey that will look different for every organisation. It focuses on improving core systems gradually, with a low-risk strategy, rather than reinventing what already works. That is why laying a strong foundation for digitalisation is crucial for its future success.

Want to learn what works for your business? Contact us and learn how we can help.