11 Questions to Ask: Building Cloud Modernization Strategy

Feb 17, 2021

Digital Transformation

| 13 min read

The world is rushing towards a revival post the pandemic, and all the organizations are trying to get back on their feet with modern and future-ready infrastructure. A study by Twilio suggests that the urgency of adapting to Digital and Cloud-based modes of business during this pandemic has fast-forwarded the Digital transformation by five years. Thus, organizations can't sustain through their several decade-old legacy apps anymore.

Hence, the trend of Legacy Apps Cloud Modernization is seeing rapid growth around the globe. Keeping in mind the crucial role these Legacy apps play in an organization and the desperate requirement for modernization of these apps, there are 11 important questions you need to ask before your Next Legacy Apps Cloud Modernization Program.

Kiran Chandran

Director - Delivery

Digital Transformation

Birlasoft

Sumedh Vipradas

Senior Solutions Architect

Birlasoft

Why Is Legacy Apps Modernization Gaining Ground?

Legacy Apps Modernization programs are seeing an increase in demand in recent years. A report by MarketsandMarkets says the global application modernization services market size is expected to grow from USD 11.4 billion in 2020 to USD 24.8 billion by 2025, i.e., 16.8% CAGR.

Various factors are driving this demand, and one of the key-factors is COVID-19 restrictions that are still in place. As COVID-19 restrictions have forced employees to work from home, the organizations and businesses are struggling to have a smooth workflow. The obsolete programs and software in the organizations have given up under the immense pressure of increased app-based digital business transactions. This has forced organizations around the world to modernize their Legacy Apps.

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The COVID restrictions have also added to the already happening shift of businesses from traditional servers to cloud-based servers. This shift again has been a key driving factor of application modernization for a long time. According to Gartner, over 45% of what's spent on "system infrastructure, infrastructure software, application software, and business process outsourcing will shift from traditional solutions to the cloud" by 2024.

Other aspects of technological advancements, such as using DevOps, Cognitive artificial intelligence & machine learning, by the service providers to automate, quickly develop, test and release the software and apps, have improved the efficiency of the programs. Adapting the Microservices architecture in developing software has also effectively reduced the timeframe of overall application modernization programs. Thus encouraging the organizations to worry less and modernize more.

A study by DataStax in 2019 on 304 IT executives at large enterprises suggested that 100% of them were in the process of IT infrastructure modernization to keep up with the advancing world.

Reasons Behind Unsuccessful Cloud Application Modernization Programs?

Modernization of Legacy Apps is a critical process, as the entire organization depends on that software. Thus, any error in the process could lead to the failure of the Modernization Program.

The latest report from Advanced suggests over 74% of organizations that have attempted a legacy application system modernization project has been unsuccessful with it. The report titled: 2020 Mainframe Modernization Business Barometer says one of the major reason behind such a huge percentage of failed attempts is "a disconnect of priorities between technical and leadership teams."

Some other key reasons behind unsuccessful Modernization Programs are:

Forcing your business to adapt to new software, rather than customizing the software for your business need.
Trying to replace the entire traditional software ecosystem with a new one at once, rather than gradually migrating
Designing for far-fetched flexibility, which ultimately leaves apps with no strength for core operational requirements.
Adopting a rigid software architecture that tends to be inflexible towards further evolution demands within the next five years.
Moving all-in with the Legacy Application modernization without proper Customer Experience assessment. Modernization of Legacy apps and the development of a software system requires consumer experience and feedback on every stage, lack of CX assessment can also lead to program failure.

Questions You Must Ask As You Build Your Application Modernization Strategy

To avoid any kind of failure in the Legacy Application Modernization program, organizations need to have a clear picture of the requirements, risks, and benefits involved. The following 11 Q&As will give you a better understanding of all the crucial aspects at play in the modernization program.

Top Questions to Ask While Building Your Cloud Application Modernization Strategy

What is opportunity loss, the business risk of not modernizing?
What are my business risks involved in modernization, and how do I mitigate the risks?
What were the challenges that prevented modernization?
Are there non-tangible benefits to the Modernization program?
Has an application assessment been undertaken? Is application business value, usage information, stakeholder information available? Has a cost-benefit analysis been performed? Is application health check performed?
Do I modernize and then innovate, or I provide innovative extensions before re-writing my legacy system?
Do I take a tactical approach or a strategic approach to modernization? How do I get a quick ROI?
How do I train or build a team for the transformation and future-readiness?
Do I have the governance models, operating model in place to ensure the modernization program is run optimally without cost overruns, security risks? Do I have a COE in place to guide the teams towards modernization?
Do I have POCs, reference architecture, landing zones in place to ensure successful modernization?
How do I ensure buy-in from Financial leadership, Technical leadership, and Business leadership?

1. What is opportunity loss, the business risk of not modernizing?

A research report published in 2018 by Vanson Bourne reports organizations opting to modernize their Legacy IT systems could see a 13% decline in their overall operational cost.

The same study also reports over a 14% potential annual revenue boost, which can translate to around $1 billion annually, for organizations with modernized legacy apps.

This means the organizations ignoring the requirements of their legacy application modernization will be operating at a higher cost. Such Organizations will eventually be compromising on scaling opportunities, suffering the increase in technical debt, and at last, not finding the operations sustainable.

However, operating at a higher cost is a fraction of the bigger picture. The demand for software capable of executing almost all the transactions digitally, and providing end-user experience through AI-enabled bots, has seen tremendous growth during the pandemic.

To keep up with the Digital Transformation, the organizations will need to facilitate a plethora of Intelligent Apps, Cognitive Services, and servers that can fulfill the demand of newer modes of user-engagement.

The outdated Legacy Apps will only work as a roadblock, leading to the loss of not many, but all the opportunities that could have been easily cashed upon.

2. What are my business risks involved in modernization, and how do I mitigate the risks?

Gartner Research in 2019 suggested that businesses should beware of potential quality losses and cost factors while moving away from legacy apps. There are risks involved, like being in a skill deficiency state to operate modernized platforms, facing security issues on newer platforms, etcetera.

However, here are some of the ways recommended to mitigate the risks of modernization-

Modernization of legacy apps should be assessment-based, as per the requirements of business and industry, and not a general trend-based.
Methods like DevOps or Agile can be used to achieve an end-product based on the user experience and feedback.
The migration could take a long period. Thus, the total cost of transitioning should be considered beforehand.
Automating the app-development and testing process can allow a faster transition time and rule out possibilities of error.
The new platform should be investigated for the flexibility requirements of rapidly growing technology for a longer time horizon.

The steps taken to mitigate business risks during Modernization are best done in tune with your Legacy Apps Cloud Modernization service provider.

3. What were the challenges that prevented modernization?

2018 BMC Mainframe Survey suggested thousands of global-scale companies still rely on 30 to 60 years old corporate software. While modernization has seen a boost in recent years, a few factors are acting as resistance.

However, organizations are beginning to realize that relying on outdated apps is a bigger risk and needs to be resolved with instant Legacy application modernization.

Cost is the biggest factor. Migrating to modern platforms requires investment in technology, skills, infrastructure, and other areas.
Organizations try to averse to the risk of operational failures in case the modernization of legacy apps doesn't go as planned.
Organizations usually sign long-term contracts with Data Centers to avail their services; the contracts then become a roadblock in the migration of servers and software.
The transition of a business from decades-old legacy apps to new cloud-based servers and modernized apps can create struggles for the fundamental ways of doing business.
Other challenges like region-specific requirements and restrictions, concerns regarding security on newer platforms, also delay the modernization.

4. Are there non-tangible benefits to the Modernization program?

Yes, there are plenty of benefits of Modernization Programs making these programs a priority for organizations around the globe. The modernization programs aren't just trends but rather an evolutionary step towards equipping the organizations with platforms and frameworks that can handle the next-gen business requirements.

A shift from outdated Legacy apps to the latest software instantly allows your business to benefit from all the technological advancements in the field of AI, Intelligent Apps, and Automation that happened in the recent decade. These intelligent integrations to the organization's infrastructure boost user engagement and present newer and scalable opportunities to your organization.

Here are a few listed benefits among many:

Modernization helps organizations in cutting down maintenance and operations costs incurred due to Legacy apps. An old survey by Unisys and MeriTalk reported that the Federal Govt. spends about $35 billion in mere maintenance of the Legacy apps.
Modernization allows organizations to integrate AI capabilities into their Apps like Chat Boats, Intelligent Assistance to end-user, thus ensuring customer satisfaction.
Integration of AI through modernization also reduces manual labor within the organization, as the tasks like Data Entry, Security checks, troubleshooting, can be automated.
Modernized apps provide an unflawed performance, ramping up the organization's overall operational speed and service quality.

5. Has an application assessment been undertaken? Is application business value, usage information, stakeholder information available? Has a cost-benefit analysis been performed? Is application health check performed?

One of the crucial aspects of the Modernization of Legacy Apps is to evaluate and overhaul the system to plan the transition process. Organizations depend on their Legacy apps for every single business and operational needs. Thus, it is essential to do an application assessment and decide which of the apps require modernization, and which require other innovative approaches.

In such a scenario, Gartner's TIME analysis comes in handy for the organizations. The simple approach of the model allows it to be implemented on any level and scale, and it assists the organization in quickly assessing which of the software requires priority attention.

TIME analysis categorizes the application in four ways i.e., Tolerate, Invest, Migrate, or Eliminate.

Another crucial aspect is the evidence-based business value analysis of an application. The analysis of business value and usage of the application should be done with the help of monitoring services to extract the Usage information and Business Value to act accordingly.

6. Do I modernize and then innovate, or I provide innovative extensions before re-writing my legacy system?

In a report based on the low-risk approach to Legacy Application Modernization, Gartner advises CIOs to find alternative and innovative ways to modernize rather than re-writing the entire system from scratch at once.

Gartner research director, Stefan Van Der Zijden, says "Application modernization is not one' thing.' If you're faced with a legacy challenge, the best approach depends on the problem you're trying to solve. Replacement isn't the only option."

Utilization of Legacy Apps API, and Microservices, can be a few of the ways through which organizations can innovate their way through Modernization with a low-risk approach. While modernization is a time-consuming and gradual process, organizations can make Legacy Apps API enabled, which will allow organizations and users to engage in business using extensions, and a set of intermediaries during the transition. Integration of Power Apps, AI-enabled bots, and other innovative ways can take the load off of the Legacy Systems during the Modernization.

7. Do I take a tactical approach or a strategic approach to modernization? How do I get a quick ROI?

To ensure a successful modernization in the organization, you need to take both routes simultaneously. While talking about a quick ROI, you need to take a tactical approach, which focuses on short term targets. The best way to implement a tactical approach is to break down the services in the form of microservices to give your organizational services a modular form, thus eventually increasing the pace of ROI. The importance of a strategic approach comes into play in the long run, where the organization's overall growth is more prominent than the quick ROI.

In addition to that, creating a transition strategy in collaboration with your Modernization Service provider can assist you better in deciding the approach beneficial for your business.

8. How do I train or build a team for the transformation and future-readiness?

The legacy application modernization programs can be utilized to full potential only with the trained employees. Building such a team can be a task, but there are few ways through which an organization can prepare a future-ready team.

Internal/External training - The organizations require to invest in the training of the employees per the new technology's need. While internal training can be useful, arranging external training with consultants and specialists specific to platforms and programs can be more beneficial.
Outsourcing – Organizations should outsource the tasks to the experts in the field. Training employees for new developments every time might consume more resources than outsourcing the requirement.
Modernization brings cultural change into the organization. Adoption of Cloud and DevOps requires the hiring of a workforce with specific capabilities. It also demands coordination between development and operation teams that was never required before under Legacy Apps. Such changes require specific training for the employees and the teams.

9. Do I have the governance models, operating model in place to ensure the modernization program is run optimally without cost overruns, security risks? Do I have a COE in place to guide the teams towards modernization?

Yes, all these are necessary to ensure a safe and successful legacy application cloud modernization program. While Cloud is the most efficient way today, it has its risks and challenges. Below are the insightful findings of the State of the Cloud Survey conducted by RightScale in 2018. This clearly depicts the Cloud challenges related to Security, Cloud cost, skill challenges, etcetera faced by organizations.

10. Do I have POCs, reference architecture, landing zones in place to ensure successful modernization?

Having reference architecture and POCs ready before the initiation of the modernization process is essential. As the report by Advanced (mentioned above in the article) states that 74% of the organizations fail the modernization program, one of the key reasons behind the failure is not taking enough steps to mitigate technical risks. Ensuring technical readiness before hopping on the train of Legacy application cloud modernization is the best possible way of finetuning the program's capabilities with the requirements of your business.

11. How do i ensure buy-in from financial leadership, technical leadership, and business leadership?

The best way to ensure buy-in from leadership for the legacy application modernization program is to choose the right business case for modernization. While preparing a business case, the first important step is to filter and identify the legacy apps in need of modernization. Other important steps to follow are setting the goal to be achieved by modernization; evaluating the cost of the program; create a roadmap to mitigate the risks of modernization, etcetera. Given that modernization's organizational benefits are loud and clear throughout the entire industry, and there are enough stats and cases to support that, it shouldn't be a task to frame a perfect business case per your organization's requirement.

A study by McKinsey has found that the organizations with already adopted modernization have seen an increase in IT productivity by 30% and an increase in motivation of employees by 40%. All these benefits should give organizations more reasons to consider modernization.

There is indeed a hesitation around the legacy application cloud modernization program due to the cost and security factor. However, these factors can be eliminated by a proper risk mitigation roadmap that plans out all the necessary elements. The organizations should create a business case by taking buy-in from stakeholders; perform an Application Assessment; establish a Modernization Governance Model; focus on a Tactical approach for quick ROI and a Strategic approach for overall growth, and have a Reference architecture in place to ensure a flawless and successful Legacy Apps modernization program.

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