6 Ways to Overcome Cost and Complexity in Application Modernization 

Key Takeaways 

• Start small; don’t try to do everything at once. Modernize systems gradually to reduce cost, risk, and disruption.
• To improve scalability and reduce infrastructure costs, use cloud-native technologies.
• It’s better to focus modernization efforts on applications that will give a better business impact on maximizing ROI.
• It’s important to Address Technical Debt During Modernization.
• You can balance performance, compliance, and cost well by using both public and private cloud environments strategically.

Is your legacy software holding your business back?

I am not sure about you, but almost 75% of the organizations have discovered their legacy systems as a barrier to digital transformation. In fact, a leading financial firm has recently spent around $20 million on just maintaining the outdated software. (Source: Gartner) Like, literally, this money could have been used for the company’s innovation. 

And as Satya Nadella, the CEO of Microsoft, also said, “Every company is a software company. You have to start thinking and operating like a digital company.” This quote indicates that companies should become ‘digital first,’ which starts by modernizing complex, costly, and outdated systems. Even traditionally manual sectors, like accounting, are seeing major transformation — see How AI Can Improve Accounting Firm for an example.

But no doubt, this process is overwhelming for many IT leaders. So here in this article, we will discuss how you can make this modernization manageable and affordable without much effort. Below are the 6 proven ways to overcome the high cost and complexity of this process, and that too without disturbing your business. So let’s get in without wasting any time.

1. Adopt an Incremental Approach Instead of a Full Overhaul 

See, the biggest mistake that people make is when they try legacy system modernization in all the places at once. A complete change may look like a simple solution to you, but it’s also the most expensive and disruptive one.

Why go incremental? Because it allows teams to update old systems piece by piece, which means reduced risk and initial investments. For example, you can start with updating a few unimportant services or backend APIs while not touching the core applications. This way, your files will stay safe.

How Incremental Modernization Lowers Costs 

• Distribute the budget over time.
• Less business disruption.
• Reduces the need for mass re-educating people
• Gives better ROI on each modernization done

This way, you give your teams a chance to learn from the canary deployments, tuned strategies, and how to align them well with modern strategies. 

2. Optimize Costs with Cloud-Native Technologies 

Cloud-native architectures are basically microservices, containers, and serverless functions. It offers its users a scalable, subscription-based alternative to traditional infrastructure-heavy setups.

Case Study: Reducing Costs Through Cloud-Native Adoption 

A global e-commerce company has transitioned its legacy monolith into a microservice architecture on a public cloud platform. The company achieved a 40% reduction in its infrastructure and operational costs within 18 months by using serverless tools like AWS Lambda.

Let’s learn what cloud-native technologies can enable for us:

• Improved scaling to meet demands.
• Automatic resource optimization
• Lower infrastructure management cost

If you have a business, you can use it to set expenditures according to their usage and increase agility.

Fun Fact
NASA once used an 8-inch floppy disk to control systems on some of its spacecraft. This thing proves that even critical systems can survive on legacy tech… for a while!

3. Automate Testing and Deployment 

Manual processes used for testing, provisioning, and deployment are time-consuming and expensive. Also, it is considered error-prone as humans are involved in it.

If you are thinking of entering automation, do it through

• CI/CD pipelines are good for continuous integration and deployment
• Automated testing suits well for faster QA cycles
• Infrastructure as Code (IaC) for consistent and repeatable deployments

Next, we will discuss why this thing matters. 

Automation will reduce the time and effort you will need for modernization. How? Understand it by an example. You can use IaC to replicate the whole environment with just a few lines of code. This process will save you countless hours spent coding with no configuration issues. 

In fact, A report has also revealed that teams using full automation practices deploy 46 times more frequently and recover from failures 96 times faster than other low-performing teams. (Source: LinkedIn)

The Benefits of Automation in Modernization 

• Low development and operational costs
• Rapid commercialization
• Increase deployment success

Updates done by automation make sure that it is not just the fastest, but also the safest and most sustainable. 

4. Focus on High-Value Applications First 

No application is created the same way, which obviously means that some will create more business value than others. And that should be prioritized for modernization, too. 

How to Identify High-Value Applications 

• Evaluate the revenue impact
• Measure how frequently it can be used 
• Access its integration with important workflows.
• Check the technical viability and impact on customers. 

Companies can maximize their ROI soon in their modernization process by focusing on these applications. A valuable app will give you benefits with which you can justify continued investment in the broader modernization strategy.

Fun Fact
The term “DevOps” was only coined in 2009, but now it’s as essential to software as salt is to fries.

5. Reduce Technical Debt Alongside Modernization 

Legacy systems usually have some level of technical debt, be it outdated code, poor documentation, or vulnerable integrations. These things can be the silent reason for your draining resources and slow innovation.

Why is addressing it important?

Because ignoring it during modernization is like renovating a house without fixing its foundation.  And eventually, the cracks will become visible in the future. 

How to Address Technical Debt Effectively 

• Restructure outdated codes during modernization sprints.
• Remove obsolete components 
• Replace old libraries and frameworks
• Document architectural decisions and system dependencies

Adding technical debt management to your modernization journey will help your applications stay flexible and sustainable for a long period of time.

6. Use a Hybrid Cloud Strategy for Cost Efficiency 

This picture displays some major key features of the hybrid cloud strategy. Have a look before reading more for easy understanding.

Relying heavily on the public cloud can sometimes result in unexpected costs or compliance issues. But in a hybrid cloud strategy, workloads are distributed across public and private clouds, which means the best of both worlds. 

IBM’s Hybrid Cloud Report also states that organizations that are using hybrid strategies report 2.5x higher cost savings compared to others that are using a single-cloud approach.

Benefits of Hybrid Cloud Adoption 

• It optimizes costs by running stable and heavy workloads on private infrastructure.
• Use the public cloud for flexible and on-demand needs.
• Meet compliance and data residency requirements.
• Ensures open and flexible architecture

To understand it better, suppose there is a finance company that stores all the sensitive data in a private cloud. While using the public cloud to grow customer-facing apps. This thing balances all performance, security, and cost.

Final Thoughts: Smart Modernization for Long-Term Success 

Now, by the end, you must have understood that Modernizing applications doesn’t have to be a budget-breaking process all the time. But for that, you have to do it smartly and not quickly.

An incremental and well-planned step, especially those that are focused on business value, automation, and cloud-native strategies, can reduce both cost and complexity. 

Hereby, one last thing everyone should remember is that Modernization is not a general process, but with the right strategy, it can be the foundation for long-term digital success— especially in fast-evolving industries like finance, where The Future of Modern Finance Begins!

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