What Is Legacy Modernization?

While it may seem more cost-effective to keep using an established system for as long as possible, outdated infrastructure can drive expenses that may not be obvious at first. Legacy system maintenance costs IT departments $40,000 per year on average.

Security vulnerabilities are also top-of-mind for more than 75% of technology professionals when it comes to legacy systems. The average cost of a data breach in 2025 is $4.4 million. While this has decreased 9% compared to the previous year, it is still higher than many organizations can afford, and legacy systems can increase the risk of these events.

Modernizing these legacy systems can reduce costs, improve security, boost performance, and ensure compliance. Here’s what you need to know about legacy modernization, including why it’s important, what it involves, and best practices.

What Is Legacy Modernization?

Legacy modernization refers to the process of replacing or updating architecture, IT infrastructure, and software systems that are out of date. The goal of legacy modernization is to improve the scalability, agility, and efficiency of these systems.  

What Is the Difference Between Legacy Modernization and Digital Transformation?

While legacy modernization refers to a tactical process of updating technology, digital transformation is the strategic integration of those technologies into business operations and the user experience.

Digital transformation often includes legacy modernization initiatives, like cloud migration and mainframe modernization. These targeted projects feed into its broader scope, which can involve changing entire business workflows and models, shifting the internal culture, or improving business value.

Here’s what Ravikrishna Yallapragada of Accenture had to share on the Cloud Currents podcast about why legacy modernization is foundational to holistic change during his time as AVP, Engineering for Google Cloud Partnership at GlobalLogic:

“Technology is growing so fast nowadays. If you are not able to understand where it is going… and then if you don’t ramp up yourself, it’s basically going to be difficult for anything that you [do to] add value to your customers or to any business problems.”

Ravikrishna Yallapragada, Senior Manager of Accenture Google Business Group

The Importance of Modernizing Legacy Systems

Companies are migrating and modernizing for several reasons. Older systems that once performed key business tasks effectively can be more expensive to maintain, prone to security vulnerabilities, and difficult to scale. They can also be hard to integrate with new platforms and powerful cloud-native tools.

For business leaders, modernization is a growth strategy that extends beyond technology decisions. Done right, it can shorten product launch timelines, reduce customer churn, and open up new digital revenue streams. Cloud-native platforms make it possible to innovate faster and scale on demand, aligning IT initiatives with business outcomes.

What Are the Benefits of Legacy Modernization?

Legacy modernization can be a complicated project, but it can also be very rewarding for organizations that take the time to do it well. After IT modernization, businesses can see improved performance, greater cost savings, and improved adherence to compliance measures. They can also improve their customer experience and innovate more efficiently.

Improved Efficiency and Performance

Outdated legacy systems can get clunky over time. Modernization projects can streamline efforts and even automate formerly manual tasks. This can reduce time to market and give team members more time to innovate and work on high-value tasks.

Modernization efforts can also include implementing new architecture like microservices, which help teams test, update, and deploy features more quickly, only affecting parts of the code instead of entire applications. 

Cost Savings and ROI

While modernization projects can come with a large upfront investment, they can also result in better return on investment (ROI) and cost savings in the years to come. Maintenance for outdated systems can get expensive over time, especially if the components that support the systems are not actively updated by your vendors.

Old systems can also come with more hardware investments and capital expenditures (CapEx), which can be costly to upgrade or replace quickly enough to keep up with modern technologies. Moving to a cloud-based infrastructure can shift organizational spending from CapEx to OpEx (operating expenses), in which you only pay for the resources you use. Paired with ongoing cloud cost optimization practices, this can reduce costs considerably.

Beyond helping organizations keep the lights on, these cost savings open up new reinvestment opportunities to spur innovation.

Increased Agility and Innovation

Many businesses turn to modernization to improve their ability to scale and adapt to new trends in the market. Legacy systems can struggle with incorporating artificial intelligence and machine learning (AI and ML) solutions, or with supporting Internet of Things (IoT) devices, whereas modern systems can support and grow with these technologies.

Moving to a modern, API-driven architecture can help organizations integrate innovative solutions and be ready for what’s next. This translates to greater competitive differentiation and business adaptability.

Enhanced Security and Compliance

Sometimes, modernization projects come out of a necessity to meet regulatory standards or safeguard against vulnerabilities. Legacy systems may not be able to meet current compliance standards such as HIPAA or GDPR, which can result in fines or regulatory actions.

Vulnerabilities in legacy systems can also make it easier for cybercriminals to infiltrate, increasing the risk of ransomware attacks and other cyber threats. Incorporating modern security measures like encryption, access controls, and multifactor authentication (MFA) into your environment can improve security and ensure compliance.

Better Customer Experience

Customers expect all businesses to deliver seamless digital experiences. They often want their interactions with your systems to be personalized and frictionless. Legacy modernization can improve the customer experience by offering better user interfaces, improving consistency across platforms, and enabling personalization with data-driven recommendations.  With better CX comes stronger retention, upsell opportunities, and revenue growth.

Legacy Infrastructure vs. Legacy Applications: The Strategist’s Dilemma

When leaders talk about legacy modernization, they’re often referring to both infrastructure and applications. While these areas are connected, they present very different challenges for cloud strategists, and a successful modernization strategy must address both in parallel.

Modernizing Legacy Infrastructure

Legacy infrastructure often includes on-premises servers, storage, and networking equipment, or virtualized environments. These systems may be reliable but can become cost-heavy and inflexible compared to cloud-native alternatives. Strategists must weigh whether to:

• Migrate workloads to infrastructure-as-a-service (IaaS) solutions on AWS or Azure to improve scalability and reduce CapEx.
• Adopt managed services such as Azure Site Recovery or AWS Elastic Disaster Recovery for resilience and compliance.
• Strengthen governance and compliance w ith native cloud tools like AWS Security Hub, Azure Policy, or Azure Blueprints to automate controls.

The outcome of infrastructure modernization is a more agile, cost-efficient foundation that supports hybrid or multicloud strategies without exposing the business to security risks.

Modernizing Legacy Applications

Applications are where business value is delivered, and modernizing them is often the most complex step. Legacy apps may be monolithic, difficult to scale, and not built for today’s API-driven, AI-ready world. Common strategies include:

• Rehosting (“lift and shift”) or replatforming for quick wins with minimal disruption.
• Refactoring into microservices to unlock agility and accelerate feature delivery.
• Replacing with SaaS solutions when modernization doesn’t make economic sense.

For cloud strategists, the decision requires both technical and sequencing considerations. Which applications create the most technical debt? Which will deliver the greatest business impact if modernized first? Balancing innovation with risk, compliance, and cost allows strategy to deliver real value.

Common Modernization Challenges

Businesses that jump into modernization projects without thinking about the potential challenges can find themselves mired in complications. Budget constraints, change management obstacles, data migration complexity, and business disruptions can turn a promising project into a slog without proper planning.

Data Migration and Integration Complexity

Legacy software can store data in formats that are not compatible with your modernized system, making the migration process tedious. As new technologies emerge, businesses alter legacy systems just enough to make it work. However, these accumulated shortcuts can become technical debt, which is difficult to work around and maintain.

Legacy systems can also have many dependencies, where single components are tied to many other databases, processes, and systems that are required for proper functioning. Untangling these dependencies while preventing data loss can take time and patience, and may require complete restructuring in a new environment to work well.

Change Management

Sometimes, people are the biggest roadblock to organizational change. Employees who are comfortable in legacy environments may not want to move to something new. It’s important to implement a change management strategy that takes into account these sentiments.

Identifying willing early adopters and getting leadership on the same page about modernization efforts can help convert resistant team members over time. It can also help to involve employees who have worked with legacy systems for many years to be part of the modernization planning. This way, they feel a sense of ownership and agency over the change.

“We need to get alignment across all the stakeholders, and everyone needs to agree that yes, it is a very important thing for the company. Then, get the buy-in from them.”

– Ravikrishna Yallapragada, Senior Manager at Accenture Google Business Group

Budget Constraints

Hidden costs in modernization projects can be hard to plan for and may even stop processes from moving forward. Before your organization begins legacy modernization, it’s vital to back up and look at the whole picture, considering all of the intricate pieces that make up the project. Ask yourself:

• What kind of vulnerabilities will you need to address?
• Do you need to bring in outside experts?
• What are the one-time versus ongoing expenses you should expect to shoulder?

These questions and more are important when determining what will work in your budget.

Business Disruption and Downtime Risks

All transitional projects will either involve some form of downtime or will require more significant investments to duplicate systems. Which critical business processes exist in your legacy systems, and how long can you operate without them?

Understanding your recovery point and recovery time objectives (RPO/RTO) can help you plan for the amount of acceptable downtime. Recovery point objectives determine how much data you can afford to lose, and recovery time objectives determine how much downtime a business can withstand without significantly impacting core business processes.

Best Practices for Successful Legacy System Modernization

A successful legacy modernization requires careful assessment, an understanding of business objectives, and a plan that aligns with a set budget and timeline. The modernization project should also align with regulatory standards and be tested regularly to confirm it is operating in a compliant, secure, optimized way.

Start with a Thorough Assessment of the Current IT System

Before you can modernize your systems, it’s important to understand what you’re currently working with. Take a thorough inventory of your current system, including the data, applications, and infrastructure. Identify mission-critical pieces, current dependencies, and possible vulnerabilities and performance bottlenecks to address during modernization.

These assessments can help you prioritize what to update first and the best approach to modernization for your system.

Align Modernization Initiatives with Business Objectives

Modernization, even with simpler “lift and shift” projects, is a major undertaking that requires careful thought. Understanding why you want to modernize and the benefits you hope to get from the process can help inform the path you take and the methods you choose. Your goals might include: 

• Improving the customer experience 
• Reducing operational costs 
• Enabling easier scalability 
• Clearing the way for new sources of revenue 

Establishing measurable targets, like shortening your average software development timeline by 25%, can further help you optimize your outcomes.

Establish a Clear Budget, Timeline, and Priorities

A realistic budget and timeline for a modernization project means that you likely won’t be able to do everything instantaneously. Instead, businesses must weigh their priorities against what they’re able to spend in a given timeframe.

Generally, organizations will work from a phased timeline that prioritizes the steps that provide the highest business value first. By approaching the project incrementally, organizations can reduce the risk of business disruptions and increase the likelihood of more predictable outcomes. However, buy-in from all relevant stakeholders is necessary to ensure the project progresses through the necessary phases effectively.

Ensure Strong Governance and Security Frameworks

For a modernization process to run smoothly, everyone involved needs to understand their roles and responsibilities. This starts with a strong governance framework. Governance guidelines can also include process steps for the project and how changes should be handled.

Moving to a new environment also provides an opportunity to set a strong security framework from day one. Measures businesses should incorporate can include encryption, identity and access management (IAM), and continuous monitoring, which feeds into the need for ongoing testing and validation to keep systems running optimally. 

Governance also involves establishing a framework with which modernization can fuel growth without introducing risk. Embedding zero-trust models, automating audit logging, and integrating identity governance across cloud and on-prem systems are critical to scaling securely.

Implement Ongoing Testing and Validation

Modernization isn’t just a one-time process. It requires regular testing and validation to be effective. Teams should have a comprehensive testing strategy that ensures that the system can handle business-critical functions and operate effectively as other changes are made or new requirements emerge. Organizations can test performance, integrations, and individual parts of the code (units). They can also test to see whether the new systems meet the needs of users with user acceptance testing (UAT).

Optimize Your Application Modernization with TierPoint

Aligning with a partner like TierPoint can make an ongoing project like legacy application modernization easier to handle. Whether you’ve created a plan and need help with execution, or you’re looking for support from step one, TierPoint has experts who can help you strategize, execute, and optimize your modernization projects. 

We also have compliance strength at our foundation, offering deep expertise in managing security and regulatory requirements for businesses in industries with strict regulations like HIPAA. Learn more about how our application modernization services are complete with your industry requirements in mind at each phase of the project.

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