Is it time to modernize your legacy systems? Let’s start by defining what a legacy system is. A legacy system is any piece of technology (including both software and hardware) that lacks modern features that would be available if you were to update it. This doesn’t mean the system isn’t functional, as legacy technology often continues to function as it was originally intended.
Legacy systems still serve a purpose, but their functionality has likely evolved, causing digital transformation challenges. As a result, the programming language used to create them may be outdated and difficult to work with when changes or bug fixes are necessary.
Outdated applications, as noted by CIO, are costly to support, rigid in functionality, vulnerable to security risks, and obstruct the integration of newer technologies. As Artificial Intelligence (AI) becomes increasingly central to business strategy, it's critical to modernize AI models and data pipelines to mitigate challenges such as model drift and algorithmic bias.
If your legacy systems create failures or performance issues, do not provide business value or possess modern functionality, or leave your expectations unfulfilled, it might be time to upgrade.
Seven options for modernization
Instead of a “rip and replace” digital transformation that you may be imagining, organizations have options when it comes to a modernization approach. Some popular options are:
- Encapsulate: Leverage and extend an application’s features by encapsulating its data and functions, making them available as services via an API. This is a viable option for organizations where auditing is a concern, and when data can be accessed via a Data Lake, for example.
- Replatform: Platform modernization means making minimal changes to the code, but not the code structure, features, or functions. Low-code/no-code platforms can help build modern interfaces and workflows on top of legacy systems, reducing dependency on scarce legacy expertise.
- Refactor: Restructure and optimize existing code (although not its external behavior) to remove technical debt and improve nonfunctional attributes. For instance, legacy systems can be augmented with Robotic Process Automation (RPA) bots that automate repetitive tasks without requiring full system replacement.
- Rearchitect: Materially alter code to shift it to a new application architecture to exploit new and better capabilities. Now, AI monitoring tools can detect inefficiencies and anomalies in legacy infrastructure, guiding targeted upgrades.
- Rebuild: Redesign or rewrite the application component from scratch, while preserving its scope and specifications and allowing for digital transformation benefits.
- Rehost: Redeploy an application component to other infrastructure (physical, virtual, or cloud) without modifying its code, features, or functions. Legacy applications are increasingly containerized and migrated to hybrid cloud environments, preserving functionality while gaining scalability. Modern SaaS tools offer mobile access, AI-driven insights, and intuitive interfaces. Bridging legacy systems with these platforms ensures consistent, responsive service across channels.
- Replace: Eliminate the former application component altogether and replace it, considering new requirements and needs at the same time, while lowering digital transformation risk.
Pros for legacy systems modernization
Let’s start with the pros of legacy systems modernization. Using any of the seven methods outlined above, there are many pros to consider when you’re ready to modernize legacy systems. The following are some of the positive outcomes that our clients have experienced.
Pro: improve user access
With a remote or hybrid work environment, it’s an advantage for users to be able to access data from anywhere, at any time, and on any device. Instead of being limited by a terminal, cloud-based flexibility gives users access to up-to-the-minute information. Modern applications allow for better collaboration on documents or projects, allowing you to save updates while on the go.
Pro: improve security
Aging systems are more vulnerable to security threats. Outdated ERP systems have gaps that allow deeper access to the software’s network. Additionally, as the software is no longer supported or becomes obsolete, you will no longer receive updated security patches from the developer. Furthermore, disaster recovery and backups are major challenges for legacy systems. This can result in more security vulnerabilities from malicious hackers using AI-driven attacks, deepfakes, or sophisticated ransomware to break into your network.
Modernizing legacy software allows businesses to improve functionality and strengthen security features. Newer technology applications are built with advanced security measures such as multi-factor authentication (MFA), biometrics, machine learning, and AI to help identify and prevent cybercrimes.
Security is one of the areas companies cannot afford to cut; it might save money in the near term, but the costs of repairing damage from security incidents will far outweigh any investments made in protecting your business.
Pro: simplify and save money
Financially speaking, maintaining legacy systems can be a costly burden. A recent survey of over 500 U.S. IT professionals revealed that 62% of organizations still rely on legacy software, and nearly half reported that maintenance costs exceed their expectations.
Legacy systems were initially built to meet business needs and functions that have become obsolete. Maintaining these archaic systems requires significant investment because technology and processes have advanced rapidly since their development. It is also expensive to buy and maintain on-site hardware that can be eliminated by modernizing to the Cloud.
Additionally, it becomes difficult to find IT professionals who are well-versed in creating and maintaining outdated systems. Many organizations are making efforts to reskill or upskill employees via AI or legacy code simulators. IT roles are moving toward more versatile profiles focused on the user experience, but this is an investment.
Pro: improve business agility and competitiveness
As your company grows, can your legacy applications support its expanding business operations? Sticking with a legacy system built on outdated technology inhibits your capacity to leverage the latest advancements and is incapable of meeting your changing needs. If your software is unable to keep up with your fast-evolving requirements, it will impede growth.
Modernizing legacy software will enable you to leverage an advanced IT architecture that can manage your growing needs and operations expansion, providing you with enhanced throughput capacity to manage increased scale and growth. With modernized systems, you can tune your environment to react faster to seasonal fluctuations, better leverage data across the organization, integrate systems to optimize processes, adapt to business conditions, or beat your competitors to the marketplace with increased innovation. Legacy code inhibits your ability to meet customer demands and achieve business growth. With a legacy modernization project, you will gain a competitive edge over competitors still operating on a legacy system.
Pro: stay compliant
For most businesses, international compliance standards like SOX, ISO27001, or HIPAA require that technology is up-to-date and supported. However, if you still own an outdated technology that fails to comply with strict regulatory compliance requirements, the cost can be significant. In case of security holes or data breaches, non-compliance can set your business up for huge penalties and fees. With a modernized system, you can automate all compliance tasks and save a lot of time and money.
Pro: eliminate data silos
Data silos are a byproduct of legacy systems. Older systems weren’t designed to integrate in the first place, and many legacy software solutions are built on frameworks that can’t integrate with newer systems. That means that each legacy system functions as a data silo. Many organizations attempt to fill gaps with an increasing number of third-party solutions, resulting in a mismatched landscape of siloed solutions.
In addition to siloing the data they contain, legacy systems keep the departments that use them out of data integration happening in the rest of the organization. If one team maintains a legacy system while the rest of the company upgrades, that one team will find itself isolated from business intelligence and insights being created by the integrated systems. Businesses increasingly operate in hybrid IT landscapes, allowing for seamless communication between legacy and SAAS systems to avoid data silos and workflow disruptions.
Pro: Take advantage of AI, safely
Legacy data often lacks diversity or structure, making it harder to train unbiased models. Responsible AI practices now require explainable outputs and human oversight, especially in regulated sectors like finance and healthcare. As generative AI becomes central to legacy modernization, organizations face pressure to ensure fairness, transparency, and accountability in AI-driven decisions. Yet, fewer than 1% of companies have fully operationalized responsible AI frameworks, according to the World Economic Forum. 62% of organizations cite poor data governance as the top barrier to AI adoption, highlighting the need to modernize legacy systems with built-in data controls.
Cons of legacy systems modernization
We’ve covered the top pros for modernizing your systems. Now, let’s talk about some cons, or potential pitfalls.
Con: time and cost
Legacy systems upgrades are expensive and time-consuming. It can sometimes take years for organizations to see a return on investment, and your project champions must continue to do their jobs in addition to any implementation. However, you may not need to do a complete legacy system refresh. The trick lies in estimating the core operations and processes, and then focusing on them first, rather than undertaking a full-scale disruptive modernization.
Costly hardware licenses, specialist contractors, and end‑of‑life support agreements drain budgets that could finance a new Cloud system with more predictable opex forecasts. There are new ways to save money as you modernize, such as using GenAI tools to assist in rewriting legacy code into modern languages, reducing manual effort and technical debt. Additionally, AI models generate system documentation and test cases from legacy codebases, speeding up modernization timelines. Hybrid cloud platforms now use AI to optimize cloud spending, making modernization more cost-effective.
Con: risk
Many companies use legacy applications for core business operations, including high-volume data processing or conducting day-to-day operations that are essential to the functionality of the organization. Making changes to some elements of these systems is a risky step that can bring the whole business to a halt.
Weigh the possible business disruption, as well as any associated impacts to business processes and organizational culture, against the desired outcomes of your legacy systems modernization project. Also consider the risk of keeping a legacy system as-is, including maintenance for out-of-support systems or limited support staff resources. Increasingly, businesses are deploying modern microservices alongside legacy systems, enabling gradual modernization without disrupting operations.
Con: integration
Unless you go for a full and simultaneous hardware and software refresh, which few companies can afford, you are most likely to integrate new applications and technologies with some legacy system elements. Ensuring a seamless integration of these elements is often a challenge, as is maintaining core system functionality during the integration process. When doing so, carefully select a system integrator with a history of integrating legacy solutions with modern solutions.
Con: performance disruption or data loss
Ensuring non-disruptive performance is a challenge with legacy systems modernization. Many enterprises, particularly those running industrial production lines, can afford zero downtime. For those enterprises, disruptions amount to revenue losses, so they must do whatever it takes to ensure that the transition is as smooth and seamless as possible.
Likewise, data loss is a frequent cause of concern during legacy system upgrades. The loss of important data may result in revenue and reputational hazards, so enterprises must invest time and effort into crafting an actionable data migration plan before undergoing a legacy system upgrade.
Con: user acceptance
Let’s face it, a modern solution is useless if nobody uses it. Employees often resist change to the “way they’ve always done it.” In general, people are comfortable with legacy processes and environments; they may also find the necessity of learning new skills to be unsettling. Legacy system upgrades typically start with a management initiative. To ensure the best results, such initiatives should include a communication plan that enhances the user experience and helps employees embrace new technologies.
As complex and multifaceted as legacy system modernization may appear, it should not be perceived as a one-time initiative. Many organizations opt for a phased approach to restructure and optimize their systems.
Alithya is here to help guide you through the options for your legacy systems modernization. Reach out to one of our experts today to learn more.