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11 min read

Application Modernization 101: Ultimate Guide to Digital Transformation

Application Modernization 101: Ultimate Guide to Digital Transformation

Imagine breaking free from the constraints of old, monolithic systems and embracing the agility and innovation of cloud-based solutions.  

This shift is an ongoing trend, with the application modernization market projected to grow by 10% CAGR (from $19.8 billion in 2022 to a staggering $65 billion in 2032).  

But why are businesses rushing towards this transformation?  

The transformation to cloud-native applications helps you align outdated software with current business and technological trends. So, it's not just about staying current - it's about ensuring your enterprise can meet the dynamic demands of today's market with efficiency and foresight. 

Let's explore all about application modernization, including what the process involves, the latest trends and technologies, and some of the main benefits and challenges. 


What is Application Modernization?

Application modernization involves transforming your legacy software systems to align with contemporary computing methodologies and infrastructures. This process can significantly improve your applications so they can deliver more value down the line. 

The application modernization process typically includes: 

  • Translating legacy code into more current programming languages 
  • Migrating databases from local servers to cloud storage 
  • Integrating advanced technologies like AI and machine learning 
  • Transitioning from virtual machines to native containers 

By modernizing legacy applications, you can rapidly adapt to evolving market demands, enhance end-user experiences, and eliminate existing limitations. Adopting an application modernization approach also ensures your organization stays competitive in a digital-first world, unlocking new avenues for growth, innovation, and operational efficiency. 

Types of Application Modernization 

Rather than opting for a complete overhaul, which can be resource-intensive and time-consuming, modernization allows for selective upgrades to different system components.  

This approach is versatile, with several types falling under the modernization umbrella, each tailored to address different components in your current applications, ensuring a more efficient and goal-oriented transformation. 


Here's a breakdown of these categories: 

1. Legacy Application Modernization 

Traditionally, legacy systems are based on monolithic architecture. This makes maintenance challenging, as even small changes can require scaling the entire architecture.  

Addressing this issue, legacy application modernization typically involves two main approaches: 

  • Code rewriting: This method involves rewriting the code from scratch, allowing the incorporation of new functionalities and platforms. But keep in mind that since it's a more thorough approach, it requires significant time and resources. 
  • Code restructuring (refactoring): This technique modifies the internal structure of existing code without altering its external functionality. Refactoring simplifies complex functions, making the code more manageable and understandable, though it doesn't address deeper architectural issues.  

Both strategies aim to transform outdated applications into more efficient, modern versions that align with current business needs and technological environments.  

But there's an even easier way for enterprises to facilitate faster scalability when it comes to legacy application modernization. This involves the transformation of an application's existing functions into multi-protocol, secure APIs. 

What makes it superior to refactoring or rewriting the entire application?   

This approach simplifies the process by eliminating the need for extensive additional coding. For instance, it allows for the easy creation of APIs that support various protocols like REST, SOAP, and gRPC. 

By leveraging app modernization tools that handle the complex aspects of API creation and service-based architecture, such as automatic conversion of message formats and protocol support, the process becomes more accessible. This way, even less experienced programmers can undertake significant legacy transformation projects and lay the groundwork for a cloud-native architecture. 

You can use these approaches to modernize outdated business applications, including:  

  • Desktop apps: This involves transforming desktop applications for compatibility with modern cloud environments or modularizing the code, making it easier to update and maintain specific functionalities. 
  • SaaS platforms: Upgrading Software-as-a-Service applications allows you to achieve better scalability and incorporate more advanced features. 
  • Web applications: Modernizing web apps with the latest technologies could entail revamping the entire site architecture or more minor changes like refining the backend code. 

application modernization architecture

2. Cloud Application Modernization 

Did you know that cloud app modernization can lead to about a 28% increase in revenue? 

This effective approach involves a strategic shift from older, monolithic system architectures to more flexible microservices architecture. 

But when is cloud application modernization utilized?

On-premise Deployment 

If you’ve been in business for more than a few years, chances are you have an application that's deployed on desktops. This approach is sometimes known as a private cloud deployment. 

On-premise deployments are popular because they allow close management and physical proximity to both client and essential business data, providing maximum control and security. 

Cloud Deployment 

If your application is relatively new or in the planning stages, it's likely to be cloud-deployed, enabling users to access it via the internet rather than downloading a desktop version. This method, commonly referred to as a public cloud deployment, offers the flexibility to adjust resources as needed. It's favored for its pay-per-use model, allowing efficient utilization of IT and other services.  

Also keep in mind that while cloud models are often equated with SaaS applications, SaaS is actually a licensing model, not a deployment type. This confusion might stem from the popularity of cloud-based services like Salesforce and Slack, which also adopt the SaaS model.  

Hybrid Cloud Deployment 

Hybrid environments strike a balance between exclusively desktop-based and purely cloud-based deployments. 

For ISVs, the challenge often lies in adapting desktop applications with dependencies on on-premise infrastructure to cloud environments. That means the application must be rewritten (in part or in full) before it can be migrated to the cloud. 

A hybrid approach allows for a gradual cloud transition, enabling the retention of existing customers while simultaneously attracting new ones seeking cloud-native solutions.  

This makes hybrid cloud deployment an optimal path for ISVs to address customer concerns regarding complete migration away from on-premise solutions. By merging the security of on-premise applications with the advantages of cloud solutions, hybrid environments offer a practical and secure middle path. 

3. UI Modernization 

UI modernization is a vital aspect of revamping legacy systems, especially those that have been operational for over a decade.  

Often, the biggest challenge lies in adapting the outdated codebase to incorporate new functionalities and a more contemporary user interface.  

But how is that done in practice? 

One approach is to do this incrementally, delivering steady, visible improvements over a specific time period. 

This gradual process aligns well with Agile methodologies, offering quick, tangible benefits to end-users. It addresses key issues such as: 

  • Inability of legacy systems to utilize modern browser features 
  • Poor user experience 
  • Incompatibility with new libraries and frameworks 

By updating the UI, not only is the user experience enhanced with a more intuitive interface and faster loading times, but it also opens doors to improved functionality and efficiency.  

Additionally, this method allows you to focus on specific front-end aspects initially, and then progressively extend updates to other areas, ensuring a cohesive and functional upgrade. 

4. Database Modernization 

Database modernization allows you to upgrade critical business databases, such as MS SQL, to more dynamic and managed cloud environments like MySQL and PostgreSQL.  

This transition not only enhances security measures but also boosts flexibility, agility, and accessibility of data.  

Modernizing database structures enables organizations to improve collaborative workflows, creating seamless data access from any location at any time. This strategic approach elevates enterprise workflow efficiency, granting more control and fortified security over vital business information and leveraging the full potential of database modernization. 


Benefits and Goals of Application Modernization 

Application modernization allows you to align your software infrastructure with the evolving technological landscape. Moreover, you get to transform your legacy systems into more efficient, secure, and scalable solutions, ensuring you can meet current and future demands effectively. 

This brings a whole set of benefits for your business, including: 

  • Enhanced efficiency: You can streamline operations and reduce time spent on maintaining outdated systems. 
  • Improved scalability: You can scale your existing applications to meet growing business demands. 
  • Increased security: Modernized applications often come with enhanced security features, protecting you against contemporary threats. 
  • Better customer experience: Up-to-date systems also provide a smoother, more responsive user experience. 
  • Cost reduction: By giving new life to your legacy applications, you can drive maintenance costs down while preserving previous investments. 
  • Agility and flexibility: Moving away from legacy applications means you can respond faster to market changes and customer needs. 
  • Innovation enablement: Application modernization allows you to facilitate the integration of new technologies, fostering innovation and a competitive edge. 
  • Data accessibility: You will also have easier access to data, enabling better decision-making and insights. 

Application Modernization Framework 

An effective modernization strategy not only reduces the resources needed for application operation but also boosts deployment reliability and uptime resilience.  

When exploring options for application modernization, you should consider some of the main application modernization approaches and patterns, including: 

  • Rehost: Also known as 'Lift & Shift,' this method entails moving your application from the familiar on-premise setting straight into the cloud, yet its core – the codebase – remains untouched. This offers quick cloud transition without altering the application's core architecture. 
  • Refactor: This approach requires modifying parts of the application code to leverage the capabilities of cloud computing. Refactoring involves breaking down a monolithic application into independent services, enhancing its adaptability to cloud environments. It’s a good option if you're looking to optimize your applications for the cloud without a complete overhaul. 
  • Re-architect: This involves a more comprehensive transformation. In this approach, monolithic applications are restructured according to a microservices model. This is a suitable framework for applications that need a complete metamorphosis for cloud-native prowess, delivering speed, agility, and a better user journey.  
  • Rebuild: Rebuilding is about creating a cloud-based application from the ground up. This is needed when the existing application’s architecture does not align with modern cloud capabilities. By rebuilding, you can harness the latest cloud technologies, reducing long-term development costs and allowing for the adoption of new methodologies and tools. 
  • Replace: In this framework, you update or replace old technologies, plugins, or tools with modern, industry-standard, and open-source alternatives. This method is often chosen when certain functionalities of the legacy system are still useful but need a contemporary touch. 

Application Modernization Process 

Embarking on the application modernization journey involves a systematic approach to upgrading your IT infrastructure. Here are the main application modernization steps you should follow: 

  • Audit and assessment: Start with a comprehensive audit of your existing IT infrastructure. The application modernization assessment includes evaluating which of your current systems are outdated or inefficient. It's essential to gather insights from different departments to understand how each segment of your IT ecosystem affects overall operations and user experiences.  
  • Planning: Develop a custom modernization plan that addresses your unique needs, goals, budget constraints, and timelines. This phase involves selecting a framework that aligns with your strategic vision, ensuring your modernization journey is both feasible and effective.  
  • Strategizing: Choose a flexible development methodology like Agile to navigate the modernization process. Effective use of project management tools ensures tasks are tracked and aligned with your goals. This strategic approach helps in managing resources efficiently and setting realistic timelines.  
  • Implementation: This step involves executing the modernization strategies. During implementation, maintain constant communication with your team, monitor progress closely, and adjust strategies as needed to address any arising challenges or opportunities. This phase is crucial for turning the planned roadmap into tangible results. 
  • Risk management: This helps you prepare for potential issues like downtime, data loss, and security vulnerabilities. You can develop comprehensive strategies to mitigate these risks, including robust backup plans and fail-safes.  
  • Transitioning and cutover: A carefully planned cutover strategy is essential for a smooth transition, minimizing disruptions to business operations. This involves detailed coordination among all stakeholders, ensuring everyone understands their role. 

Application Modernization Drivers 

In today's fast-paced digital landscape, staying competitive requires more than just meeting challenges—it's about leveraging opportunities for growth and innovation. Here are the key drivers of application modernization: 

  • Reliability: With legacy systems, the risk of unexpected failures and disruptions is higher. Modernizing applications not only bolsters system stability but also enables proactive maintenance, reducing the likelihood of critical issues.  
  • Cost savings: Did you know that organizations can reduce their operational costs by as much as 13% through application modernization? Additionally, this can help boost revenue by 14%. By moving away from legacy systems, you can avoid the escalating costs associated with outdated technologies, such as increased support expenses and inefficiencies. 
  • Performance: Upgraded systems can handle more complex tasks with greater efficiency. For example, converting to cloud-based solutions often results in improved data processing speeds, enhancing the overall agility of business operations. This can potentially lead to quicker decision-making and response times. 
  • Scalability: Modernized applications offer the capability to scale resources up or down based on real-time demands. This adaptability is particularly vital for businesses experiencing rapid growth or those with fluctuating resource requirements.  
  • Customer experience: Modernized applications enable businesses to offer advanced features and functionalities that meet the constantly evolving customer expectations, significantly improving user engagement and satisfaction. Better customer experiences directly translate to higher customer loyalty and can be a distinguishing factor in a competitive market. 

Application modernization drivers

Is Application Modernization Right for You? 

Kickstarting your own application modernization journey can be a game-changer if you're looking to optimize your operations and enhance user experiences.  

But when and why should you consider modernizing your application? How do you know if it’s right for you? 

There are a few key cases that can make you highly legible for an app modernization project: 

  • You want to upgrade application functionality: Modernization allows for updating applications to a cloud-first model, enabling the addition of new features and enhancing security. This ensures you can meet the constantly evolving needs of your user base and keep up with the latest trends with every app update. 
  • You want to foster automation and productivity: Application modernization reduces repetitive tasks and reliance on human intervention. This shift towards automation can lead to increased productivity and efficiency within your organization. 
  • You want to adapt and be agile: By adopting practices like container orchestration and DevOps, you can ensure rapid and continuous delivery of applications. Refactoring monolithic apps into microservices also contributes to this agility, allowing for quicker updates and more flexible app management. 
  • You want to stay on top of the competition: Staying competitive in today’s market often requires a modern IT infrastructure. By leveraging the latest technological advancements and application modernization best practices, you can understand your customers better and innovate faster. 

Application Modernization Challenges 

Application modernization offers numerous advantages, but it also comes with its own set of challenges that businesses must navigate. 

  • Security risks: Modernization exposes applications to new vulnerabilities (like the infamous Heartbleed bug in SSL). Ensuring robust security requires constant vigilance and a deep understanding of new security paradigms. 
  • Skills gap: For many businesses, finding qualified personnel for cloud projects is a major obstacle. Reports indicate that 94% of IT decision-makers view this talent shortage as a significant challenge to cloud success. 
  • Business logic: Modernizing applications involves transitioning from older programming languages to modern ones suitable for cloud-based environments. This change necessitates developers proficient in both old and new languages, a combination that's rare, creating a significant challenge in maintaining legacy systems while developing new, cloud-native versions. 
  • Complex data migration: Migrating to modern relational databases involves a steep learning curve for developers. This complexity often requires a team with expertise in both legacy and modern databases, a combination that's hard to find, making the migration process intricate and challenging. 
  • Cost: Initial investments in new technologies, architectures, and training can be high, although they often lead to long-term savings. Careful financial planning and analysis are crucial to ensure that the benefits of modernization outweigh the initial expenses. 

Application Modernization Technologies and Trends 

Application modernization is a dynamic field driven by the adoption of various cutting-edge technologies like: 

  • Containers: They provide a consistent environment for applications, regardless of where they're deployed, and encapsulate everything an application needs to run. 
  • Microservices: Breaking down a monolithic application into smaller, loosely coupled microservices boosts scalability and agility, allowing for more modular and flexible development. 
  • APIs: APIs facilitate communication between different software applications, enabling seamless integration and interaction within the modern IT landscape. 
  • CI/CD automation: Tools like Jenkins and Ansible automate the development process, enabling continuous integration and delivery. This automation is key to maintaining efficiency and consistency in the software development lifecycle. 
  • Cloud computing and platforms: Cloud platforms such as AWS, Azure, and Google Cloud offer robust infrastructure and services to support modernized applications. They provide essential resources like computing power and storage, along with advanced services for data analytics and machine learning. 
  • Modern databases: The shift towards modern databases accommodates both structured and unstructured data, offering flexibility and scalability. These databases are essential for managing the diverse data needs of modern applications. 


How to Modernize Applications the Right Way? 

Next, let's examine how Freight Management Systems (FMS), a leader in transportation management software, successfully transitioned from a desktop-centric model to a cloud-based solution. 

Freight Management Systems Case Study 


FMS faced the challenge of evolving its offerings from traditional desktop applications to modern, cloud-based solutions. With a legacy system built using DataFlex, FMS struggled to adapt to changing market trends and customer expectations. Upon acquisition in 2014, FMS's owner recognized the need for application modernization in order to stay competitive. 


FMS decided to partner with Mertech for their modernization project. Mertech's Thriftly platform allowed FMS to utilize existing backend code while focusing on developing new front-end web interfaces. This approach offered a flexible solution, leveraging existing assets and enabling a gradual transition to modern, web-based modules.  

End Result 

The collaboration with Mertech transformed FMS's product offerings, enhancing customer satisfaction and business growth. By focusing on front-end development and design, FMS was able to improve their product's aesthetics and functionality significantly. Additionally, the modernized system enabled FMS to offer new services like EDI, increasing customer value and retention. 


Our application modernization services help you move towards future-proofing businesses in a digitally-driven world. The right approach involves understanding the current landscape, identifying needs, and executing a plan that aligns with business goals. 

Are you ready to take your applications to the next level? 

Schedule a Free Consultation


Frequently Asked Questions

Why application modernization?
Application modernization is essential for businesses to enhance efficiency, improve scalability, and stay competitive by leveraging modern technologies and meeting current market demands.
Why is application modernization difficult?
It's challenging due to the complexities of migrating legacy systems, potential security risks, the need for skilled personnel, and the integration of new technologies with existing infrastructure.  
What is the mainframe of application modernization?
It involves updating and transforming mainframe-based legacy applications to more modern, cloud-based, and flexible architectures, improving their performance and integration capabilities. 
What is business application modernization?
It's the process of updating business-critical applications to newer platforms or architectures to improve performance, reduce costs, and enhance user experience.
What is an example of application modernization?
A classic example is transitioning from a legacy desktop-based customer relationship management system to a cloud-based, microservices-driven platform.  
What are the benefits of application modernization?
Key benefits include improved efficiency, enhanced security, increased scalability, cost savings, and better customer experiences. 
Why is application modernization inevitable?
Due to the fast-paced technological advancements and changing market demands, businesses must modernize to remain relevant, efficient, and competitive.
What are the trends in application modernization?
Current trends include the adoption of cloud computing, microservices architecture, containerization, DevOps practices, and the integration of AI and machine learning. 


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