Modernize or Replace? A Smarter Path to Legacy App Transformation

Modernizing legacy applications doesn’t have to mean starting from scratch. This blog explores how incremental modernization enables U.S. and U.K. enterprises to reduce risk, accelerate innovation, and maintain business continuity—without the disruption of full system replacement.

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Modernization is no longer optional—but the question remains: should you rebuild from scratch or evolve what you already have?

Despite digitalization being a top priority for 74% of business leaders, nearly 70% of transformation initiatives fail to meet their objectives. One of the biggest hurdles? Legacy IT systems and applications.

These systems can be difficult to replace or modernize due to complexity, deep dependencies, limited documentation, and a shrinking talent pool. But despite those challenges, they remain essential to business continuity—and replacing them outright can introduce risk and disruption.

The Good News? You Don’t have to Choose Between Evolution and Continuity. You can Do Both.

Incremental application modernization empowers organizations to evolve critical systems in phases—reducing risk, accelerating time to value, and supporting long-term agility.

But modernization isn’t just about updating technology. It’s about transforming how your business operates. Legacy applications often constrain scalability and innovation, while modernized apps are built to adapt, integrate, and grow alongside your business.

Figure 1 highlights the key differences between legacy and modernized applications—and why the shift is essential.

Understanding the Role of Mainframes in Modern Enterprises

Before we move forward, let’s take a look back. Systems like mainframes have been built over years, if not decades, to serve different customer markets. They were built by people who poured their hearts and souls into them over their entire careers. Many still power critical businesses applications today.

I once worked with a large retailer that had a mainframe at the center of its system landscape. Built in the 1980s, it was originally developed to support a mail delivery catalog service before online e-commerce retail existed. Fast-forward 40 years and this mainframe is still the most pivotal system in the enterprise. It has successfully evolved over the years to support new channels, keep pace with customer demand, and help the retailer remain competitive.

Contrary to belief, mainframes have continuously evolved. Let’s bust that myth—mainframes, and the applications powering them, can still be modernized incrementally through evolution and not just completely replaced.

Key Considerations When Planning Modernization

The question isn’t whether to modernize—it’s how. Before tackling a modernization initiative, organizations must choose the right modernization path.

Should you rebuild on a new cloud-native platform; rehost or replatform for a quick infrastructure win; incrementally refactor critical components; or wrap and extend existing systems with APIs to deliver modern, user-facing experiences—balancing speed, cost, and risk while achieving uninterrupted business continuity?

Each approach has trade-offs. A full replacement introduces higher risk, time, and cost. Incremental modernization allows for continuous delivery and validation but requires robust integration between legacy and modern systems. Connecting systems of record to systems of engagement can accelerate innovation but may introduce complexity in maintaining consistent data flow and governance across platforms. Regardless of the path, seamless data transfer and system interoperability are critical. You’ll need to:

• Keep sophisticated systems running during development.
• Confirm data flows smoothly between your current and future state.
• Monitor both environments to maintain operational stability.

Critical Questions to Ask

Before committing to a modernization strategy, it’s essential to assess whether your current systems are enabling or hindering your business goals. To dig deeper, ask yourself the following set of questions:

• Is the cost of IT maintenance, operations, and support increasing?
• Is the development lifecycle too long, leading to slow time to market for new features and is measured in weeks not days?
• Is innovation constrained by the current solution?
• Is it becoming increasingly more difficult to find resources with the right skills to build and maintain as-is platforms?
• Are the current platforms locked into vendors and inflexible licensing agreements?
• Are there several important applications not well understood within the business, with only one or two key individuals with advanced knowledge?
• Are applications tightly coupled through the lack of modern application integration patterns and architectures, leading to changes taking longer and carrying a higher risk?
• Are there many repeatable tasks that are manually performed, leading to an increase in cost, time, and risk of building and releasing software?

If you answered “yes” to several of these questions, it’s time to explore a phased application modernization strategy.

The Case for Modernizing Incrementally

Incremental modernization, rather than a full replacement, can be a sensible strategic decision. By updating legacy applications in stages, organizations can reduce risk, control costs, and maintain operational continuity.

This approach allows you to prioritize high-value areas, minimize downtime by keeping core systems running, and deliver early wins that build stakeholder confidence. It also lays a stable foundation for future modernization phases.

Many organizations are choosing this approach. Here’s why it works:

Minimizes risk

Modernizing in stages helps avoid common pitfalls that derail transformation efforts—such as long delivery timelines, data migration failures, and downtime. It also lowers failure rates caused by broken integrations and limited opportunities for early user feedback. By enabling safer testing in controlled environments and reducing disruption to steady-state operations, incremental modernization supports business continuity throughout the process.

Delivers faster value

Incremental updates allow you to unlock business value and benefits early—whether it’s improved performance, better user experiences, new revenue streams, or reduced operational costs.

Supports parallel operations

Legacy and modern systems can run side by side, enabling smoother transitions and reducing the threat of data loss or service disruption. This helps maintain operational continuity while new capabilities are introduced.

Keeps scope and budget manageable

Smaller, focused modernization efforts are easier to plan, execute, and measure—helping you stay aligned with business goals and avoid the complexity of large-scale system overhauls.

Enables continuous improvement

A phased approach lets you learn and adapt as you go, refining your strategy based on real-world feedback and evolving needs. It also allows teams to incrementally build modernization skills, reducing reliance on an aging legacy workforce.

Your Path to Modernization Starts Here

Application modernization is essential for staying competitive, agile, and enhancing security. A phased approach helps reduce risk, preserve business continuity, and unlock value faster. In this white paper, we describe our approach to rethinking application modernization and how to turn your applications into assets.

Learn more in this state of IT modernization 2025 report or get in touch to start the conversation around what’s right for your business.

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Frequently Asked Questions:

What is application modernization and why is it important?

Application modernization involves updating legacy software to improve performance, scalability, and security. It’s essential for staying competitive and agile.

Is it better to replace legacy applications or modernize them incrementally?

Incremental modernization is often more effective. It reduces risk, preserves business continuity, and delivers faster value compared to full system replacements.

How do I know if my applications need modernization?

Look for signs like rising maintenance costs, slow development cycles, limited scalability, and difficulty finding skilled support. These indicate it’s time to consider modernization.

Can legacy and modern applications run together during modernization?

Yes. A phased approach allows legacy and modern systems to operate in parallel, assuring smoother transitions and minimizing disruption.

What are the benefits of modernizing legacy applications?

Benefits include reduced operational costs, improved agility, enhanced security, better user experiences, and faster delivery of new features.