Legacy system modernization for the digital era

What is legacy system modernization?

Legacy system modernization is the process of updating outdated software systems, infrastructure and applications to meet current and future business needs. This involves integrating past data with modern technologies to enhance functionality and efficiency.

Enterprises are shifting towards legacy system modernization to address issues such as slow processing, outdated interfaces, security gaps and integration incompatibilities. Modern solutions offer features like cloud storage, digital asset management and secure remote access, which provide greater flexibility, accessibility and scalability for collaborative tools and applications.

> Read more | Advancing in modern information management

Examples of legacy system modernization

Enterprises across industries can benefit from legacy system modernization. For example:

A financial institution might choose to modernize its customer relationship management (CRM) system, replacing a legacy solution that can no longer sustain a rapidly growing number of clients and transactions.

In this case, legacy system modernization would involve upgrading the CRM system to seamlessly integrate and manage extensive historical data securely, scale dynamically to handle large customer bases online and offline, optimize and automate workflows and let users track customer interactions, preferences and financial needs — giving employees the ability to improve customer data analysis and deliver efficient, tailored customer experiences.

An airline may see the need to modernize its IT infrastructure to improve customer experience. Perhaps this decision came after realizing its legacy reservation and booking systems — built on older technology — lacked flexibility and hindered innovation, rendering the organization unable to continue to meet the evolving needs of the industry and its customers.

By modernizing legacy systems with new technologies such as cloud computing, microservices architecture and agile development practices, the airline can deliver personalized, efficient travel experiences for customers.

Meeting modern challenges: The benefits of modernizing legacy systems

Challenge 1: High maintenance

As legacy systems were built using the technology models and infrastructure components of the day, now they’re typically required to undergo frequent maintenance over time to meet evolving business requirements — an exercise that forces organizations to allocate large IT budgets and specialized maintenance resources for upkeep. Even then, the maintenance and upgrades these systems receive are often only fundamental, covering primarily bug fixes or compatibility enhancements — with no room to introduce new, modern features.

Upgrading and modernizing legacy systems will not only ultimately prove cost-effective, as newer systems built on advanced architectures are easier to maintain and support, but also provide more avenues to introduce innovative features and enhancements.

Modern systems make use of cloud-native infrastructure, which reduces the need for on-premises and hardware maintenance and facilitates easier and more agile development of new features. Cloud infrastructure allows for continuous integration and delivery (CI/CD), enabling organizations to roll out updates and innovations faster than ever before, and at a lower cost as well.

Challenge 2: Integration issues

Legacy systems often rely on proprietary interfaces, data formats or communication protocols that are incompatible with standard integration methods, making them near impossible to perform data exchange with other systems. This creates data silos and inefficiencies, hindering communications, operations and modernization efforts.

Today’s software and infrastructure have been designed with this in mind, using standard integration frameworks and protocols to facilitate interoperability and seamless communication with other systems — achieving faster decision-making and agile response to unpredictable market changes.

Challenge 3: System unreliability

Legacy systems are prone to crashes and failures due to under-maintained software, irregular maintenance and complex or obsolete architectures that are hard to maintain and debug. This leaves businesses at risk of disrupted operations or security breaches.

Legacy systems are also typically built on outdated architectures that aren’t designed to easily accommodate the scalability requirements of larger enterprises or high-transaction use cases.

Scalability becomes an issue when legacy systems aren’t able to handle increased customer demands, user growth, data volume and complexity — largely due to a rapidly growing digital ecosystem requiring near-immediate responses, and the fact that outdated systems have rigid architectures that make it difficult to scale horizontally or vertically. This can result in slow response times and potential downtimes.

By modernizing legacy systems, company data can be fitted with the latest, state-of-the-art features, ensuring easy maintenance procedures, tighter security, data integrity and up-to-date regulations and policy compliance. This in turn maintains platform stability and business continuity.

With modern technologies, architectures and practices, technology systems can more easily adapt to changing business needs and maintain a high level of performance. Cloud-native infrastructure allows on-demand scalability and automatic resource provisioning, which can handle increased loads without manual intervention or significant upfront investment. Additionally, modern infrastructure improves system performance, enhances compatibility and reduces the risk of security vulnerabilities.

Challenge 4: Security vulnerabilities and compliance complications

Because of its outdated architecture and lack of encryption measures, older systems often possess inadequate security measures. This can lead to data breaches, leaks, cyber-attacks and service outages, complicating compliance and undermining a business’s reliability and trustworthiness.

In replacing legacy systems and moving to a cloud-based solution, security measures can be implemented to protect against these vulnerabilities, both through internal security features like data encryption and additional measures taken by the cloud service provider.

Companies can also make sure data is protected from external threats and internal risks such as human error or malicious intent. This helps to maintain compliance with industry and legal regulations, avoiding fines, penalties and reputational damage.

Challenge 5: Skill shortage

As legacy systems become more outdated, and more modern systems take their place, the demand for knowledge on newer systems becomes higher while the requirement for legacy system skillsets dwindles. Companies who hold on to legacy systems risk not protecting their data enough, as it may be difficult to find people to maintain, secure and update their system capabilities.

Modernizing legacy systems not only ensures companies have plentiful resources to look after their systems, but also guarantees companies can remain competitive, meeting high customer demands and staying ahead of the curve in a fast-paced industry.

> Read more | 8 reasons to modernize your financial services institution

Exploring the approaches to legacy system modernization

Legacy system modernization can be a daunting task, especially as there are several possible approaches that depend on a variety of factors like the complexity and size of the legacy system, available budget and core business priorities.

Some approaches, while simpler and less costly to execute, come with their own set of problems.

Encapsulation

Some companies have considered encapsulation, which involves wrapping existing systems (i.e., legacy components or functionalities) within newer, modernized architecture — this means that only the interface layer is altered. The idea is that since new data and functions are applied using an external API, entire processes are still controlled via legacy systems.

This is a phased approach to modernization, but encapsulation doesn’t solve several of the problems companies are already facing when considering legacy system modernization, especially involving difficulties with maintenance, integration and upgrading.

Encapsulation also poses additional challenges, one being performance overhead. This actually increases computational resources (such as CPU, memory and network bandwidth) or time required by a system or application to execute additional tasks or processes. Instead of solving operational complexities, encapsulation adds to them as companies must maintain and manage the encapsulation layer on top of the legacy system. Encapsulation creates dependencies between the legacy system and the encapsulation layer, meaning changes or updates to the legacy system can also impact the encapsulation layer — potentially causing disruptions and issues in functionality.

Depending on how encapsulation is implemented, organizations may become dependent on specific vendors or proprietary technologies to maintain the encapsulation layer, limiting flexibility and vendor choice.

Federation of legacy systems

While a modern ECM is capable of federating content from legacy repositories, old-fashioned tools may require federating legacy systems. This happens when multiple independent solutions, including legacy systems, are integrated to work together as a unified system . The purpose of this is to leverage the strengths of each, while providing seamless access to data and functionality across the integrated environment.

However, this type of federation involves establishing communication protocols, data standards and integration patterns to facilitate interoperability between these systems. As the number of systems that are involved in the federation increases, more time and resources will be needed to establish and manage them.

Maintaining data consistency across federated systems can be challenging, as organizations need to deal with siloed data sources — going against the purpose of modernizing systems to eliminate this. Federation instead introduces performance bottlenecks, especially when there are large volumes of data involved. Downtime or performance issues in one federated system can cascade to affect other interconnected systems, leading to service disruptions or data inconsistencies.

Federation and security

Companies often consider legacy system modernization to mitigate security risks, yet federating systems potentially increases the risk of security vulnerabilities. However, leading modern ECM platforms approach federation differently, federating content repositories rather than legacy systems. ECM content federation enables modern ECM platforms to manage content not only within its repository but also across the many siloed repositories, including legacy ECM platforms, file shares, email and more.

With a manage-in-place approach, a single content solution platform allows organizations to apply its overarching content management strategy (a records management policy, for example), regardless of where content resides in the enterprise. With that type of foundational content solution, different business units can store content in the systems that make sense for them, and records and information management professionals could control, protect and manage content centrally and in a way that works for the entire organization.

Content migration and federation

By leveraging ECM content federation, organizations can avoid the slow, complex, error-prone and expensive content migration that is often required when modernizing ECM platforms. Modern ECM platforms that include content federation, including Hyland’s Alfresco and Nuxeo platforms, can manage content in place without requiring any content migration.

Rehosting and replatforming

Rehosting and replatforming are alternate modernization strategies companies may consider.

Rehosting involves moving current applications from on-premises to a cloud or different hardware with minimal code changes, called “lift and shift” — transferring applications and databases to the cloud and adjusting them to work in the new setting. Replatforming has a similar approach, with an additional step known as “tinkering”, or making minor adjustments like updating configurations, adjusting settings or optimizing code for better performance.

There are drawbacks to both approaches. Rehosting doesn’t address underlying issues and inefficiencies in application architecture. By simply migrating applications into a new environment, systems can still continue to exhibit previous limitations such as performance bottlenecks, inflexible scalability and maintenance challenges.

Replatforming involves modifying the application or system to adapt to the target platform's requirements or constraints, which presents double work (instead of simplifying processes) due to the differences between source and target environments. There is also a risk of setting the wrong configurations, settings and code, introducing even more complexity and potential risks to a legacy system not equipped to protect itself.

By selecting rehosting or replatforming, companies must accept the risk that these approaches don’t address technical debt or legacy issues in the application codebase. This can perpetuate existing problems and increase complexity over time, as these migrated applications may become more difficult to maintain and evolve in the future — costing companies much more to do so.

Replacing

Many companies have concluded they no longer require legacy systems at all and have chosen to replace the system entirely.

Replacing legacy systems with completely new solutions would incorporate necessary features and functionality to meet your organization’s current and future needs, while also eliminating obsolete elements from the old system, reducing long-term maintenance costs and significantly contributing to increased ROI.

New, modern solutions enable organizations to incorporate the latest technologies, functionalities and features to address current business problems, providing an opportunity for companies to align their systems closely with their goals and objectives to support future growth.

New solutions are designed with scalability, performance and efficiency — crucial capabilities for today’s industry landscape — and leverage cloud-native architectures to enhance improved system performance, responsiveness and capability to store, manage and sort large data volumes. This allows organizations to handle growing workloads and user demands effectively.

Modern solutions also empower organizations to innovate and differentiate themselves in the market by leveraging cutting-edge technologies, such as AI, machine learning and advanced data analytics.

While legacy system replacement may be the obvious choice for many, not all businesses are ready for it. Deloitte suggests, “It’s important to develop your core system replacement strategy in conjunction with process rationalization and optimization.” Additionally, businesses must “clearly communicate their needs to IT” to ensure adequate capacity planning and budgeting.

How a legacy ECM could hurt your business

Legacy ECM systems are reliant on outdated technology and manual processes, and were never designed to adapt to today’s quickly changing business dynamics. Their functionalities were meant to be simple: Store and index digital copies of business records to be located and retrieved at a later date as part of a business process or in response to an ad-hoc request.

But today, they also fall short in a number of ways:

• They’re evolving too slowly. Imagine running a marathon in old, worn-out shoes: Your competitors will have long finished the race by the time you reach the end. That's why businesses need to keep systems up to date and make sure they’re able to respond to evolving demands.
• Critical business solutions shouldn’t be carried out on aging infrastructures. Legacy infrastructures used to be fine for handling basic tasks back in the day, but aren’t built to handle today’s complex integration requirements. They’re also not compatible with all the latest security patches and updates, leaving the door wide open for cyber attacks.
• Functionality is encased in a single code base. A legacy system is like a huge treasure chest, storing all crucial data in a single compartment. But searching for a single piece of treasure would be a nightmare, especially when you’re expected to locate it fast — and it would result in a lot of unhappy clients. Here’s where sleek, organized, cloud-native file management systems come in handy instead.
• Integration to third-party systems is near-impossible. Third-party systems are packed with all sorts of useful features and functionalities that come in incredibly handy for operational processes: automating tedious manual tasks, providing valuable insights or helping you answer customer queries on time, to name a few. But if your legacy system can't connect smoothly with these systems, you'll be missing out on all those benefits.
• Establishing and maintaining security protocols is challenging across product releases. Legacy systems are a patchwork quilt of different technologies and components, making them incredibly difficult to keep track of fixes and updates. Conversely, modern systems are built with security in mind from the get-go, with layers of defenses: firewalls, encryption, authentication protocols and more. And because they're designed with the latest technologies and best practices, they can keep track of, and are much more resistant to, cyber attacks and vulnerabilities.

> Read more | Understanding the risks of legacy ECM

Holding on to your legacy ECM system ultimately hinders your business's ability to effectively manage and leverage your organization's valuable content and information, causing operational delays and placing you at a competitive disadvantage.

According to a McKinsey report, “reinvented” legacy companies see around 2.5 times more revenue growth, as well as a twofold increase in EBIT growth and ROI on digital efforts compared to their traditional counterparts.

Instead of reinventing the wheel by trying to fix legacy systems, upgrading to a modern ECM is a much more efficient approach to unlocking growth and success.

Features of a modern ECM platform

A robust ECM platform is often beneficial to companies implementing legacy system modernization efforts. ECM platforms facilitate the migration of content from legacy to modern systems, manage content throughout its lifecycle and strengthen information governance practices, among other tangible benefits.

Here’s a comprehensive look at how ECMs can play a part in system modernization:

Cloud-first approach and scalability

ECMs are usually cloud-based, offering scalability and lowering IT costs while improving security.

Modern architecture and extensibility

As modern ECM systems are typically built on cloud-native architectures with robust APIs, components can be deployed and scaled independently to meet changing needs. They also enable seamless integration with external data sources and systems, facilitating interoperability and data exchange, and enabling federation of content across disparate repositories.

By leveraging APIs and connectors, modern ECMs access and aggregate content from various sources, including legacy systems, cloud applications, databases and external repositories. This provides a unified view of content assets.

Modern systems also make use of natural language processing (NLP) to enhance search accuracy and relevance, enabling users to seamlessly find the information they need.

Intelligent processing capabilities

AI and machine learning (ML) automates content categorization and tagging, extracting intelligent data and supporting predictive analytics for forecasting trends.

Process automation

Robotic process automation (RPA) and intelligent document processing (IDP) technologies utilize AI, OCR and automation to capture and extract data from documents in business processes and streamline workflows.

> Read more | Process automation guide 

Reporting and analytics

ECM platforms can deliver real-time insights from interactive dashboards and audit trails, supporting data-driven decisions.

Metadata assignment

Metadata helps to provide additional context to documents, making it easier for users to find content or for the system to automate functions, such as records management. Therefore, ECM systems that provide advanced support for defining and assigning metadata to documents facilitate compliance and quick information retrieval.

Selecting the right ECM platform for your legacy system modernization efforts

If your organization is stuck in the cycle of dealing with inefficient systems, purchasing more software and attempting data migration — only to find yourself in a risky situation — you’re not the only one. Many enterprises find themselves working with several legacy ECM systems that are supposed to support core business processes, but have come to actually detract from user productivity.

Legacy ECM systems that rely on outdated technology and manual processes can create operational inefficiencies, pose integration challenges, escalate costs and present compliance and security risks. This significantly affects productivity and business growth.

Hyland’s modern, cloud-native content solution platforms are built from the ground up to enable extensibility and integration. Our ecosystem of professional services, partners and systems-integrator networks provide user-friendly, low-code interfaces, ensure rapid implementation and empower developers to create faster. Learn why Hyland might be the solution for your legacy system modernization.