The Future of Enterprise Application Modernization: Trends and Predictions for 2023 and Beyond

Legacy systems and technical debt are highly relevant issues for many companies; and in 2023, application modernization is an essential, life-saving solution to the problem. Application modernization involves not only dealing with obsolete systems, but opening up many digital transformation opportunities and trends that the company can benefit from. That said, the process of modernizing your business applications can be a challenge as it requires significant changes and investments in modern technologies.

In this article, we review six business application modernization trends that are worth considering in 2023. Additionally, we will delve into five essential tips for preparing for an application modernization strategy that will lead to higher chances of success.

What Is Enterprise Application Modernization?

Simply put, enterprise application modernization is the process of updating and transforming existing software applications and infrastructure in the enterprise. The key difference is that, unlike SMBs, the scale of enterprise app modernization is larger and requires more careful planning, coordination, and resource allocation across multiple departments or business units – all compliant with security and other application infrastructure requirements and standards.

Why is application modernization important?

As recently as 2018, 78.5% of the US Federal Government’s IT budget was spent on maintaining existing legacy software, and around 20% was spent on development and modernization. Having technical debt and dealing with obsolete technologies can hinder the growth of organizations and is, therefore, a serious problem that can prevent businesses from bigger profits. Application modernization is the solution to this problem.

However, to fully benefit from application modernization, it is essential to properly prepare for it beforehand. This involves choosing the best modernization approach and conducting a well-thought-out enterprise application modernization plan. Although there is plenty of advice on the latter, we would like to focus on what businesses can do before actually writing down a plan to reduce implementation risks and increase the chances of modernization success.

How to Prepare for Application Modernization Strategy

Cloudbase Research found that, in the past year, 81% of enterprises had digital transformation projects fail, suffer delays, or be scaled back, costing an average of $4.12 million. Moreover, 82% were prevented from pursuing their strategies due to a lack of resources, funds, and skills to deliver the project or the complexity of implementing technologies.

To avoid failure, it is essential to thoroughly prepare for developing a strategy. Specifically, we advise you to prepare the needed budget, form a qualified team with an authorized leader, be patient and realistic, and get ready for the significant change management consequences of modernizing your business applications.

Prepare the Budget

The process of application modernization includes costs for infrastructure changes, software licenses, development processes, employee training, potential disruptions, and much more. A well-prepared budget that includes explicit and implicit costs will prevent financial surprises and facilitate effective resource allocation. This allows businesses to prioritize critical applications and ensure successful project completion within the allocated funds.

Moreover, counting the costs and budgeting for application modernization helps organizations gain buy-in from stakeholders, secure the necessary funding, and effectively communicate the potential benefits and ROI, ultimately maximizing the chances of a successful and smooth modernization journey. Therefore, our first piece of advice is to prepare the necessary budget.

Form an A-Team

Next, it is essential to pay attention to the team that will be responsible for the modernization project. The people on your team should have diverse skills and expertise, ranging from software development and infrastructure management to data migration and user experience design. Therefore, gathering experienced team members and adhering to external service providers if needed is key for modernizing legacy applications most effectively.

Additionally, external service providers can supplement the in-house team with a fresh perspective and broader talent pool, enabling faster high-quality execution while allowing the internal team to maintain focus on their core responsibilities.

Learn how to outsource software development right with 12 reliable tips from a provider with 13 years of experience

Appoint an Authorised Leader

Another thing to pay attention to is the presence of one or several individuals that are authorized to make critically important decisions.

Modernization projects often involve situations that require immediate action. Having at least one person on the team that is capable of making decisions without constant consultation with executives enables quicker response times and prevents unnecessary bottlenecks or delays.

Moreover, this autonomy fosters a sense of ownership and responsibility, empowering team members to take the initiative and contribute to the project’s success.

Maintain Realistic Expectations

It is essential for businesses to understand that application modernization takes time and patience. Depending on the size and complexity of the entire system, it could take several months to a year to complete a typical modernization project. Setting overly ambitious or unrealistic expectations only leads to disappointment and frustration. By being realistic, organizations can align their goals with the actual timelines and challenges of the modernization journey.

Be Ready for Change Management

Lastly, it is crucial to be mentally prepared for future change management processes, as modernizing applications often brings significant shifts in technology, processes, and roles within an organization. For example, some employees may need to leave the company or transition to other positions due to changing skill requirements. Embracing this reality and planning for it helps to ensure a smooth transition and modernize enterprise applications with minimum disruptions.

Find out more about the application modernization roadmap steps and best practices to modernize business apps profitably

Future Trends of Business Application Modernization

Mindlessly following trends can lead to useless changes, budget draining, and decreasing employee motivation. On the other hand, being aware of what the market offers and analyzing and choosing what to invest in based on accurate data and statistics is the best way to stay competitive and to help the business grow faster.

In 2023, there are many tech trends to choose from. We recommend paying attention to low-code and no-code development, hyperautomation, cloud-native applications, serverless APIs, DevSecOps, and microservices architecture.

Low-code and no-code development

Low-code and no-code approaches allow users to create their own applications without knowing how to program, as well as to use graphical user interfaces and configuration tools rather than traditional programming languages. This speeds up application development capabilities, enables organizations to iterate and deploy solutions faster, and reduces the traditional development backlog.

According to Gartner, by 2025, 70% of new applications developed by organizations will use low-code or no-code technologies, up from less than 25% in 2020. The global low-code platform market revenue itself is expected to reach approximately $32 billion in 2024, compared to almost $22.5 billion in 2022.

It’s important to note that although low-code and no-code development offers speed and simplicity, it may have limitations in terms of customization, scalability, the cleanliness of code, and handling complex requirements. It is better to have professional, independent software developers review the code created.

Hyperautomation

Hyperautomation involves the use of new technologies such as artificial intelligence (AI), machine learning (ML), and robotic process automation (RPA) to analyze data and identify patterns and insights that can be used to automate processes. It can help organizations free up resources and improve productivity, while also enabling them to deliver better customer experiences and drive innovation.

For example, leveraging the latest technologies mentioned above, enterprises can automatically analyze and categorize customer emails, integrate intelligent chatbots, automate social media monitoring, streamline order processing, etc.

Through 2024, organizations will adopt at least 3 of the 20 process-agonistic types of software that enable hyperautomation. They will also lower operational costs by 30% when combining hyperautomation technologies with redesigned operational processes.

Cloud-native applications

Cloud-native applications are designed and built specifically for deployment and operation in cloud computing environments. Their goal is to enable faster, more agile software development and deployment, and to provide better scalability, resilience, and efficiency than traditional software applications.

As an example, for large retail enterprises, cloud-native applications help enhance the customer experience by providing real-time inventory visibility across all channels and enabling seamless online and in-store purchasing options.

Gartner estimates that over 95% of new digital workloads will be deployed on cloud-native platforms by 2025, compared to 30% in 2021. IDC research predicts that over 90% of apps will be cloud-native by 2025 .

Serverless APIs

Serverless APIs, also known as serverless functions or functions-as-a-service (FaaS), are a type of cloud computing service designed to execute small, discrete units of code in response to specific events or HTTP requests instead of running an entire server or application continuously. In 2019, the O’Reilly survey found that 40% of organizations have adopted some sort of serverless architecture, mostly benefitting from reduced operational costs and automatic scaling. Thus, the trend is set to continue for the foreseeable future.

Serverless APIs abstract away the infrastructure management tasks, allowing developers to focus on writing code, building functionality, and improving their applications without being burdened by operational tasks. For example, for a financial enterprise, using serverless APIs could mean ensuring consistent performance even during peak periods, such as when markets open or when major economic news is released.

However, serverless API is also quite a unique feature that only fits specific purposes. For example, if you have a high and consistent workload with predictable traffic patterns, relying solely on serverless APIs may not be cost-effective. It is always better to thoroughly analyze your current business needs before deciding to invest in any trending technology.

DevSecOps

DevSecOps is a set of practices and principles perfectly suitable for industries requiring special security attention, like finance or healthcare. It combines DevOps principles, which focus on collaboration, automation, and continuous integration and delivery (CI/CD), with a strong emphasis on integrating security measures throughout the entire development cycle. It also promotes a culture of shared responsibility, where developers, business operations teams, and security professionals work together to ensure that security is prioritized and integrated seamlessly into the software development and deployment pipeline.

In 2023, 56% of organizations reported using DevOps or DevSecOps methodologies, up from 47% in 2022. Among the benefits received, the most common were increased security, more efficient DevOps practice, easier automation, cost and time savings, and better collaboration. Therefore, the trend for DevSecOps is only going to grow stronger.

Breaking down the Monolith into Microservices

Microservices architecture is an approach to software development where engineers divide a complex monolithic application into a collection of small, independent services. Unlike a monolithic system that requires complete redeployment for every change, microservices provide greater flexibility and autonomy. This architecture also facilitates iterative updates, enables the selection of the most appropriate technology stack for each service, enhances troubleshooting and debugging capabilities, and much more.

With a microservices architecture, an e-commerce platform, for example, can scale the product catalog service separately from the payment processing service, ensuring that the platform can handle high traffic volumes during peak periods, such as holiday sales, without affecting other services.

In 2021, 85% of respondents from large organizations (i.e., with 5,000 or more employees) stated that they currently use microservices. In 2020, 55% of respondents reported that their experience with microservices architecture was either entirely or mostly successful. Microservices architecture is set to become essential for more and more organizations that want to take advantage of its benefits.

Conclusion

In 2023 and beyond, the application modernization process will remain essential to enterprises’ technology maintenance. In order to fully benefit from the process, businesses need to form an A-team with authorized leaders, maintain realistic expectations about the process and the budget, and be prepared for change management’s outcomes. Then, when executing enterprise application modernization, it would be beneficial to pay attention to low-code and no-code development, hyperautomation, cloud-native applications, serverless APIs, DevSecOps, and microservices architecture.

Among the pool of existing opportunities, it is challenging to choose the most beneficial one for your business. Having 13+ years of experience in different niches (e.g., Travel, Fashion, Goods for children, Food, Logistics, and Branded products) and sizes (e.g., from startups to Fortune 500 and the Inc.5000), Maven Solutions can help you execute application modernization effectively. Contact us to discuss your business needs.

FAQ

What is the goal of application modernization?

The main goal of application modernization is to transform legacy applications into more efficient, scalable, and adaptable systems that meet the business’s and its users’ evolving needs.

Why Do Businesses Need an Application Modernization Strategy?

A clear strategy allows businesses to mitigate the risk of application modernization failure and achieve long-term success by aligning their actions with their vision and objectives.

What are the application modernization phases?

We divide application modernization into 3 phases: Inception, Construction, and Transition.

Are there any financial benefits of legacy application modernization for enterprises?

Yes. Modernizing applications allows enterprises to reduce operational and maintenance costs, decrease hardware expenses, save costs on dealing with potential security risks, and much more.

What is an example of application modernization?

One example of application modernization is transforming a monolithic application into a microservices-based architecture. It enables better agility, scalability, and maintainability of technology as each service can be updated or scaled individually without affecting the entire application.