How To Reduce Costs And Risks In Application Modernization?

Reduce Costs and Risks In Application Modernization

According to 2022 research from vFunction and Wakefield Research, application modernization is one of the most important priorities in many organizations, however, 79% of application modernization projects end up being failures and cause negative impacts on companies’ financial assets. 


This data raises an important question: how can organizations successfully navigate the labyrinth of application modernization without draining financial resources or facing substantial risks? The answer to this question is multifaceted and involves a comprehensive understanding of the process, potential pitfalls, and best practices. In this blog post, we will delve into the strategies for reducing costs and risks in application modernization, fostering a smoother and more efficient transition for your organization. 


Common Pitfalls Of Application Modernization Projects 

Before diving into the strategies for mitigating costs and risks, it’s essential to first highlight the common pitfalls in application modernization projects. Understanding these can provide crucial context and guide your organization towards more effective decision-making. These common missteps range from inadequate planning to overlooking critical components of the existing system, and often result in unforeseen costs and project delays. 


Failure In Buy-In 

One of the most common pitfalls in application modernization projects is a lack of stakeholder buy-in. This issue often arises when the benefits and objectives of the modernization effort are not effectively communicated to all stakeholders. As a result, key individuals may resist the change, stalling the project and causing costs to escalate.  


Failure in buy-in can also occur if the project does not adequately consider the needs and concerns of end-users, creating a barrier to adoption once the modernized application is deployed. Therefore, garnering support from all stakeholders, including management, IT staff, and end-users, is critical to the success of application modernization projects. 


Lack Of Understanding About The Current Situation 

A critical pitfall that organizations often overlook is the failure to fully understand their current application ecosystem before initiating modernization efforts. This includes not only the technical aspects of the existing applications but also operational processes, user interactions, dependencies, and business logic embedded within these applications.  


Without this comprehensive understanding, organizations risk modernizing applications in a way that could disrupt essential business operations or exclude critical functionalities. This could lead to increased costs in efforts to rectify these issues post-modernization and potential business downtime. Furthermore, it could lead to the development of solutions that are incompatible with existing systems and processes, thereby increasing the complexity and risk associated with the modernization effort.  


Therefore, performing a thorough assessment of the current state of the application ecosystem is an essential step in application modernization. It helps to minimize risks, control costs, and ensure the development of solutions that are truly aligned with the organization’s needs and objectives. 


Lack Of Skills And Training 

Application modernization projects require a diverse skill set, including expertise in legacy systems, new technologies, and project management. Organizations often lack these skills within their internal teams and resort to outsourcing, which can be costly. Furthermore, without proper training on the new technology stack or processes involved in the modernization effort, employees may struggle with adopting and utilizing the newly modernized application effectively. 


This can lead to a longer transition period, increased costs in providing training and support, and delays in realizing the benefits of modernization. Therefore, it’s crucial for organizations to ensure that their internal teams have the necessary skills and training to successfully execute application modernization projects. 


Data Migration Issues 

Data migration is a significant component of application modernization projects and presents its own set of challenges. One of the key issues that might arise is data loss or corruption during the migration process. If the data isn’t accurately transferred, important information may be lost, impacting operations and decision-making.  

Another common issue is the potential inconsistency in data formats between the old and the new systems. If not properly addressed, this can lead to incompatibility issues, rendering the migrated data unusable in the new system. Moreover, the time it takes to migrate data can exceed expectations, causing project delays and increasing costs.  


Security is another concern during data migration. There’s a potential risk of data breaches or leaks, especially if sensitive data is involved. Therefore, ensuring robust security measures are in place during the migration process is crucial. 


Finally, there can be problems due to the absence of a well-defined data migration strategy. Without a clear plan outlining what data needs to be migrated, when, and how, organizations risk migrating irrelevant or obsolete data or not migrating necessary data, leading to inefficiencies and potential operational disruptions post-modernization. 


Inadequate Cost Estimation 

Inaccurate or inadequate cost estimation is another pitfall that often leads to budget overruns in application modernization projects. The process of modernizing applications can be complex and multi-faceted, with costs associated with the acquisition of new technologies, labor, training, testing, and potentially unforeseen issues. If these costs are not accurately estimated and factored into the project budget from the outset, it can result in a significant financial strain as the project progresses. This can further exacerbate delays and impact on the organization’s ability to realize the full benefits of modernization. Therefore, a detailed and realistic cost estimation, accounting for both expected and potential unexpected costs, is an integral part of planning and executing a successful application modernization project. 


Practices To Reduce Costs And Risks Of Application Modernization 

Application Modernization Practices

Set Measurable Goals & Objectives For Your Modernization Project 

Setting specific, measurable, achievable, relevant, and time-bound (SMART) objectives for your modernization project is a critical first step. These objectives should align with your organization’s broader goals and clearly define what success looks like for the project. Well-defined objectives provide guidance and direction and enable the team to track progress effectively. They also serve as a benchmark against which the project’s success can be measured. For example, objectives may include reducing maintenance costs by a certain percentage, improving system performance, enhancing user experience, or increasing operational efficiency, etc. 


Define The Timeline Clearly 

Without a well-defined timeline, it’s challenging to accurately estimate costs and keep the project on track. A realistic timeline should take into account all activities involved in the modernization process, including planning, assessment of current systems, data migration, development, testing, and deployment. It’s important to factor in contingencies for any potential delays or issues that may arise during the project. A clearly defined timeline also helps to keep stakeholders informed and manage their expectations. 


Leverage Automation 

Automation can significantly reduce the time and effort required for certain tasks involved in application modernization, such as testing, deployment, and data migration. It also minimizes the risk of human error, which can lead to costly mistakes and delays. By automating repetitive or manual processes, organizations can save time and resources, ultimately reducing the overall costs of the modernization project. 


Prioritize Security 

Security should be a top priority throughout the application modernization process. One way to mitigate potential risks is by conducting thorough security assessments of both legacy and modernized systems. This helps to identify any vulnerabilities or gaps that need to be addressed proactively.  


Additionally, organizations should also consider implementing security measures such as encryption, access controls, and regular updates to ensure the protection of sensitive data. 


Invest In Training & Up-skilling 

As mentioned earlier, inadequate skills can be a major roadblock in application modernization projects. To avoid this issue, organizations should invest in training and up-skilling their internal teams on new technologies and processes involved in modernization. This not only prepares them for the project at hand but also equips them with valuable skills that can be leveraged for future projects. 


Continuous Monitoring & Maintenance 

Application modernization is an ongoing process, and it’s crucial to continuously monitor and maintain the modernized systems to ensure they are performing as expected. Regular maintenance activities such as upgrades, bug fixes, and performance tuning are necessary to keep the systems running smoothly and avoid any potential issues or disruptions.  


By proactively addressing issues, organizations can save time and costs associated with major repairs or replacements in the future. Additionally, continuous monitoring also helps to identify areas for further improvement and optimization of systems.  


Overall, investing in regular maintenance is essential for ensuring the long-term success and sustainability of application modernization projects.  



Application modernization is a complex and challenging process that requires careful planning, execution, and management to be successful. By being aware of potential pitfalls and adopting best practices such as setting measurable goals, defining timelines, leveraging automation, prioritizing security, investing in training, and continuous monitoring & maintenance, organizations can minimize costs and risks associated with modernization projects. Ultimately, successful modernization efforts can lead to improved efficiency, greater agility, and a competitive advantage in the rapidly evolving digital landscape. So, it’s crucial for organizations to carefully consider these factors and invest in effective strategies to achieve successful application modernization outcomes. 

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