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Reduce Costs With App Modernization

Is there a strategic approach to digital transformation that allows CIOs to reduce costs after app modernization?


No Option but to Modernize: The Imperative of Reducing Costs

Legacy applications with limited integration or interoperability increase operating costs and risks for established organizations. 

They push away consumers who require positive multi-channel experiences but attract attackers seeking to capitalize on security gaps. 

Business users can't wait to have real-time decisions and demand greater visibility into project statuses and timelines, financial performance and budget allocation, supply chain operations, customer behavior and preferences, and regulatory compliance. 

However, organizations have to spend significant sums of money just for maintaining existing capabilities in conditions when it's necessary to compete with new digital-first disruptors and reduce the time to launch innovative applications. 

Yes, deploying new technologies to transform core platforms, data, and processes may accelerate cost savings and provide immediate financial relief or even long-term benefits, with new revenue opportunities. 

And yes, cutting legacy costs may be achieved by avoiding the use of duplicate software and eliminating payments for infrastructure licenses, some tasks may be offshored without sacrificing velocity and productivity, and the workforce may be redeployed instead of hiring additional staff at higher costs. 

However, the key question is: Is there a strategic approach to digital transformation that allows CIOs to reduce costs after app modernization? 

Custom Modernization Approaches for Cost Optimization

Incremental Modernization

Many legacy applications are deeply entrenched in business processes and contain years' worth of critical data. This data should be integrated, not hastily moved or altered, preserving its value while enabling new capabilities. For example, we could wrap the legacy application in a more modern interface or connect it to newer systems through APIs.

Instead of replacing an entire legacy application all at once, an incremental modernization approach allows for a more controlled and less risky transition. Building upon existing data systems incrementally minimizes disruptions, financial costs, and the risk of data loss or corruption. 

This flexible approach to modernization allows easier adoption of new technologies, ensuring effective functioning and gradual skillset adaptation for IT staff.

Migrate Only Customizations, Not the Core, to Microservices

This principle is about application architecture and aims to separate core functionality from customizations. If only the customizations or special features are moved to separate microservices, then the change may not be as radical as a full transition to a microservices architecture for the entire application.

This makes it easier to update or replace these individual components without affecting the entire system.

Microservices are independently deployable, meaning they can be scaled up or down based on demand, leading to more efficient resource utilization. Migrating to microservices can enable faster development cycles.

Teams can work on different services simultaneously, enabling quicker deployments. Separating customizations from the core system into microservices makes it easier to troubleshoot and manage the application, thus improving maintainability.

Modernizing Critical User Journeys First

Such modernization efforts focus on the most important and frequently used workflows in an application, to maximize the impact in terms of user satisfaction, productivity, and overall ROI.

It refers to the modernization of critical "journeys" or workflows, a series of interactions that users undertake to complete a specific task within the application. 

For instance, in a project management application, a critical user journey might involve the steps to create a new project, assign team members, and allocate resources. This journey is "critical" because it is essential for the core functionality of the application and directly impacts user productivity and satisfaction. If this function is slow and users (either customers or employees) are mostly frustrated with it, this feature will be prioritized in the initial scope.

The risks associated with the modernization are easier to manage because the scope is limited to specific, well-defined areas of the application.

In contrast, arbitrary modernization refers to the practice of updating or upgrading systems across various aspects of a system, rather than targeting specific areas that need improvement. For example, a company might decide to update its entire software stack simply because some of the technologies are perceived as outdated. However, this approach can be costly, and not deliver the expected returns, as not all parts of the system necessarily require updating or might not be critical to business operations or customer experience.

Integration Modernization

When modernizing or upgrading technology infrastructures, the focus should be on ensuring various systems can communicate and work together seamlessly rather than modernizing individual systems.

Many organizations have already invested heavily in various tools and platforms. Integration allows you to leverage these existing investments, as you can connect new technologies to older systems, thereby extending their utility.

In a complex organization, different departments or teams often rely on various systems to accomplish their tasks. Prioritizing integration ensures that data can flow easily between these systems, improving operational efficiency.

While modernization of individual systems has its merits, focusing on integration often brings more comprehensive benefits, especially for complex or growing organizations. Integrated systems are typically easier to scale, allowing for smoother transitions and expansions. An integrated system is generally more adaptable to changes. Whether you're incorporating new functionalities or need to replace an old system entirely, if your focus has been on integration, the impact of such changes can be managed more efficiently.

Moving Non-Differentiating Functions From Core App to Specialized 3-Party SaaS/PaaS Solutions

While SaaS usually replaces a particular function or application entirely, PaaS provides the building blocks that allow you to more easily develop and manage your own custom applications.

For instance, if your in-house application has a reporting feature that requires a specific database and server setup, rather than maintaining this internally, you can offload this to a PaaS solution that provides the necessary database and server resources. This allows your team to focus solely on the logic and user interface of the reporting feature itself.

Maintaining in-house solutions for non-core functions can be expensive. By moving non-essential tasks to third-party services, a business can focus more on what it does best,  whether that's product development, customer service, or another core competency. 

Third-party solutions are plug-and-play to accelerate development cycles and help get products or features to market faster. 

SaaS and PaaS solutions are generally built to be scalable, allowing companies to easily expand or contract usage based on needs, without the complex and costly process of altering in-house systems. 

Third-party providers often invest in security and compliance measures, and meet industry standards. 

Using third-party solutions means you don't have to worry about the upkeep of the software. Updates, security patches, and new features are handled by the service provider.

Building Global Platform That Supports Local Customization

This is particularly relevant for enterprises operating across multiple regions or countries. This approach aims to standardize core functionalities while allowing for the flexibility to adapt to local needs, laws, or customer preferences. 

The global platform would contain the core functionalities that are common across all markets. This could include things like basic product or service features, security protocols, data storage and management, etc. These elements are standardized to ensure consistency and efficiency.

On top of this global layer, you would build localized modules that can be plugged into the core platform. These modules could cater to region-specific requirements like language localization, currency conversion, tax calculations, or even market-specific features.

Technologically, this could be achieved through a modular architecture or microservices that allow for independent deployment of localized features. APIs could be used to facilitate interaction between the core platform and the localized modules.

The core platform can be updated or scaled without affecting the localized modules. Ensures that regardless of the location, the core functionalities and user experience remain consistent. The architecture allows for quick adaptations to local market conditions, regulatory changes, or customer preferences. Common functionalities are developed and maintained centrally, reducing duplication of effort.

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Written by
CTO / Department Head / Partner
I've been leading a department specializing in custom eLearning software development and Business Intelligence software development for 17 years.
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