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In this article, we look at the advantages of legacy system modernization, from improved efficiency and security to greater flexibility and scalability.


Unlock the Full Advantages of Legacy System Modernization

Posted by Angela Davis on July 26, 2023
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You’ll likely have heard a lot about digital transformation and how it relates to existing legacy systems. “Legacy systems” refers to the established hardware and software used by companies, which is frequently outdated and incompatible with more modern cloud-based systems and applications.

Many business owners are asking whether they should modernize their legacy systems and move to a cloud-based computing model instead. What are the advantages of legacy system modernization? Does it make a real difference to how you operate? Will it make your business more streamlined and efficient? 

Knowing the benefits of modernization can be a catalyst for change. However, understanding how to plan and start the process is essential to successfully modernizing a business and migrating to the cloud. 

The advantages of legacy system modernization

A graph showing responses to the question “Would you say your company is heavily dependent upon legacy systems for business-critical functions?”

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If your company is using a legacy system, you’ll want to know what advantages you could gain from modernizing it. Here are just a small selection of the possible benefits:

Improved efficiency 

If you continue using a legacy system, you may find that outdated hardware or software prevents you from adopting new technology and tools that are designed to work with cloud-based systems. 

Modernization will allow you to access these tools and reap the benefits of improved functionality, productivity, and efficiency. You’ll also experience far less downtime (sometimes zero) as your provider will fix any technical issues.

Enhanced security

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In the information age, data can be more valuable than gold dust to businesses and complying with the laws and regulations pertaining to its use is essential.

Luckily, migration to the cloud offers enhanced security for your data (though it should be noted that it’s your responsibility to configure services to meet your needs). Data stored in the cloud is more secure due to higher levels of encryption and less access by human staff to the data warehouses. 

Remember to take steps to protect your data during the migration process, as this is often when it’s most vulnerable. This is especially important during insurance legacy system transformation, for example, where the data in question can be extremely sensitive. 

Scalability and flexibility

Older legacy system hardware and software often have limitations that can be a barrier to scaling up a business. For example, growth might only be possible with  extra investment in infrastructure. 

Following modernization, however, you will have the scalability and flexibility to easily grow your business (or even scale down when needed). This is because you won’t be limited by physical hardware. Therefore, your computing system can be tailored to ever-evolving requirements and changing business demands. 

Reduced costs

Legacy systems often involve a lot of costs, from ongoing maintenance to investment in new hardware and software. 

If you modernize, you remove these costs and only pay for the services and resources you’re actually using. 

With monolithic architecture costs rising annually, modernizing means you should see significant savings year after year. 

An improved user experience

You want your customers to be happy, and that means providing them with the best possible user experience. With a legacy system, there are limits to how you can improve this, but with modernization, the sky’s the limit. You can better store and protect customer data and develop applications and tools to make their journey smoother and more enjoyable. 

Six effective legacy system modernization approaches

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As with many things in the business world, change doesn’t always follow a single path. If you decide to modernize your legacy system, you need to decide which approach best suits your business and its needs. 


With this approach, you can reuse some or all of the main components of your system and connect to new access layers using APIs (application programming interfaces) by omitting old legacy code. This adds a fresh interface to old system components to improve functionality. 

This method doesn’t eradicate maintenance costs but can be ideal for businesses that can’t afford or aren’t yet ready for a complete modernization. 


Rehosting is a fairly low-risk legacy system modernization approach. It involves migrating your system to a new cloud, hardware, hybrid, or virtual environment. Many larger organizations opt for this approach, as it can improve efficiency without disturbing workflows. 


If you want to migrate app components without major changes to your code, re-platforming may be the best approach. While this method avoids altering the core code and main features, it does have restricted benefits. 

One example of this is that you will only be able to adapt components that work with the new system, meaning redundant components may not be able to keep pace with modern business demands. 


Refactoring allows you to improve the internal components in your system without making changes to the external environment. It’s a good approach if you want to change your system’s configuration, give your code more clarity, or solve tech issues. This approach can help make your reconfigured system more flexible.

Refactoring is ideal for organizations that want to switch from containers to microservices. 


If you’ve experienced issues with performance and/or scalability, rearchitecting may be your best choice. For this approach, you need someone with good technical/coding skills to alter the code of the application’s architecture. 

Benefits include better app functionality and future integration. It’s worth noting that rearchitecting can be risky, as it changes the way your system works. 


Of all the possible approaches listed, this is the most complicated, as it involves building a completely new system. 

Technical staff must rewrite core legacy components and build new functionalities. Despite its complexity, this approach offers considerable benefits, such as better security, customized network protocols, and reduced development time. 

Best practices for legacy system modernization

Six drivers for application modernization. 

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No matter which legacy system modernization approach you chose, it’s pointless to pretend that the process will be simple. Modernization comes with certain risks and can be complicated. The more complex the changes you want to make, and the more unwieldy the legacy system, the harder the process will be. 

However, these best practices can help smooth the way.

Know your system 

If you don’t know your system intimately, you won’t know what pitfalls to expect. Identify the areas that don’t work properly as well as those that do. 

By understanding how well your existing tech operates, especially in terms of connections and interoperability, you’ll be well-placed to prioritize the changes required.

Look at your business processes too, as there may be faults in them. Doing this before considering software solutions will save you time and money. 

Remember, just because the system as a whole is outdated, it doesn’t mean every component is problematic. 

Plan your goals

Why do you want to modernize, and what do you hope to achieve by doing so? Having clear objectives in mind, and understanding which parts of your legacy system are preventing you from reaching them, will help you plan your modernization. 

Knowing what you want to achieve will help you avoid distractions and stay on track throughout the project. A list of goals is also beneficial for narrowing your focus in regard to which parts of your system are redundant and which might still have a role to play. 

Modernize or replace?

By this stage, you should have a clear idea of what approach will best suit your business, as well as which parts of your system will be retained, modernized, or replaced with more up-to-date components. 

In most cases, you’ll find certain system features can be modernized rather than changed, which will save you money and time. Identifying which components can be updated and still used, and how important those components are to your business needs, will help shape your modernization process.

Step by step

One thing to avoid is doing everything at once. Modernization should be a methodical process that causes as little disruption to your business operations as possible. Identify the functions and processes that are most important to you, and modernize or replace them one by one. 

By breaking your legacy system down into its various functions and prioritizing the importance of each one, you can better approach modernization and avoid mistakes. 

Play the long game 

It can be tempting to take shortcuts and implement software and tools that ‘look pretty’. However, avoid temptation and instead try to take a long-term view of software and apps. There’s little point in buying and implementing something that will be outdated in a year or two. 

When looking at new applications, consider their architecture. Will they be adaptable to other tools and offer you the integration abilities you need in the future? 

Thinking long-term when it comes to new components will save you from having to revisit modernization in the future and should be an integral factor in mainframe application modernization

This list of best practices isn’t an exhaustive one, but it should help you plan the modernization process better. Remember, it’s not just a case of knowing where you want to be in six months' time, but where you want to be a few years down the line. 

Making your legacy systems more secure and resilient with modernization

The rise of legacy systems.

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While there will certainly be new challenges as your business moves forward, there will also be opportunities to embrace fresh technology. OpenLegacy can support you with a legacy system process as well as every aspect of your modernization. 

While you may have several different modernization goals, you should always have improved resilience and security in mind.

Your data is more at threat now than ever before, and you must also consider the increasingly stringent laws and regulations that govern how you store and use customer and other sensitive data. Legacy system modernization services can help enhance your security and ensure compliance with relevant rules and regulations. 

Modernization can also help make your business more resilient in the future. Outdated legacy systems restrict your ability to scale and be flexible. Post-modernization, however, you’ll find that both flexibility and scalability are vastly improved, allowing you to meet new and future challenges. 

Whether you’re updating a legacy banking system or any other type of system, you’ll discover there are many advantages of legacy system modernization. With more and more businesses realizing it’s time to consider upgrading their legacy systems, maybe it’s time to look at how OpenLegacy can help you. 



FAQs about the advantages of legacy system modernization

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What is the most important reason to replace legacy systems?

There are many reasons to consider modernization, and what one organization views as most important may be less important to another. 

Your legacy system may present security risks or fail to offer the analytical insights you need to make informed business decisions. However, the most common reason to modernize legacy systems is that they’re simply not as efficient as they once were. 

With new technology and tools emerging, you need a system that’s flexible, scalable, and offers a wide range of integrations.   

What are some challenges in changing from legacy systems to new ones?

The main issues you’re likely to face are: 

  • Costs. Depending on your needs (and how outdated your legacy system is),  modernization can incur significant costs. Identifying and budgeting for these should be an integral part of your planning process. 
  • Security. You already know how important data security is. You should identify and mitigate any possible risks to data during the modernization or migration process. You should also be aware of any risks during extraction and ensure compatibility between old and new formats.
  • Technical specs. You need to be sure the technical specs of your new system match those of the legacy system as closely as possible. Exact replication may not be possible due to obsolete technology or coding, but you must nonetheless ensure that your new system is able to meet your business needs.

Users. Never forget your users. Have all stakeholders involved in the planning and modernization process, so they feel comfortable with any new functions and apps. Involving users can also help you make informed decisions on what applications to include.

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