Cloud Modernization vs Migration: How Do They Differ & What’s the Right Approach for You?

According to Fortinet, 98% of businesses are placing over half of their workloads in the cloud to reap enhanced scalability, agility, innovation, and cost-efficiency. Before diving in, you need to consider cloud modernization vs migration to understand which adoption strategy is right for you.

Are you ready to completely migrate your applications to the cloud to access the full scale of benefits? Or, should you dip your toes in with cloud modernization to minimize risks? 

In this article, we’ll discuss the key differences between the two approaches, run through their unique strategies, and explore how to decide which cloud adoption strategy you should initiate.

Cloud modernization vs migration: Key takeaways

Here’s a quick rundown of the key points in this article:

• Cloud migration and cloud modernization are two cloud adoption strategies that allow businesses to leverage unique cloud benefits. 
• Cloud migration transfers workloads to the cloud, whereas cloud modernization transforms workloads to optimize them for the cloud.
• The two approaches vary significantly in several areas, including objectives, strategies, complexity, agility, resource-intensiveness, cost, and risks.
• Key things to consider when debating cloud modernization vs migration include your company goals, existing infrastructure, budget, resource availability, and organizational readiness.

What is cloud migration?

Cloud migration is the process of moving your company’s digital assets — such as IT resources, applications, and data — from an on-premises architecture to a cloud environment. This is done with minimal, if any, changes to the underlying architecture.

By migrating to the cloud, businesses can unshackle themselves from on-premises legacy architectures and their limitations. It provides access to cloud benefits like enhanced scalability, flexibility, security, and cost-efficiency. It’s why 75% of businesses are choosing to default to the cloud.

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Types of cloud migration

There are two main cloud migration approaches that you can undertake; rehosting and re-platforming:

Rehosting

Also known as the “lift-and-shift” approach, rehosting involves lifting workloads from on-premises legacy systems and shifting them to a private, public, or hybrid cloud environment without making any changes.

It’s essentially like moving all of your belongings from a tiny old house to a spacious, brand-new house. Instead of shifting furniture, you’re shifting applications and data.

Rehosting is the easiest and least disruptive way to migrate assets. Businesses with time or resource constraints may use this approach to rapidly migrate to cloud platforms.

Re-platforming

Re-platforming also lifts and shifts assets from on-premises locations to the cloud. However, it also involves making slight but targeted adjustments to optimize the application for the cloud environment. 

So, while the core architecture isn’t changed, the underlying platform or infrastructure is updated to enhance performance, security, integration, and other necessities.

Replatforming is a sound approach for businesses that want to optimize migrated applications to improve performance in the cloud without having to undertake a complete redesign. 

There’s no need to migrate everything at once, though. The best cloud migration solutions facilitate a hybrid approach, allowing you to rehost and re-platform IT resources gradually and safely, accelerating digital transformation while minimizing risks.

Cloud migration example

Cloud migration can be initiated by any business, regardless of size or industry. To understand how it works in action, let’s explore a hypothetical example of a healthcare organization’s cloud migration journey:

The company: A healthcare company launched in the 1980s.

Their current situation: The company’s electronic health record systems and patient portals are being hosted on legacy on-premises servers.

The challenges: The company has opened more clinics across the country, which has spotlighted the significant limitations of their legacy systems. The on-premises systems incur high costs, are unable to efficiently share data between clinics, and struggle to comply with healthcare data privacy regulations like HIPAA. 

The cloud migration process: Using the “lift-and-shift” approach, the company transfers its electronic health records from its on-premises servers to cloud alternatives. Their patient platforms are migrated using the re-platforming approach, with slight modifications made to improve their performance and security in the cloud without altering the end-user experience. 

The results: The cloud migration centralizes data access and streamlines data sharing for the healthcare company. They can also benefit from enhanced security measures, such as encryption and access controls, along with lower operational costs and improved scalability to align with growth.

What is cloud modernization?

Cloud modernization doesn’t just move your existing applications, data, and IT resources to the cloud, it transforms them for the cloud.

In cloud modernization, your digital assets are modified so that they can fully exploit the benefits of the cloud. It typically involves redesigning the assets through refactoring or rebuilding. This optimizes them for peak performance, agility, and cost efficiency in the cloud environment. 

Some businesses may even choose to re-purchase their assets. In other words, trade their legacy models in for a third-party, cloud-native solution.

While time-consuming and resource-intensive, cloud modernization is the key to unlocking the extensive range of cloud capabilities.  With this comes increased business revenue, something recognized by 60% of companies.

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Types of cloud modernization

The three main types of cloud modernization — refactoring, rebuilding, and repurchasing — can be used for application, data, and infrastructure modernization.

Refactoring/re-architecting

A refactoring cloud modernization approach involves restructuring and customizing existing application architecture and code so it can leverage the full capabilities of the cloud. 

In refactoring, the core functionality and external behavior of the application remain the same (or similar). However, its performance, agility, and compatibility with cloud-native architectures like microservices or serverless models are greatly increased. 

Re-architecting is a similar but more intensive approach. Here, more significant changes are made to add new functionalities.

The time and resources required to undertake refactoring and/or re-architecting make them two of the most complex types of cloud modernization around. Unsurprisingly, this effort has the most potential for innovative results and can unlock high availability, scalability, innovative opportunities, and other benefits.

Rebuilding

You also have the option to completely rebuild the legacy application or enterprise system from scratch. 

With a rebuilding approach, you abolish the old code or system and redevelop it within the cloud, essentially creating a cloud-native application. This is far from straightforward, as the process is notoriously lengthy, disruptive, and expensive, but the rewards are lucrative.

By rebuilding your application on a cloud platform, you get access to technologies like microservices, serverless computing, container orchestration, and continuous integration and continuous deployment (CI/CD). These tools empower you to build innovative apps that are highly scalable, resilient, and successful.

Re-purchasing

One of the most popular cloud modernization approaches is to replace the existing legacy system with a modern cloud solution, usually Software as a Service (SaaS). It’s often referred to as the “drop and shop” approach.

For example, you might abandon your on-premises customer relationship management (CRM) system and repurchase a cloud-based solution. Or, perhaps you ditch your legacy communication tools and switch to a cloud-based business communications system instead.

While the number of SaaS tools used by businesses is slowly declining, the average company still uses 106 SaaS apps. And there’s a very good reason why.

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Leveraging off-the-shelf solutions can fast-track your cloud modernization. It reduces the disruptions and complexities that occur with more intensive approaches, like rebuilding and refactoring. As a result, you can accelerate access to cloud benefits. 

But it does have its limitations.

Repurchasing comes at the cost of customization and control — a crucial consideration for businesses that want to remain competitive and agile. And, you still have to migrate your data and onboard users onto the new platform, which is no easy task.

Cloud modernization example

To understand what cloud modernization may look like for your business, let’s walk through a hypothetical example of a manufacturing company initiating a cloud modernization strategy.

The company: A manufacturing company launched in the 1990s.

The current situation: The company relies on legacy systems, including monolithic ERP systems, manual inventory processes, and Excel-based reporting. 

The challenges: The company recognizes that its legacy systems are buckling under the pressure of an increasingly complex supply chain and evolving customer demands. They suffer from a lack of real-time data visibility, poor collaboration, and stunted growth potential.

The cloud modernization process: Using a refactoring approach, the company splits its monolithic ERP into microservices to deliver custom procurement, ordering, and inventory. IoT sensors are integrated into production lines and APIs are built to achieve seamless communication between services. The company also uses the repurchasing approach, abandoning its on-premises CRM system for an SaaS solution.

The results: With modernization, the manufacturer achieves centralized real-time visibility into production schedules, inventory levels, logistics, and performance metrics. This enhances efficiency, agility, and collaboration across the supply chain. Their integrated CRM allows for the proactive anticipation of customer needs, reducing stockouts and overstocks. And, they can leverage cloud-delivered capabilities like smart manufacturing and real-time reporting.

Cloud migration vs modernization: How they compare

Cloud migration and cloud modernization are often used interchangeably. However, they describe two unique cloud adoption strategies that have differing objectives, strategies, resources, and risks. 

Here’s a table that sums up the key differences, followed by an in-depth comparison of cloud migration vs modernization​:

Main objective

The main objective of cloud migration is to replicate existing on-premises applications and data functionalities in cloud environments. It’s a short-term strategy that aims to meet the immediate need of transitioning to the cloud and, in doing so, accessing the foundational benefits of cloud-hosting (enhanced cost-savings, security, etc).

Cloud modernization aims to make your applications and systems cloud-native, rather than just cloud-hosted. Here, the main objective centers on maximizing cloud capabilities through comprehensive transformation, with a long-term focus on innovation and competitiveness.

So, both adoption approaches involve migrating legacy applications to the cloud. While the cloud migration journey ends there, modernization seeks to optimize these applications to leverage the cloud’s full benefits.

Strategy

A cloud migration strategy is fairly simple; move assets from A to B without changing the underlying architecture or code. This can be achieved using a “lift and shift” approach, where no changes are made to the underlying architecture or code, or a re-platforming approach, where minor updates are made but the core architecture still remains the same.

Cloud modernization strategies are considerably more intensive. They typically involve large-scale redesigns to deliver cloud-native technologies and architectures to legacy systems. For example, monolith legacy architectures and applications are often broken down into microservices or serverless architectures using refactoring. 

Complexity and resource-intensiveness 

Cloud modernization is significantly more complex than migration, requiring access to a specialist set of skills and resources.

Effective cloud modernization relies on the careful, efficient execution of highly complex tasks, including application code refactoring, architectural redesigns, and data restructuring. This mandates a highly specialist team of skilled developers, IT professionals, and cloud experts, along with in-depth planning, auditing, and continuous testing.

Without these resources, businesses are at high risk of service disruptions, lost data integrity, poor interoperability, and other challenges. In fact, a lack of resources and expertise was one of the biggest cloud challenges reported by businesses at 75%, topped only by managing cloud costs and security.

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In comparison, cloud migration requires fewer development resources and cloud expertise, especially if you use the lift-and-shift approach.

Timeframe

Thanks to its relatively low complexity and resource-intensiveness, cloud migration is usually much faster to complete than cloud modernization.

In cloud migration, you may hit roadblocks like compatibility issues or cost-overruns. Generally, though, when you’re lifting and shifting workloads without making changes, you can migrate your assets to the cloud in a few weeks or months, depending on the size of the migration.

When you’re making intricate code and architectural changes — as you are in cloud modernization — you have to allow for a much longer timeline. You also have to account for cultural readiness and employee onboarding. So, it can take months or years to complete cloud modernization to the point of cloud maturity. 

Cost

Cloud migration has a relatively low upfront investment compared to cloud modernization.

A cloud migration strategy doesn’t necessarily require specialist teams, resources, or expertise, nor is it as time-draining or disruptive as modernization. 

However, although cloud modernization does have a higher initial upfront cost, it yields a greater ROI in the long term. 

Along with reducing the cost of capital-intensive hardware and infrastructure (which is also achieved with migration), modernization offers cloud-based benefits that deliver long-term cost savings. This includes things like automation, accelerated time-to-market, performance optimization, and predictive analytics.

Risks

Cloud migration and modernization both have inherent and overlapping risks. In the short term, cloud migration has a lower risk profile as it doesn’t involve making any major changes during the transition. 

Many of the risks that can arise, such as cloud compatibility issues, cost overruns, and data corruption, can be avoided with careful planning and mitigation strategies. 

That said, cloud migration does come with long-term risks. If you transfer brittle, outdated legacy applications, they remain brittle and outdated in your new cloud environment, accruing technical debt. It also doesn’t allow for innovation, competitive advantage, agility, and other critical benefits that can only be achieved through modernization. 

Of course, the short-term risks of cloud modernization shouldn’t be understated. The complexity of refactoring, re-architecting, and rebuilding can cause widespread disruptions and data loss, especially in unskilled hands. The strategy is also prone to challenges like integration and interoperability issues, skills gaps, and adoption resistance. 

In the long term, however, the risks are low and the rewards are significant. Unlike basic migration, cloud modernization future-proofs your systems and offers unique cloud-native benefits like increased adaptability, efficiency, scalability, and innovation opportunities.

Scalability and agility

While cloud migration does offer easier scalability than on-premises platforms, it’s nowhere near the scale of cloud modernization.

When you migrate assets to the cloud without making changes and optimizations, they remain limited to the functionalities in the original infrastructure. Cloud modernization enables businesses to adapt their assets to the cloud environment, making them more scalable and agile. 

For example, they can leverage microservices to scale services independently in response to spikes or drops in demand. And, they can adopt and integrate cutting-edge technologies like AI, machine learning, and IoT.

The aforementioned Fortinet study reveals that scalability and agility are the most recognized benefits of cloud adoption, reported by 53% and 45% of businesses, respectively. 

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Deciding between cloud migration and modernization: What to consider

One of the biggest challenges of cloud adoption is deciding which approach is right for you, cloud migration or cloud modernization​. The answer lies in a combination of several factors, including your company’s goals, your current infrastructure, and whether your organization meets budget, resource, and readiness requirements.

Company goals

What are your main reasons for transitioning to the cloud? 

If you’re seeking immediate cloud benefits like improved cost-efficiency, disaster recovery, and resilience, then migration may be a good option. It’s a viable strategy for businesses who have a pressing need for cloud benefits, as it can be achieved with minimal complexities and disruption.

However, if you want to future-proof your architecture for long-term benefits, then focusing on cloud modernization is the better choice. It’s suited to businesses looking to capitalize on cloud-native features for the purposes of improving agility, innovation, application performance, and scalability.

Your current infrastructure

The condition of your current infrastructure can help you determine whether you need to migrate or modernize.

The more tightly coupled, inflexible, and brittle your monolithic systems and applications are, the more resistant they’ll be to change. Trying to migrate them can not only be complex and time-consuming, but can cause catastrophic failures. 

Assess the compatibility of your legacy systems with various cloud platforms to identify dependencies, hidden complexities, and other challenges. This can help you decide whether you’re able to rehost or re-platform, or if you need to refactor, rebuild, or re-purchase.

Budget and resource availability

Cloud modernization requires a significant upfront investment owing to the time, resources, and specialist expertise needed to execute the strategy. The budget and resources you have available will dictate whether you can begin modernizing or if you should start by migrating on a smaller scale.

Cloud modernization and migration​ costs have a tendency to spiral if you’re not careful. In a survey by CloudZero, 37% said that their cloud costs were a bit higher than they should be — and 14% said they were way too high.

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So, do your research and work closely with your finance team to establish a realistic budget.

Organizational readiness 

Your company culture has a significant impact on your cloud readiness and, more specifically, whether you can successfully complete cloud migration and/or cloud modernization.

Cloud modernization requires significant changes to workflows and technologies. If you jump into the deep end with modernization, but are backed by a workforce who are resistant to adopting new processes and systems, you risk derailing the effectiveness of what is already a high-risk strategy. This leaves you more vulnerable to failure.

Assess your cultural readiness, employee skills, and organizational adaptability. If they’re lacking, you may decide to build on a foundation of cloud migration while working to improve your readiness for future modernization initiatives.

Where OpenLegacy fits (capability snapshot)

In the battle of cloud modernization vs migration, there is one alternative that can help whatever your unique circumstances — an incremental hybrid approach. 

Incremental modernization and migration help you progressively achieve cloud-nativity while minimizing risks and enhancing adaptability. Align your modernization strategy with specific needs and opportunities, introducing cloud capabilities to your most valuable functions at a manageable, organic pace.

OpenLegacy’s hybrid integration solution helps you migrate and modernize at a pace that suits you, supported by AI, continuous development, and instantly generated cloud-native services. 

With OpenLegacy Hub, you can seamlessly bridge your legacy and cloud environments using microservices and hybrid APIs. Identify and modernize your most valuable business functions for the cloud while ensuring smooth integration with monolithic, complex, and core legacy applications. 

Ensure business continuity and maximize the value of your legacy investments — all while creating agile and future-proof cloud-native services. Explore modernization decoupling patterns and phased migration with OpenLegacy Hub.

In practice, the safest route is incremental; decouple a boundary, run legacy and cloud in coexistence, then migrate at your pace with rollback ready. 

A phased hybrid path (decouple → coexist → migrate) lets you realize cloud benefits while controlling risk and downtime.

Legacy-heavy realities that shape your choice (mainframe & IBM i) 

Before you choose a path, keep these legacy constraints in view, they often determine what’s feasible and how fast you can move: 

• Stateful transactions: CICS/IMS units of work and IBM i commitment control require transactional integrity—purely stateless patterns may not apply as-is.
• Protocol/data gaps: 3270/5250, MQ/CTG/IMS Connect, COBOL/RPG interfaces, copybooks/EBCDIC/packed decimals, and Db2 for z/OS types often fall outside default connectors.
• Security & governance: RACF/ACF2, MFA, audit trails, residency, throughput/back-pressure, governance and performance need specialized gateways and patterns.

Modernization-first playbook: Decouple → coexist → migrate 

Here’s a practical way to move forward without disrupting critical operations:

• Decouple a clear boundary (domain/transaction/dataset) and expose it via secure, standardized APIs.
• Coexist so channels and operations stay online while traffic is gradually redirected; keep rollback ready.
• Migrate domain-by-domain, validate outcomes, and retire debt in waves

Decision guide: When to prefer migration, modernization, or a hybrid path

Use this quick matrix to choose where to start and how to stage the work:

In this context, OpenLegacy’s role is capability-focused—so teams can:

• Analyze & plan: Identify safe decoupling points and required controls for phased change.
• Generate & standardize: Produce modernization-ready APIs (no/low/full code) from legacy assets.
• Coexist & cut over: Keep legacy and cloud in sync; redirect traffic gradually with rollback available.