Why App Modernization Projects Fail Series – Ep 1 Overview

Modernizing legacy applications — from back–office business applications to mission critical enterprise applications – is a priority in many organizations today.  Doing so is often seen as a necessary bridge from analog business systems and processes to digital transformation and innovation.  But app modernization projects are risky and fail at an alarming rate according to our research.  This is why Aspen ESS is publishing an entire series on why app modernization projects fail and how to reduce the risk and tilt the odds of success in your favor.  This is the first article of why app modernization projects fail – an overview of our research and findings from the industry.

In 2019, Stefan Van Der Zijden, VP Analyst, Gartner, said: “For many organizations, legacy systems are seen as holding back the business initiatives and business processes that rely on them.  When a tipping point is reached, application leaders must look to application modernization to help remove the obstacles.”  Indeed, that remains as true as ever.  However, in recent years, it has become increasingly apparent that application modernization projects are difficult for many companies to execute well and are fraught with risk to the organization.

A recent survey of more than 200 senior IT leaders at organizations with more than 1,000 employees was conducted by Global Surveyz Research found 70% of respondents reported they were confident or very confident in their understanding of their applications when they prepared for modernization.  However, that level of confidence dropped to 41% at the planning stage and even lower (28%) at the point the project began, the survey found.  Here are some additional findings from the survey.

  • The survey found a full 81% of respondents reported they currently have or anticipate challenges hiring or retaining talent to support legacy applications.  Nearly half (46%) currently don’t have enough talent available to manage legacy applications.
  • The primary reason these initiatives are launched is to boost employee productivity (40%), followed by retiring existing infrastructure (37%), reducing the dependency on legacy code (36%), reducing maintenance costs (30%), improving customer experience (29%) and cloud migration (22%). 
  • Most of the respondent’s projects are focused on critical applications (55%) as well as applications that have few or no dependencies (55%), the survey finds.
  • The primary success metrics for assessing these projects, however, are improving customer experience (46%), the readiness to migrate to the cloud (46%) and meeting the performance requirements of the modernized application (45%).
  • Less than a third of respondents (31%), however, reported having access to modern tooling.  More than half would like to automate code transformation and business rules extraction (BRE) while 40% would like to automate documentation.
  • Nearly two-thirds (64%) said freezing code during the modernization process would have significant business and financial consequences, with 59% noting that finding a way to modernize applications without freezing code is at the top of their technology wish list.

Application modernization is a stated priority for CIOs in the enterprise—a top initiative, according to CIO magazine’s State of the CIO 2024, in both effort and resources.  App modernization projects are expensive endeavors—especially when you begin to look at broad application portfolios, with some enterprises having hundreds of business-critical apps to modernize.  As such, failed efforts mean wasted time and money, lost efficiency, and setbacks in the race against competitors, who unburdened by legacy application portfolios, may outflank them and capture additional market share.

In the WSJ Article from March 2024, The Invisible $1.52 Trillion Problem: Clunky Old Software, Christopher Mims estimates the amount of collective software technical debt within U.S. organizations is just over $1.52 trillion to fix and costs the U.S. $2.41trillion a year in cybersecurity and operational failures, failed development projects, and maintenance of outdated systems, according to a 2022 report by a software industry-funded nonprofit.

Reasons App Modernization Projects Fail

When examining the root causes of unsuccessful modernization initiatives, differences emerge in the challenges identified by executives and architects.  This highlights the complex and sometimes conflicting demands faced by these two groups.  A series of problems were cited by these two groups for the reasons why app modernization projects fail.  The problems included:

Business Executives

The main reasons that business executives indicated why their app modernization projects fail include:

  • Business Disruption.  Executives cite business disruption as a leading cause of app modernization failure.  The issue comes down to the fact that often the same team of technical resources that are maintaining the application, also need to modernize the application.  There often is no bridge to get business users from the legacy application to the new application without disruption.
  • Too Costly.  App modernization projects are typically overbudget and behind schedule.  The cost of a typical app modernization effort is high, very high.  Wakefield Research indicated that almost three-quarters of their respondents said a typical application modernization effort can cost on average $1.5 million.
  • Too Long.  Wakefield Research indicated that 74% of their respondents said a typical application modernization effort can take 16 months.
  • Lack of Organizational Readiness.  Typical app modernization efforts change the business processes associated with an application.  Whether it’s how data is integrated between systems, how reports are run or what access to data is available, the organization needs to understand how these new business processes will function, and this is often not fully understood prior to the modernization project completion.
  • Lack of Feature Development.  Given the slow pace, cost and risk of most app modernization projects, project teams are focused on getting the technical stack modernized and not looking for opportunities to add new features during the process.  As a result, the business experiences very little value from the app modernization effort.

Team Members

The main reasons that app modernization team members indicated why their app modernization projects fail:

  • Too long.  Team turnover can have a devastating effect on an app modernization effort.  Losing a key team member, knowledgeable about the legacy application can set the project back months.  The longer the duration of the project, the higher the risk of impact is.
  • Complexity.  App modernization projects are almost always more complex than originally anticipated.  The impact on other systems and the data quality related issues increases the complexity of the project significantly.  If the project team does not have the skills and experience to deal with this increased complexity, the project could likely stall for a long period of time.
  • Lack of Training.  Once the application is modernized, can the existing team manage, and more importantly, advance the application for the business?  Often, they cannot without additional training and skills development.
  • Lack of Processes / Tools.  A big constraint for app modernization teams is the lack of tools that are available to assist the team in modernizing applications.  Almost all app modernization projects use a brute force approach to modernize the application – wading through mountains of code and modernizing one object or module at a time, but inconsistencies within the code, code duplication, outdated libraries and dependencies, and poor code quality, make this process long and cumbersome when done manually.

Over the next eight weeks, we will dig into each of these reasons and uncover the driving factors behind why these challenges plague app modernization projects and what IT and business executives can do to overcome them.

Todd Ingersoll

With over 20 years of experience serving multiple roles inside successful enterprise software and services organizations, Todd has been expressly interested in successfully overcoming app modernization challenges.  His first-hand experience and dissatisfaction with the limitations and business impact of the traditional options of application modernization led him to create Aspen ESS.  Aspen ESS was created to give organizations rapid, reliable, scalable, and extendable solutions to challenges with legacy software products and portfolios.