Modernizing legacy software can seem daunting, especially if you are considering a complete rewrite. However, an incremental approach offers a safer, more reliable path. Let’s take a deeper dive into the reasons why incremental modernization is often the better choice, providing continuous value to your customers while minimizing risk and cost.
Understanding Incremental Modernization
Very few companies have a perfectly modern product, and very rarely is there a good business case for a complete rewrite of a successful commercial product. By definition, your product will be at least somewhat legacy. After all, if it weren’t aging, it wouldn’t need modernization! But you don’t have to throw the baby out with the bathwater and go through a full rewrite.
A full replacement of an enterprise legacy application or product involves enormous risk. Think huge investment with an uncertain outcome. “Next-gen” platforms are usually a path to nowhere, and it takes a long time to get there.
Your successful legacy product is your golden goose – it delivers real value to your customers even if it isn’t completely modern. In my experience, “next-gen” projects have a failure rate of well over 90%. It’s not just that you can get it wrong or that it’s too risky, but it also takes your eye off the ball for your existing customer base.
Time and again, taking on a complete rewrite effort with limited resources leads to putting off features customers are asking for. You’ll end up promising those improvements in the next-gen product. Then years go by, and you haven’t provided them incremental value, losing their trust.
Don’t bet it all on a next-gen platform, which often fails to deliver the expected benefits. Instead, incremental modernization offers a safer, more reliable approach. Incremental modernization involves making small, manageable updates to your existing product rather than a complete overhaul of the entire system. This approach allows you to continuously deliver value without the high risk and costs that come with a full rewrite.
By updating or adding new features (in new technologies), you can improve your system’s performance, security, and usability while maintaining the stability of your legacy applications. This process also builds trust and keeps your customers engaged with your product, allowing you to stay competitive with continual enhancements.
The Value of Incremental Improvements
To be financially successful in the software business, you have to deliver significant value through your products, services, and offerings. Once you have customers, maintaining them and preventing attrition while driving organic growth requires providing ever-increasing value to those customers.
How do you do this? Put your investor hat on; this is not just a C-suite question. Engineers also need to participate in this process as well so they can understand the financial impact of their work. You need to continually invest in your current products on some level. If you don’t, the competition will catch up, and you will lose customers.
Every decision you make, every piece of code, should be evaluated for the best combination of lower risk and higher return. Software engineering traditionally involves 95% labor cost. The investment in time is your cash investment.
What’s going to give you the best bang for your buck and use the least cash? Unless you have unlimited resources, throwing discipline out the window and lighting money on fire is never a good idea. If you have an aging product generating the vast majority of your revenue and you are having trouble servicing existing customers or growing into new markets, that merits investment. Incrementally improving what you have and continuing to maintain your golden goose is crucial. Just remember this: Build new features in new technologies that bolt onto your legacy technologies. Pivot, don’t rewrite.
How to Develop an Incremental Modernization Strategy
Developing an incremental modernization strategy means thinking beyond your current technology set. You need to provide a service to customers or expand into a new market to grow. Without completely overhauling your golden goose, this means incremental change.
Too often, companies and engineers get stuck in a product-centric state of mind. “What can I do to my product to give my customers what they want?” But let’s broaden that lens and ask “What am I offering my customers?”
Moving from a product-centric to a platform-centric mindset allows for the seamless integration of new capabilities and technologies with existing ones. This is where incrementalism makes a lot of sense.
If 80% of your revenue comes from your current tech, how much are you willing to risk? If you shift from a product-centric mindset to a platform-centric mindset, you minimize that risk. Suddenly, your platform includes your legacy product AND modern elements that tie together. Aging pieces can move into the background and be replaced incrementally over time.
In a platform environment, If you want to replace something, you can do it one piece at a time.
Look for low-risk opportunities with good ROI!
Think beyond your current technology set. To enter a new market or foster a new partnership, you can set yourself apart from the competition by offering an API, mobile experiences, or modern web experiences. Approach this by asking department leaders how to meet business objectives without solely focusing on achieving a technology milestone. Customers care about the value delivered, not the technology used.
It’s okay to have an older piece of technology, especially if that’s what brings in value. If it’s just perception, you could consider a light refresh of the look and feel. Just by changing non-structural things like fonts, colors, styling, and images you can make older technology LOOK like newer technology. This is a relatively small investment with a huge psychological impact.
Addressing Technical Debt and Cost Savings
Many companies are concerned about the “technical debt” accrued by the legacy product. Does this debt require paying it off by kicking the old product to the curb? No. But the stigma of technical debt often leads to consideration of re-platforming and next-gen iterations.
Instead of getting rid of it, consider refinancing and incrementally reducing the debt’s impact. Challenge your team to honestly assess whether central technologies linked to your product will be phased out or inoperable, making re-platforming necessary. This situation is usually the exception rather than the rule, meaning that incremental modernization can offer similar results with significant cost savings.
Assessment Phase
A comprehensive evaluation, such as the Modularis Tech 360 Assessment, looks at your whole operation, including financial aspects, technology stacks, R&D efforts, and team capabilities. An independent partner review of your current processes, technology, and team will help tell you what’s going well, what’s an obstacle, and how you can improve moving forward.
This gap analysis looks at the difference between your current state and your desired future state to provide a concrete action plan to reach your business goals and targets. Your management team might assume that your platforms are the foundation for everything you want to build in the future—Tech 360 tells them if that’s true and if it’s possible for your platform to be a driver for the future.
Calibrating risk and return needs to be done thoughtfully, and the assessment phase is no different. You don’t want to leave this solely up to your tech team. Have you ever met an engineer who isn’t extremely busy doing extremely important things? Of course not. But what happens when you have a huge team full of busy engineers and revenue isn’t growing? What if one engineer thinks you’re 83% done, and then another is certain you’re 27% done? Are they even in agreement on what “done” means?
An independent assessment impartially calibrates your risk and returns, ensuring that engineers’ busy schedules align with revenue growth and project completion so you can build successful, scalable enterprise products.
Effective KPIs, Metrics, and Value Delivery
I’ll say this and stand by this: the most important metric for any software-based business is value delivery.
Whether you’re looking at modernization projects or core engineering, you need to be aware of the cadence of value delivery. Every quarter, you must deliver some kind of incremental value increase to your customers. Every single quarter. This should be built into your growth plan – if the project is going to take years to produce something deliverable, the answer should be “no”.
Instead of next-generation products, focus on value creation and delivery, building incrementally quarter by quarter. This approach ensures that each quarter builds on the previous one, maximizing labor efficiency and investment in automation. It’s all about ROI and lighting up net new revenue so you can hit your growth targets. Modularis can help you do this, quarter by quarter, building the foundation of what you need to build next in the correct sequence.
So how do you hold your engineering teams accountable and measure their effectiveness and efficiency? It comes down to your key performance indicators (KPIs). You need to talk in dollars and cents.
Along with value delivery, I recommend you keep track of two core metrics:
- Innovation Fraction. What fraction of your monthly R&D spend is going toward delivering innovation vs. maintenance (keeping the lights on for your existing customer base)? You should aim for 80% innovation and 20% maintenance to prevent attrition and drive growth. If you stop maintenance and push 100% toward next-gen, you might be thinking “Yes! Innovation!” when in reality your Golden Goose will be cooked. You’ll lose traction due to the lack of value for your current customers.
- Planned vs. Unplanned Engineering. Ask your engineering team what percentage of engineering time is planned vs. unplanned. Are you spending all your time fighting fires? Estimates are often founded on the assumptions of perfect engineering hours. But in reality, that’s not how it works. If you haven’t budgeted for 10 – 15% of unscheduled work, you won’t hit your dates (and this is the best-case scenario).
No matter what industry or business you’re in, you need to be able to successfully create and deliver value to your end customer in order to grow and be successful. How can you deliver value regularly and continuously? Involve your engineers in these conversations so they know what they’re working toward and everyone in the value chain benefits.
Leveraging Technology for Incremental Modernization
The most important tools you have for incremental modernization are experienced software engineers with a platform-centric mindset. Utilize experienced software engineers and unique modern technologies like PlatformPlus®, Platform Builder, and Agent Gateway Architecture to accelerate and de-risk modernization.
- Platform Builder builds upon our PlatformPlus® technology to create a virtual model of the underlying legacy data stored in your database, transforming it for modern use without rewriting or migrating. This advanced technology makes the data look more natural and understandable while capturing the relationships between data elements. This allows us to reverse-engineer what exists in your legacy system and transform it into a modern view. Virtual modeling generates an infrastructure that allows you to build without rewriting or migrating so data stays where it is. You can accelerate your innovation by 10x without a rewrite!
- Agent Gateway Architecture connects legacy on-premise products to modern applications and APIs, enabling incremental modernization. You can build modern experiences, apps, and APIs that are connected to, and get data out of, legacy products that are on-premise, wherever they might be, in real time.
Final Thoughts
Incremental modernization involves continuous investment in your current products, strategic integration of new technologies, and a shift from a product-centric to a platform-centric mindset. By evaluating risk and return thoughtfully, leveraging unique technologies, and setting practical timelines, you can deliver continuous value to your customers and drive business growth.
At Modularis, we have spent the last two decades focused on the efficiency of software engineering. That’s why we built our tech stack, so you don’t have to waste your time building the same thing over and over again. We focus on the timeless first principles that get high-quality products out to market with less cost and less risk. It’s in our DNA.
Are you interested in high-quality, low-risk products in the least amount of time with the least amount of effort? Get our 5-step modernization guide today and launch your modernized software product in 90 days!