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Insights

Survey: Application modernization in industry

A survey of IT managers in various industrial companies has shown that, in many places, the systems are adequate for current needs but not fully ready to meet future demand. Application modernization projects are therefore essential, with particular focus on ERP systems. How should these application modernization projects be handled?

Insight in brief

  • A survey shows that the systems are adequate for current needs but not fully ready to meet future demand
  • There are different approaches, which are used for application-modernization-projects
  • The survey shows also that there are different challenges in carrying out application-modernization-projects

In a qualitative survey, Zühlke asked IT managers in industrial companies about application modernization. Their responses highlight the different reasons for modernization projects, the different approaches used, and the underlying success factors.

Why is modernization necessary?

The reasons for application modernization projects are complex. Essentially, however, there is always a change in requirements: the existing application no longer meets the current business needs or the systems make it impossible to implement a strategy consistently – such as in the fields of data analysis, the ecosystem, and a customer-centric approach. In addition, the relevant internal knowledge will often have been lost over the long application lifecycle and, along with the increasing complexity of the application, the risk to the company becomes so great that taking action is unavoidable. Another potential reason for application modernization is the reorganisation of the company – for example, through mergers, takeovers, or spin-offs.

How are applications modernized?

In application modernization projects, the survey participants start by conducting a thorough analysis and inventory. In close co-operation between IT and business, future requirements are defined and integrated in line with the corporate strategy. Which systems should replace the former individual software solutions and how they should be integrated into the overall landscape must be critically examined. When modernizing entire landscapes, it’s wise to analyse the enterprise architecture as a whole. The possible migration to the cloud leads to an even stronger focus on this role.

Acquisitions and takeovers can be performed using different approaches. One approach involves the IT staff of the acquired company being used to manage the transition into the existing landscape of the acquiring company and work on its legacy systems. Eventually, the IT infrastructure of the acquired company can be switched off completely, resulting in a consistent simplification of the combined landscapes. From a technical viewpoint, service-oriented architectures with small components are often introduced during modernisation, meaning it makes sense to clarify the issue of migration to the cloud in advance.

Challenges of application modernization

The survey participants most frequently mentioned the following challenges:

  • Proliferation of semi-redundant systems and technologies (e.g. multiple ERP systems)
  • Standard applications that are too highly customised to the company; updates are almost impossible and not performed for a long time
  • The business department is not ready for changes
  • Knowledge about the applications has been lost
  • The wait for modernisation has been too long; time pressure increases

Key success factors

The survey participants agree that it’s vital to approach application modernization from a business perspective rather than an IT perspective. Far too often, it’s forgotten that modernization projects always involve aspects of change. Small substeps adding concrete value increase acceptance by the business departments. In addition, the survey participants regard support from management as critical. The corporate culture must also be tolerant of change. As in every project, it’s important for the dimensions and complexity to be assessed correctly and to appoint a competent project management team. Another critical success factor is the topic of user-centricity: the needs of end users must be prioritised and understood in the context of the application. When working with new partners in particular, it’s important to be cautious and evaluate the quality of the collaborator and the deliverable with a proof of concept before making a long-term commitment. Working with external partners is also an opportunity to explore new avenues.

Conclusion

The survey shows that application modernization is a topic that will become more important for many (industrial) companies in the near future. To be able to modernise successfully, it’s essential to take certain critical success factors into account.

Regina Dietiker

Regina Dietiker

Senior Business Solution Manager
Contact person for Switzerland

Regina Dietiker is a partner at Zühlke and responsible for the ""Application Modernisation"" division at Zühlke Switzerland.
As a developer, she gained experience in modernisation projects and has been involved in this area in various roles up to the present day.
Regina's passion is to work with customers to resolve the difficult situations that arise when modernisation is delayed too long.