Modernization is the process of upgrading old existing systems, known as “legacy systems”, by incorporating the latest technology and developing them to meet current needs. As the “2025 cliff” that threatens social and economic losses approaches, companies play an important role in achieving DX. If modernization can be implemented correctly using technologies such as cloud computing and artificial intelligence, it can be expected that not only large-scale economic losses will be prevented, but also corporate competitiveness will increase. In this article, we will introduce the origins, effects and implementation methods of modernization in general.
What is Modernization?
Modernization is the upgrade of existing legacy computer systems (legacy systems) to modern systems that meet current needs. We use old assets to increase productivity and security and prevent loss of corporate competitiveness. It is said that it is a necessary move for companies to switch to DX as the 2025 cliff approaches. The word “modernization” is derived from the verb “modernize” and is used in the sense of modernization or modernization.
The reason why modernization has attracted so much attention is the existence of the “DX Report” published by the Ministry of Economy, Trade and Industry in 2018. The report titled “Overcoming the ‘2025 Cliff’ of IT Systems and Full Utilization of DX” states that DX Ga will not be possible if the problems of the old system cannot be overcome, and instead points to an economic loss of up to 12 trillion yen/year (approximately three times the current amount). This is due to various cost increases due to the retirement of personnel who understand the existing systems that have become complex, obsolete, and black boxes, or the discontinuation of system support. This is the rock of 2025.
Modernization not only prevents major economic losses, but also increases the competitiveness of the company that has developed over the years. It is considered an important investment for companies in terms of both offense and defense.
What is a legacy system?
Legacy Systems Legacy is an expression derived from the word “legacy” and is a catchall term that describes legacy systems that have failed to keep up with business changes, trends, and the latest industry standards. Many systems are built using legacy technologies and architectures and suffer from performance bottlenecks, and many systems have become complex or black boxes due to frequent component changes over many years of operation.
It is said that legacy systems should be avoided in order to reduce risks such as system issues and increase business continuity, and for this purpose, “modernization” and “legacy migration” should be performed, as will be explained below.
Difference between modernization and legacy migration
In addition to “updating”, a method called “legacy migration” can also be considered as a way to update an old system.
Modernization means “legacy modernization” and is a way to upgrade existing systems by incorporating the latest technology. It aims to improve the system, including adopting new development methods and increasing security measures.
Legacy migration, on the other hand, refers to “legacy migration” and is the process of replacing existing outdated systems with a more modern environment. For example, it refers to reusing a system or data in a different environment without changing the functionality or structure of the existing system, such as moving data storage from on-premises to the cloud. The primary goal is to increase system security and user comfort while reducing the total cost of ownership (TCO).
The two are often confused, but each has its advantages and disadvantages, so you need to carefully consider which one is most effective for your company.
The relationship between Modernization and DX
DX stands for “Digital Transformation” and refers to the use of data and digital technology to fundamentally change business models, corporate culture, and customer experiences in order to create a competitive advantage. One example of this is the introduction of cloud-based ERP, which goes beyond simply introducing IT technology and has a larger purpose behind it, looking at the future transformation of corporate operations.
Modernization, on the other hand, is the effort to increase operational efficiency and reduce costs by updating existing outdated systems and is often implemented when needed to ensure business continuity.
Considering these differences in positioning, it can be understood that modernism exists as a method within the broader DX concept.
Background of the Importance of Modernism
It can be said that the existence of old systems creates major obstacles for companies to develop their businesses. It is said that if we can reduce risks and increase efficiency by taking advantage of modern technology with modernization, it will be possible to create new jobs while preserving what we have until today.
Better flexibility
Due to outdated technology and the lack of human resources to operate old systems, they lose the flexibility needed to respond to the rapidly changing business environment. Upgrading existing systems through modernization can increase productivity, save time for tasks that were previously unusable due to resource constraints, and accelerate the creation of new services.
Reduce maintenance and operating costs.
Older systems, such as legacy systems, usually have a higher frequency of failures and the costs required for maintenance and operation increase regardless of hardware or software. It may be possible to keep old equipment in working order by performing frequent maintenance, but if the costs required for this increase, it can be challenging for business management.
Easy to expand and change
Legacy systems often have a structure where system components are interdependent and, as a result of frequent partial updates, only special engineers can maintain and update them. If these limitations can be overcome through modernization, it will be easier to add and improve functionality, and the system can be used more accurately for business purposes.
How is data used?
In modern times, it has become common for businesses to analyze large amounts of data and display it in services. However, due to the complex system structure of the legacy system, there are many cases where information coordination between departments is delayed and data stored within the company is not used effectively. By modernizing and improving the ability to easily share data within a company, you can expect to create new business and customer experiences in line with changing market needs.
Efficiency/Quality
Legacy systems have been in operation for a long time since they were first created, turning into black boxes due to their aging architecture and frequent functionality additions. Visualizing the current state, re-establishing a sustainable architecture, and incorporating the latest development practices such as DevOps and SRE during the modernization process will increase productivity and quality.
Better performance
When running a system, it is extremely important to ensure that it performs consistently. Especially with legacy systems, there is a higher risk of large-scale system failures when systems are connected, which can lead to service outages or security incidents such as leaks of personal information, so be careful.
If you can improve the performance of the entire system through modernization, you can also reduce the impact on services by reducing downtime in the event of a system failure.
Benefits of Modernization
Areas that can benefit from modernization include:
User Interface (UI)
Updating the UI (UI) of legacy systems to a more intuitive and easy-to-use interface not only increases business efficiency and reduces human errors, but also improves UX (User Experience).
Application
Application modernization makes it possible to optimize the architecture of legacy systems that have significant limitations in terms of development speed and usability, and to meet the current needs and requirements of developers.
Data
By updating the way you manage and access large amounts of data stored in legacy systems, you can get closer to rock-solid security while still providing the performance and scalability you need.
Infrastructure
For infrastructure modernization, implementing a hybrid cloud that combines public cloud services while continuing to use an on-premises environment is effective. Enabling increased innovation by integrating with flexible, scalable, and secure mainframes, servers, and storage.
Operations
By using the latest AI technologies, such as image recognition and natural language processing, we can expect to improve a range of business processes in enterprise activities, such as quality control and customer service. As a result, the efficiency of overall enterprise operations will increase, leading to the development of new business models and the adoption of different work styles.
How to modernize?
Modernization methods include: Please choose your modernization methods considering the budget and timeframe of the goals you want to achieve through modernization.
Replacement
Replacement is the process of defining the business roles and goals of an existing system and replacing it with a new system that can achieve these goals. While there are challenges such as the impact of large-scale investments and system-wide restructuring on business operations, there are also many challenges for companies such as responding to new business models and customer needs using the latest technology, strengthening security and increasing security measures, improving business performance. The process has its benefits. This method is quite suitable for introducing DX.
Rehost.
Rehosting is a method of migrating servers, operating systems, etc. to a new system platform without changing software and data. The main goal is to reduce infrastructure costs and increase operational efficiency. Rehosting allows you to move to a more suitable data center or cloud environment without making major changes to your software architecture. Although it carries the disadvantages of legacy systems such as not being suitable for integration with other systems, it is a relatively simple and cost-effective approach.
Rewrite
Rewrite is a method of fundamentally examining the software source code used in existing systems and restructuring it using a new language. This is done to adapt systems built using old technology to modern technical standards and business environments and to improve software performance and maintainability. Note that although code and design analysis may require significant time and technical expertise, automated conversion software may be available for rewriting.
Refactoring
Refactoring is a method of reviewing and adjusting software code to improve readability and maintainability. While the above refactoring involves rethinking the language itself, refactoring leaves the language as it is and removes the complexity of the internal structure without changing the functionality. It is possible to increase the efficiency of subsequent developments while maintaining the overall system performance and is especially effective for projects that are continuously developed over a long period of time.
Redocumentation
Redocumentation is a method that supports system understanding and increases operational efficiency by updating existing legacy system specifications, manuals, and other documentation to the latest information. Especially in systems that have been around for a long time, developers change frequently and basic knowledge is often lost in the process. Keeping documentation up-to-date will not reduce operational efficiency or minimize the impact on end users, even if the person responsible changes.
Modernization implementation flow
Modernization generally goes through the following stages:
- Managing IT Strategy (Management Strategy)
- Analysis of the current state of IT assets
- Decision on modernization policy
- Plan the migration
- Continuous modernization
It is important to understand the company’s management strategy and the current state of the IT strategy within this strategy. Then list your company’s IT assets, organize the functions they use and how they are created, and consider the priority of “what needs to be modernized”.
After determining the areas to be modernized, choose which methods and systems to modernize. Each method has its advantages and disadvantages, so a combination of them is often used. Choose the method carefully, taking into account the target system and budget scale.
Then create a solid migration plan based on the method you choose. We will explain the period and what needs to be done to ensure the smooth transition, including the impact on operations during the transition and how to deal with it. It is a good idea to consider the ongoing implementation of modernization even after the migration is complete.
Then create a solid migration plan based on your chosen method. We will explain the period and what needs to be done to ensure the transition goes smoothly, including the impact on operations during the transition and how to handle it. It’s a good idea to consider the ongoing modernization implementation even after the transition is complete.
Points to consider when implementing an upgrade
When implementing a modernization, it’s important to clarify its purpose and analyze the current system usage status against risks. Clarity of goals not only serves as an important guide for making appropriate decisions in budget sizing, staffing, and planning, but also helps facilitate smooth communication with the field.
We then analyze the current system based on this goal and decide which parts need to be improved, such as “must be changed,” “cannot be changed,” or “cannot be changed.” Be careful, because if you make the wrong decision here, you risk losing irreplaceable functions, which can disrupt your business.
Communication with those responsible for using the system in the field is also important. By understanding the details of how the current system is used through regular dialogue, you will be able to deepen your understanding of the newly introduced system and avoid unnecessary confusion. And while choosing a method is critical to a successful modernization, by repeatedly interviewing staff in the field, you can get closer to choosing the best method based on the issues and needs.
Technology that increases the efficiency of modernization.
Some of the most important technologies for modernization are: By combining these technologies appropriately, it is possible to modernize legacy systems more easily and efficiently.
Cloud computing
Adopting cloud computing not only reduces the cost of owning physical infrastructure, but also allows IT infrastructure to be scaled much more easily than traditional on-premises environments. As a result, the necessary resources can be gathered quickly and software can be created and deployed efficiently. It is also expected to increase reliability and cost efficiency.
Containerization technology
By creating a virtual application operating environment through containerization, development and deployment are simplified and legacy systems become more scalable and portable. Note that containerization differs from traditional virtualization in that it does not require the use of a guest operating system for operation and reduces unnecessary processes, allowing for faster operations and reducing the number of man-hours required to create the environment.
Microservices
Microservices are a software development method that breaks an application into smaller units and creates multiple independent services that work together. Since each service can be developed and implemented independently, the overall picture is easier to understand and is less subject to technical constraints. It is an approach that allows you to create a more resilient system, including easier response to failure.
Automated operation
If automation can reduce the need for human intervention, it will significantly reduce costs and increase productivity. The more efficient it is, the more effective it is if it can be used throughout the process, especially when it comes to large-scale business development and system operation. We can also expect to increase quality and customer satisfaction by reducing human errors due to automation.
Using artificial intelligence
Using artificial intelligence can also help modernize legacy systems through automation and operational improvements. For example, if we can automate tasks such as code abstraction and documentation by loading existing source code into Generation AI, we can hope to deepen our understanding of the source code and help discover potential problems with the application, Maso said.
Modernization support for Sky Corporation
For modernization to be successful, it is recommended to establish a third-party system that will increase quality and facilitate verification from an objective perspective. Sky Corporation’s modernization support service has a wide range of support systems, including existing and new benchmark tests provided by test engineers covering functional and data guarantees, non-functional tests covering performance guarantees, and mass-providing operation and maintenance support.
The work that Sky Corporation has undertaken so far includes planning efficient test methods, creating an automated test system to prepare for additional developments, and helping to create system operating manuals.
Summary
So far, we have explained in detail the meaning of the word modern, why it is of interest, how to implement it, and what to look for. Modernization, which can increase productivity and safety while making the most of legacy assets, is an important initiative for companies to implement DX as they approach the “2025 cliff.” If you can optimize various systems through appropriate modernization, you will not only prevent immediate economic losses, but also increase your company’s competitiveness in the medium and long term.