What Is Legacy Modernization? A Guide for Retail Businesses

When looked at by volume, the US retail business community looks pretty healthy, with over 1,045,422 retail businesses. Of course, volume isn’t the most reliable indicator of health.

The failure rate in business is notoriously high, and retail is not immune. In fact, by the 10-year mark, only 30 percent survive. So, if you built a business that’s lasted that long, you likely face a software problem.

Your business almost certainly uses legacy systems that made a lot of sense when you got them but don’t work so well now. If that’s your situation, you need legacy modernization.

Not familiar with legacy modernization in business? Keep reading to learn more.

What Is a Legacy System?

In simplest terms, a legacy system or legacy application is an outdated piece of software you use for a crucial business process. In most cases, this software was state-of-art at the time you got it and offered a lot of innovative features that improved a process.

As time goes by, though, new systems came along that offered better features or a more robust feature set that would benefit your business. Even worse, the system can’t handle new types of files that have become industry standard.

Unfortunately, the old piece of software is so critical to maintaining a business process that you don’t dare try to replace it. You worry that even the attempt would cripple your business during the changeover process. It’s estimated that the average retailer spends 58% of their IT budget on maintaining legacy systems.

Even worse, these systems often lack any kind of support from the company that originally developed them. For example, you don’t get security updates for the software. That can leave your company vulnerable to hackers that know about exploits in the software found after the developers stopped offering support.

In some cases, dependence on that software can make it difficult to grow your business.

Integration Problems

The rise of cloud computing with its cloud-based applications and even cloud-based infrastructure has made the problem of legacy systems even more relevant.

Many legacy systems aren’t designed with the cloud in mind. You can’t simply dump the old software onto a server and expect that it will work, even if the server offers solid virtualization.

Most software is built around certain kinds of hardware architectures. The older the software, the less likely it is that it will function properly on modern hardware. So, instead of a smooth transition, the software will likely throw up error after error if it runs at all.

Businesses run into similar problems trying to get legacy systems to integrate with modern business software. Think in terms of analytics systems, enterprise resource planning, and customer relationship management systems.

Given how important these kinds of systems are to business decision-making, a lack of integration can become a strategic weakness.

What is Legacy Modernization?

It’s important to know that legacy modernization isn’t a single process or approach. Rather, it’s something of a catch-all term for a set of processes that let businesses make those legacy systems more useful or provide an alternative.

Let’s look at some of the considerations and options involved.

Modernization Considerations

There are several crucial considerations a business must take into account when choosing a modernization strategy. Some of the main points are:

  • Complexity
  • Risks
  • Functionality
  • Cost

Take complexity as an example. The business must weigh the difficulty in implementing a given strategy.

Writing custom software that lets the legacy system provide data or receive data from other systems may sound complex on the surface. Yet, the complexity of that may well pale in comparison to the prospect of rewriting the code to work on new hardware architecture.

Not surprisingly, increases in complexity often signal increased risks and costs.

Businesses must also weigh which modernization option will preserve the functionality of the legacy system. There is no point in modernization if the effort will cripple key features of the software.

Legacy Modernization Approaches

There is no single correct approach to legacy modernization. There are, however, seven main approaches that a business can employ. Let’s take a brief look at each.


Encapsulation is a kind of trick that comes out of object-oriented programming. Basically, you put the original program in a kind of bubble that lets the business access the data or features using an API. That lets the business move critical information out into modern applications.


In some instances, all other options become prohibitively expensive, complex, or expensive. In that situation, abandoning the old software and moving to a new system becomes the best option.


Rehosting means deploying the software, as is, in a new environment. That might mean in the cloud or simply on modern hardware. This only works if the software can function properly in the new environment without changes.


Many legacy systems run on outdated platforms, such as a Unix system or even a COBOL system. Replatforming means moving that software onto a contemporary platform, such as Windows, and making minor changes in the code to let it function on that platform.


The refactoring approach looks for ways to improve the existing code, typically in the backend. It does this without any meaningful changes to its feature set or functions.


The rewriting approach starts from ground zero and writes all new code. The end goal is a system that provides the exact same features and functions but does so on modern hardware.


Some businesses know that they will either close down operations or get acquired in the near future. In those cases, it makes more sense to stick with the existing system rather than spend the money on modernization.

The right strategy will depend on a business’s goals, IT infrastructure, and finances. Consulting with a legacy modernization company can also provide clarity.

Legacy Modernization and Your Business.

The longer a business sticks around, the more likely it will face problems with critical but outdated software. In those situations, the business must consider legacy modernization options.

Without modernization, the software will become less and less compatible with modern systems. That lack of compatibility will hamper crucial business decisions that rely on robust data exchange between its various systems.

RedIron specializes in legacy modernization for businesses. For more information about our modernization services or to get started, contact RedIron today.


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