Modernizing applications is now a priority

Application modernization is a leading priority for IT investments looking ahead to 2024. Organizations are increasingly focusing on this area due to the growing and now critical need to integrate advanced AI technologies, bolster cybersecurity measures, propel organizational growth, meet evolving customer demands, and drive innovation. Foundry’s State of CIO survey in 2024 highlighted the importance being placed on modernization efforts, spotlighting its central position in shaping future IT initiatives.

Complexity and risks in modernization

Today, organizations face rapidly escalating complexities and risks in modernizing IT infrastructure. Diversity of application portfolios and varying IT infrastructures are primary contributors to this complexity. 

A forecast from IDC highlights that by 2027, over half (53%) of U.S. enterprises will manage more than 500 applications, painting a picture of the enormous scale of modern IT environments. 

Organizations are challenged to synchronize multiple modernization efforts without interrupting ongoing business operations. Project failure risks increase with inadequate planning and insufficient support from senior leadership, and there’s a dire need for meticulous strategic oversight and robust project management expertise.

CIOs as strategic advisors

Traditionally focused on managing IT operations, CIOs now find themselves at the strategic center of business transformations. An IDG study reveals that 66% of organizations now view their CIOs not just as operational leaders but more as strategic advisors. 

CIOs must forge strong partnerships with CEOs and other key decision-makers and stakeholders so that IT and business strategies are cohesively planned and implemented to drive sustained organizational success.

Importance of the pre-modernization phase

Organizations need to pay careful attention to the pre-modernization phase, which is often neglected despite its importance in setting a foundation for success. As organizations prepare to modernize, shifting focus from adopting new technologies to truly building up business value is key. 

Strategic planning during this phase helps businesses better align IT upgrades with broader corporate goals, maximize the impact of investments, and facilitate smoother transitions.

3 key strategies for modernization

1. Develop a robust business case

Organizations need to articulate the business impacts of modernization clearly, focusing on improving customer experiences, fostering business growth, and building IT resilience. 

A well-prepared business case is more sophisticated than simply listing the features of new technology—it showcases the tangible benefits. It should also include a thorough cost-benefit analysis that details the initial investments needed, the ongoing costs of maintaining legacy systems versus new solutions, and the expected return on investment (ROI). Financial projections here are must-have for capturing the sponsors’ attention and securing funding.

2. Learn from past modernization efforts

A strategic review of previous modernization initiatives generates useful insights that can help shape current strategies. Organizations should analyze both successful and unsuccessful past projects to identify best practices and avoid previous pitfalls. 

Learning here should extend beyond internal experiences to include external ones, drawing lessons from diverse industry peers. A comprehensive understanding helps refine the modernization strategy so that it is well-rounded and informed by real-world experiences.

3. Assess and develop talent

As per IDC, 65% of businesses are unlikely to achieve the full benefits of digital transformation by 2024 due to a lack of critical skills. To mitigate this, companies must assess their existing workforce capabilities and identify skill shortages. 

Developing a strategy that balances the recruitment of new talent with the reskilling of existing employees is key. Forming a techno-functional team that blends domain expertise with technical know-how, organizations can leverage the right mix of skills to handle new technologies and complex modernization challenges. Leveraging partnerships to access the necessary skills can further de-risk the modernization process and provide stability.

Advocating for continuous modernization

Modernization in today’s business context does not operate well as an isolated or singular event; rather, it must occur continuously to align with ever-shifting business objectives and technological advancements. Chief Information Officers (CIOs) must push the perspective that modernization is an ongoing journey, not merely a destination. Each step, from small-scale pilots to full-scale implementation, lays the groundwork for subsequent innovations and refinements.

Initiating modernization with manageable projects, such as proof of concepts and pilot rollouts, provides learning opportunities to inform broader strategies. Initial steps are key for testing the waters so that organizations can adjust and refine their approach in a controlled environment before committing extensive resources. These initiatives help companies demonstrate value and gain stakeholder buy-in by showcasing potential benefits and facilitating smoother transitions during larger-scale implementations.

Adopting continuous modernization is important for keeping pace with rapid technological changes and dynamic market conditions. 

Organizations that commit to regular updates and improvements in their IT infrastructure can respond more agilely to new challenges and opportunities. This helps maintain competitive advantage and ensures that the organization remains resilient against disruptive forces in the industry.

For CIOs, advocating for and leading a culture of continuous modernization requires crafting a clear communication strategy that aligns IT upgrades with long-term business goals. It also requires developing a scalable and flexible IT architecture that can adapt as new technologies emerge and business needs evolve. Fostering an environment where innovation is routine aids companies in making sure they are always ready to capitalize on new technologies and market trends.

Tim Boesen

May 3, 2024

4 Min