According to McKinsey, up to 70% of the software in use at Fortune 500 companies was developed over two decades ago. These were the days well before chat GPT was even a sparkle in Sam Altman’s eye, not to mention the myriad of advancements that generative AI (GenAI) has ushered in since its entrance into the market. 

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Modernizing these systems is routinely considered to be an “IT problem,” with leaders pushing the work further into the future. Meanwhile, new AI supported features and benefits — like automation, decision-making, personalization, and real-time data processing — continue to roll out, constantly redefining the standard of modern software. 

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With technology evolving at a rapid pace, even systems that are currently capable of performing essential duties will eventually run into efficiency, security, and innovation issues. So leaders who are already struggling with legacy software may find that by next year they won’t be treading water — they’ll be drowning. 

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What Makes a System “Legacy”? 

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Gartner defines legacy software as “an information system that may be based on outdated technologies, but is critical to daily operations.” But understanding if you’re running on legacy software isn’t as simple as a definition. Instead, assess the viability of your system by analyzing its cost, performance, compatibility, security, and scalability. 

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• Cost: Is the maintenance of your software worth the price? As software ages, maintenance costs increase due to patches, bug fixes, and premiums searching for skilled workers who understand the ins and outs of the technology. Frequent bug fixes, patches, and reliability on older technology or specialized skills make it expensive to keep running.

• Performance: Is the performance of your software decreasing? Legacy software is slower and has elongated task execution time than its modern counterparts. This usually means that the infrastructure is outdated or the code is inefficient. 

• Compatibility: Is it hard to integrate with modern tech? Legacy systems are often incompatible with newer tools and platforms — resulting in data silos as cross-system communication is hampered. 

• Security: Does the software meet current security standards? As software gets older, security patches are few and far between. This makes the system prone to cyber threats, which puts you and your customers at risk. 

• Scalability and adaptability: Is your system more rigid than flexible? Is it fulfilling the business needs of today, or the business needs of 20 years ago? It’s hard for legacy software to effectively manage amplified workloads and new business requirements. Businesses that want to scale and adapt will find that older software limits their ability to meet the demands of market changes and opportunities. 

If after assessing your system you find that you’re working with legacy software, it may be time to think about modernization. Otherwise, you could deal with the negative impacts that come with older systems. 

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How Does a Legacy System Impact Your Business? 

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In a world where innovation is constant, legacy systems trying to compete with modern software is akin to trying to make your Blackberry work when the iPhone16 is on the market. In other words, legacy systems were certainly best in class for their time, but can’t compete with today’s capabilities. Specifically, older software is often held back by manual data entry, complex workflows, and limited automation. 

Further, legacy systems have security and user experience issues that can impact the bottom-line. Older software is more susceptible to cyberattacks, including data and malware breaches, which can result in significant financial losses. Legacy systems are also prone to slow and dated user interfaces with lesser online functionality and little to no integration with current customer service features. This results in higher bounce rates and lower conversions. 

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If all this isn’t enough to jumpstart modernization talks, a report from Dell finds that organizations allocate an estimated 60-80% of their IT budget to maintaining legacy software. Additionally, 90% of business are held back in terms of growth because of old tech; legacy system upkeep can cost a business 10–15% more per year; and old tech decreases productivity, with 48% of employees wasting three hours or more per day due to inefficient systems.

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But you may be thinking, why fix something that isn’t broken? Legacy systems do a good job of hiding issues — effortlessly performing without any warning signs. However, just like a Blackberry, it will work right until today’s complex needs catch up with it, causing massive disruptions throughout the company. 

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The Benefits of Modern Software 

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Software modernization is the process of enabling existing software to leverage modern tech, frameworks, and architectures. This can include changing to contemporary programming languages, upgrading to a framework with greater functionality, restructuring systems for modularity, and more. 

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Modern software, especially cloud-based solutions, offers unparalleled scalability. By modernizing applications, organizations can quickly adjust resources to match current demands. Whether you're catering to peak periods — think e-commerce sites during holiday sales — or testing new features, modern software ensures your systems scale when needed. 

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Being able to seamlessly integrate with other tools, features, and operating systems gives modern software the capacity to remove data silos created by legacy systems, enabling data integration and real-time analytics. This provides organizations with actionable insights, be that identifying customer preferences, predicting inventory trends, or automating decision-making processes with machine learning algorithms. 

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Modernized software also integrates the latest security features to mitigate advanced threats. From real-time monitoring and automated updates to advanced encryption protocols, today's platforms are built with security in mind. Additionally, regulatory compliance — GDPR, HIPAA, or CCPA — can be a complex landscape. Outdated systems may lack the flexibility to accommodate these regulations, leading to organizational risk. Modernization ensures your software aligns with evolving compliance requirements.

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With all these benefits, why are so many companies still relying on legacy systems? Modernization can be a costly, time-consuming, and complex process — but it doesn’t have to be. 

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The Role of AI in Software Modernization 

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Modernizing a legacy system includes complex technological and architectural updates, like code refactoring, which are known for their time demands and susceptibility to errors. This is where AI shines as it has the ability to assess legacy software and find improvement opportunities, automate code refactoring, test software, and more. Being able to delegate these tasks to AI reduces your team’s workload, freeing them up to find optimal solutions rather than settle for those they have time for. 

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But AI goes beyond automating mundane tasks; it can also grow its knowledge using data-fueled algorithms that enable it to adapt to changes or make decisions in real-time. This opens the door for businesses to assign AI to complete complex workflows, data entry, and process analysis. 

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Further, while modernization can be prone to human error, AI can ensure that the process adheres to best practices and business requirements — including coding standards and design patterns. This helps with code consistency and streamlines refactoring during modernization. 

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Additionally, AI can drive solutions capable of predicting and managing complex situations, without human intervention. Automation of these routine operations gives businesses the opportunity to shift human oversight to more strategic areas.

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Use Case: Spotify

Spotify used AI to refactor outdated code and integrate new features into their music streaming platform. This enabled Spotify to improve its recommendation algorithms and create a more customizable interface. AI also helped the company transition into a cloud-native system capable of scaling with their growing user base. 

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5 Steps to AI Modernization

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Legacy system are inherently complex, so modernizing them requires a strategy that accounts for all of the risks and benefits. Achieving modernization with AI is a step-by-step approach. Here are five to get you started on your AI software modernization journey:

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1. Onboard All Stakeholders 

Modernization affects everyone — from IT teams to end-users. Start by aligning all key players around the "why" of the project. Highlight the benefits, such as improved efficiency, scalability, and security, to get buy-in across departments. 

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2. Start Small 

Don’t try to modernize everything at once. Begin with small, high-priority systems where AI can demonstrate significant, measurable wins. This builds momentum for larger-scale updates. 

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3. Test and Train 

AI thrives on learning, but it needs the right environment to succeed. Train AI algorithms using high-quality data and conduct testing before going live. Make incremental changes to minimize disruption. 

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4. Build in Transparency 

AI systems must be explainable. Businesses need confidence in understanding what the algorithms are doing and why. Opt for AI solutions that provide clear documentation and decision-making processes. 

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5. Partner with Experts 

Modernization is challenging. From the complexities of refactoring code to integrating AI solutions, having experienced partners makes the process smoother and less risky.

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Modernize Legacy Software with AI

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AI is your most powerful ally in software modernization as it can speed up learning, guide best practices, automate tasks, and guarantee consistency throughout the process. But it’s not a magical solution. Instead, it’s a tool that gives your team the time to focus their efforts on high-level processes rather than the intricacies of implementation. By accelerating product development cycles, organizations can shift focus from technology implementation to business agility. 

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To avoid falling behind, tech leaders should look towards modernization and ensure that their systems align with the latest AI-driven standards. The goal isn’t to simply follow the AI trend but to position themselves as a leader in the age of intelligent software.

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Ready to modernize your software? Do it the right way with the advanced AI of Stride100x.

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