For Incremental Modernization, Setting Priorities Is Everything

“Big bang” modernization projects are dead. Incremental modernization has taken its place.

At least, this is increasingly what’s happening in the enterprise world. Organizations are realizing that overhauling software platforms in one huge go is far too costly, risky and time-consuming. Instead, they’re modernizing incrementally by updating their architecture and code piece by piece, through projects that last a month or two rather than several years.

The challenge of establishing incremental modernization priorities

Yet, while incremental modernization solves many traditional modernization challenges, it also presents a fundamental new question: How should IT leaders decide what to modernize first? And where do they go next after that’s complete?

This is a question organizations didn’t have to ask themselves in the days of big-bang modernization. Then, the focus was on overhauling everything in one big go.

But with incremental modernization, deciding where to start becomes crucial, as effective prioritization is essential to achieving success. Smaller, faster, lower-risk modernization initiatives only deliver value if they result in change that actually benefits the business.

To make matters more complicated, there’s no clear-cut roadmap that every organization can follow when it comes to incremental modernization. Instead, incremental modernization must reflect the unique needs and goals of each business that embarks on the journey. It must factor in where the organization’s software assets stand today, and where it wants to take them – and it must be driven by an effective prioritization strategy that allows the company to navigate that path as efficiently as possible.

Drivers for incremental modernization

So, how can businesses decide where to start, and where to go next, when they embark on incremental modernization journeys?

The answer starts with analyzing current systems to find deficiencies that present the greatest risk. For many organizations, that means identifying the following:

• Functional shortcomings: Which capabilities does the business need that the system doesn’t fully provide? For example, are there types of features (like deploying AI agents) that are not possible under the existing system?
• Performance liabilities: Which performance bottlenecks or downtime vulnerabilities exist in the current system, and how serious are they from a business perspective?
• Security risks: What are the security weaknesses of the system, and how could exploitation of them affect the business?
• Vendor support limitations: Has the platform vendor ceased supporting the system, or has it announced plans to do so? In the absence of vendor support, how will the business continue to operate the software?
• In-house skills loss: Does the organization still have the in-house expertise necessary to manage and use the system effectively?

Enterprise software platforms typically pose risks across all or nearly all of these areas. It’s the task of IT leadership, in conversation with business stakeholders, to decide which shortcomings merit addressing first via incremental modernization updates.

Incremental modernization in practice: A case study

To illustrate what the process for making prioritization decisions during incremental modernization actually looks like, let me share a story about an enterprise that wanted to leverage modern generative and agentic AI capabilities but struggled to do so because it ran its applications on an on-premises ERP platform.

Modern, cloud-based versions of the platform offer robust AI support, so modernizing the company’s ERP environment to run in the cloud was one way to enable access to the AI features it sought. But the platform vendor makes its AI features available only to customers who migrate to the modern version of its offering — and completing that migration requires not just “lifting and shifting” apps into the cloud, but also overhauling internal application logic to conform to the architectural demands of the cloud-based platform.

The company didn’t have time to overhaul all of its logic — a process that would have taken years, given its expansive portfolio of apps. Instead, they deployed a custom AI tool that analyzed their existing application portfolio to identify which apps had the most code in need of modernization, and how difficult it would be to overhaul that code.

By correlating this with the business context on where AI capabilities were most needed, we were able to prioritize a list of applications to modernize first. The result was the ability to bring modern AI features to the enterprise’s most business-critical apps through an incremental modernization effort that took just a few months to complete — rather than the years we would have spent overhauling the company’s entire ERP code.

Accelerating incremental modernization for software

I share that story partly to illustrate what a practical approach to modernization looks like, and partly to highlight a couple of strategic choices that make modernization even more efficient.

One is the use of AI to speed up prioritization decisions. By using AI to analyze existing software architectures and code, project stakeholders in the example I just discussed were able to generate an application inventory of top candidates for modernization in hours. Manual analysis would have required weeks of work by programmers with rare expertise in analyzing complex application code.

The second boon to the organization was its decision to bring in outsiders to help pursue its modernization goals. Businesses that have been operating enterprise platforms for decades tend to become “stuck in their ways” in how they think about the platforms — and, by extension, how they think about modernizing them. Outsiders can offer a more balanced, objective perspective that adds crucial insight to incremental modernization projects.

To be sure, every business’s IT estate is unique, and, by extension, every organization’s approach to incremental modernization will differ. But to fully capitalize on the velocity and risk reduction that an incremental approach brings to modernization, all businesses need to establish clear, deliberate priorities for what to modernize first — while also finding and leveraging modernization accelerators to speed up the process further.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Image credit: iStockphoto/NicoElNino