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How Modernizing Legacy Applications Saves You Money Amid Decelerated Tech Spending

James Ardis
Young professional at desk planning budget for modernizing legacy applications

Even with the possibility of a recession, most tech teams will not face substantial budget cuts in 2023. However, many CIOs feel that the pandemic-era tech spending boom is ending. 

These leaders told Citi Research that they only expect their budgets to increase by 1.8% in the first six months of 2023. While still an increase, it marks a clear decline from the heights of the pandemic in September 2021 (5.4%) and even a decrease from the historical average (3.4%).

CIOs will need to be even more strategic about their spending than they have been in previous years. They will also need to work more closely with their CFO to validate their investments. 

Luckily, modernizing legacy systems can decrease long-term expenses by reducing technical debt and dependence on costly on-prem systems. Application modernization can also boost staff efficiency in employee-facing platforms. That allows CFOs to see a clear and multi-faceted return on investment and frees up room in the budget for innovation. 

Below, learn how modernizing legacy applications lowers expenses. Plus, discover the processes that will put you in the best position to see early results.

Reduced Technical Debt

As customers and employees stayed home during the pandemic, companies produced more digital products than ever before and at record speeds. Many of these organizations knew they were accruing technical debt along the way. However, they viewed it as a necessary cost to keep up with consumer and business needs.

“Sorry, we’re closed” sign of a building during the pandemic era

 

Now, these companies are starting to feel the impact of technical debt. IT departments spend nearly 25% of their yearly budgets handling accrued debt, according to DevOps.com. As we enter leaner times, CIOs should consider reducing their technical debt to preserve a healthy budget for innovation.

Modernizing legacy applications can help tech teams correct the mistakes that led them to advanced technical debt. Cleaning up code, for example, can reduce the number of bugs that users encounter. That way, your development teams spend less time with bug fixes and more time building new features that dynamically meet emerging user needs. 

It can sometimes be difficult for CFOs and other stakeholders to understand what technical debt means and how it impacts your department’s efficiency. Be sure to sit down with these leaders and help them visualize how much time and resources currently go to basic upkeep. Then, help them imagine a future where those resources can be reallocated towards initiatives that have a more profound, long-term impact on the company.

On-prem system used to host legacy applications

Less Dependence on Costly On-Prem Solutions 

One of the most discussed application modernization processes is cloud migration. This strategy takes software that once existed in on-premises servers and moves it to a more affordable third-party cloud provider. 

Companies were once enticed by the control that having on-prem servers provided. However, many organizations now realize how much money the on-prem model requires them to invest in hardware, maintenance, licenses, and more. Cloud migration saves companies an average of 31% on infrastructure costs, according to AWS.  

But that is only the beginning of the cost savings. In the cloud, your organization only pays server fees when you or your customers use applications. That means saving money during down periods. 

Student walking around campus with a blue backpack

For example, one of our clients in the education field had to maintain their on-prem systems even during yearly down periods in the academic calendar. By moving them to the cloud with our Fast-Track approach, they enjoyed lower overhead costs that reflected how much their clients actually used their systems.

Increased Efficiency in Employee-Facing Systems

Modernizing legacy applications can also help employees complete their tasks faster and with more accuracy. Cleaning up code ensures employees no longer have to find workarounds for pesky bugs. Meanwhile, integrating systems removes the need for your employees to jump between multiple platforms. 

Your team can also modernize employee-facing systems by automating redundant processes that employees once had to perform manually. Automation saves the organization money in two ways: 1) reducing the time employees need to spend on these tasks and 2) removing the costs related to human error.

Doctor checking application on his phone

For example, we recently helped a healthcare RCM company automate weekly reports they sent out to each of their clients. These were detailed, technical documents outlining where oncology practices may have undercharged insurance companies.

Before automation, these reports took employees three hours every Sunday night to put together, reducing efficiency and employee morale. With so many nuances in each document, human error was also inevitable. Automation saved this healthcare RCM company time and money. It also improved the company’s relationship with clients and its own employees.

Modernizing legacy applications will sometimes improve the efficiency of departments outside your own in the organization. While you may think this does not impact your tech budget, it gives you a compelling case to bring to your CFO on why you deserve more funds. If you can prove every dollar spent on IT saves two dollars elsewhere, the CFO will better understand technology as an investment.

Three young professionals discussing budget for modernizing legacy applications

Final Thoughts

After all the disruption of the pandemic era, companies are entering another period of uncertainty. With consumers becoming more selective in their purchases, worries of a recession, and costs rising across the board, many organizations will choose to increase their tech budgets by less in 2023 than in the previous three years. 

However, as IDC analyst Rick Villars told TechCrunch, the role of the CIO will be more important, instead of less, in these volatile times. “Technology is part of solving the business challenges that a recession brings. And if the focus is on just cutting technology investments, [leaders are] not actually helping the company get through the recession or through these disruptions.” 

Modernizing legacy applications can help CFOs and other stakeholders see how technology investments reverberate throughout the organization. Application modernization also reduces your own department’s expenses, unlocking more resources that can be put towards innovation.  

Man organizing notes for application modernization campaign

 At Programmers, we have a process to modernize legacy applications that drives value to your organization every 90 days. We call this our Fast-Track Application Modernization service. 

Together with your leaders, we work to understand what brings meaningful value to your organization and what roadblocks you’ve faced in your legacy applications along the way. Then, we uncover your most pressing tech barriers and work to remove them in 90-day iterative cycles. 

Our clients prefer this type of modernization service because leaders like the CFO see results quickly. Plus, customers and employees enjoy better experiences rapidly in your digital ecosystem. This Fast-Track method also helps companies keep their modernization effort laser-focused on what actually brings value to their organization.

Learn more about our Fast-Track Application Modernization service by clicking the links above. And when you’re ready to begin modernizing, fill out the contact form below.

Let us know how we can help you.

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