IT modernization: companies need to tackle their legacy applications

There is an urgent need for IT modernization in German companies, according to a study by the consulting firm Lünendonk. According to the study, 62 percent of the companies surveyed stated that parts of their business-critical applications are already so outdated that they no longer meet today's requirements and need to be replaced. For half of them, the operation, maintenance and further development of legacy systems are also not guaranteed in the medium and long term. Just over three quarters assume that at least 20 percent of all business-critical core applications will require modernization in the next five years.

Accordingly, 83% of companies are planning to increase their IT modernization budget in 2026. For almost a fifth, the budget is set to increase by more than five percent. According to Lünendonk, over 150 IT and business managers from medium-sized and large companies in various sectors were surveyed for the study. The main drivers behind the rising expenditure are increasing regulatory requirements for cyber security, but also concerns about security attacks.

Off to the cloud

Unsurprisingly , the move to the cloud plays a major role in modernization strategies. Nine out of ten companies surveyed want to run more than 40 percent of their IT applications in the cloud by 2028. Currently, only four out of ten do so. Lünendonk assumes that this combination of different operating models will make IT landscapes increasingly hybrid.

Companies are pursuing different approaches. 74% rely on replatforming, i.e., the conversion of legacy applications to a new platform, while 64% rely on refactoring. In turn, 72% switched completely to on-premises or private cloud-based standard solutions. Only 47 percent opted for a completely new development.

SaaS and AI only play a minor role

Software-as-a-Service (SaaS) is mainly considered for less critical applications. According to Lünendonk, skepticism still prevails for business-critical applications. Overall, 43 percent rely on SaaS to get rid of their legacy applications.

Companies also have high hopes for AI – when it comes to tackling their modernization backlog, although there is a lack of practical experience as to how helpful it really is. According to the survey, 74% expect AI to be able to uncover security gaps in legacy systems and at least partially rectify them independently. 69 percent also hope for a deeper understanding of programming and code structures. However, only eight percent of companies have advanced approaches to automated code analysis using AI. However, 22 percent already use AI in the area of documentation.

(axk)