7 Legacy Modernization Challenges Teams Can’t Ignore

Quick summary

This article explores the core challenges businesses face when modernizing legacy systems, including technical debt, data migration issues, and skill shortages. It offers practical tips and strategies to tackle these obstacles and demonstrates how Kodesage simplifies the process with AI-driven features like system mapping, comprehensive documentation, and a unified knowledge base. Explore the Kodesage blog for more insights on modernizing your legacy systems.

Want to overcome legacy system modernization challenges?  

Your legacy systems are slowing innovation, increasing costs, and making integration with modern tools nearly impossible. You know modernization is no longer optional, and you have already begun planning the transition.

But before you take the leap, it’s essential to understand the challenges that could derail your efforts: technical debt, complex data migration, monolithic architectures, skill shortages, and more. These roadblocks can quickly turn a modernization initiative into an expensive, drawn-out process.

In this Kodesage article, we’ll break down these challenges and provide actionable strategies to help you navigate them so you can modernize your systems successfully. 

What is legacy modernization? 

Legacy modernization is the process of updating or replacing old systems with new technology. These older systems might still work, but are expensive to maintain and hard to connect with newer technologies, causing up to a 25% drop in efficiency. 

Modernizing legacy systems can range from simple solutions (like adding new services to old systems) to more complex ones (like completely rebuilding or replacing the system). When done right, it can lower costs, improve security, and boost performance.

However, legacy transformation is not exactly a smooth ride. It can be time-consuming, costly, and risky, especially when moving away from deeply integrated legacy systems. Knowing how to manage the challenges is key to a successful modernization.

Why legacy modernization matters  

• Cost reduction: Legacy systems are expensive to maintain, and modernization helps lower these ongoing costs by adopting newer technologies.
• Efficiency boost: Updating legacy systems improves integration with modern platforms, reducing inefficiencies and simplifying business processes.
• Enhanced security: Modern systems address security vulnerabilities in outdated software, protecting data and reducing the risk of cyber threats.
• Performance improvement: Legacy modernization increases system speed, scalability, and reliability, ensuring better overall performance and user experience.
• Future-proofing: By adopting modern technology, businesses can easily adapt to evolving market trends and technological advancements.

 7 core legacy modernization challenges   

1. Increasing technical debt and outdated code

Over time, legacy systems accumulate patches, quick fixes, and unsupported libraries, making the codebase complex and hard to understand. This technical debt slows down development and increases the risk of errors when changes are made.

This was the case with TSB Bank. In April 2018, the bank tried to upgrade its computer system while also moving a billion customer records. This caused a major crash, with customers unable to access their accounts or seeing incorrect balances on their online and mobile banking. 

As a result, the bank couldn't trade for several days, and the migration ended up costing £330 million, on top of the planned engineering costs. An additional £49.1 million was lost due to financial fraud during the system outage.

Here are tips to manage this challenge:

• Prioritize code refactoring: Regularly clean up and update your codebase to eliminate unnecessary complexity and improve maintainability.
• Invest in modernization tools: Use modern tools and technologies that can help streamline the migration process and reduce the risk of errors.
• Break down large migrations: Instead of moving everything at once, break the migration into smaller, manageable phases to minimize disruption.

Managing this challenge becomes easier with a tool like Kodesage. You can generate mermaid diagrams to visualize dependencies (front end, back end, files, etc.), helping you understand the structure of your legacy systems and identify areas that need refactoring. This visualization makes it easier to manage technical debt and minimize errors. 

Kodesage can also be deployed in on-premise and even in air-gapped environments, ensuring secure handling of sensitive data during modernization. This flexibility allows you to maintain control over your system’s security while modernizing legacy infrastructure.

2. Monolithic, tightly connected architecture

Legacy systems often have a monolithic structure, where various components are tightly integrated and depend on each other. This makes it difficult to update or replace parts of the system without affecting the entire application. As systems grow, changes become more complex and risky, leading to longer development times and higher chances of errors.

In the early days, Amazon used a single, large application where all services, like search, checkout, inventory, and recommendations, were connected in one big system. As Amazon grew, this setup became a problem. Deployments took hours, and small changes could break other parts of the system.

To fix this, Amazon broke the monolith into thousands of smaller, independent microservices. Each microservice got its own database, moving from a single central database to multiple, specialized ones. This change allowed Amazon to release new features hundreds of times a day without causing downtime, and scaling became much more efficient.

Here are tips to manage this challenge:

• Shift to microservices: Break down your monolithic system into smaller, independent services that can be developed, updated, and scaled separately.
• Prioritize modular design: Focus on designing systems with modular components that can evolve independently without affecting the whole system.
• Incrementally refactor: Instead of rewriting the entire system, refactor one module or component at a time to avoid large-scale disruptions.

With automated code analysis and visual system mapping, Kodesage helps you to break down complex monolithic structures into more manageable, modular components. It finds dependencies and gives you actionable insights, making it easier to move to a microservices setup. 

3. Complex data migration and legacy schemas

Old data structures that are hard to move to modern systems are one of the challenges of legacy systems. These old structures are usually poorly documented and don’t work well with new technologies. This makes data migration a difficult task, requiring a lot of mapping, changing, and checking to make sure the data stays accurate and consistent.

Here are tips to manage this challenge:

• Data mapping and transformation: Carefully map legacy data structures to the new system’s schema to ensure compatibility and accuracy.
• Cleanse data: Prioritize cleaning up data during migration to remove duplicates, inconsistencies, and outdated information.
• Automate migration tasks: Use tools that automate data migration and transformation to reduce manual errors and speed up the process.

Kodesage's comprehensive documentation helps surface any gaps in the existing schema, enabling you to address potential issues early and ensure smooth data migration. Furthermore, Kodesage also provides migration guides that will help teams working on the modernization project with detailed steps and recommendations.

4. Integration with modern APIs and services

Legacy systems struggle to connect with modern APIs and services because their architecture is outdated and the protocols don't match. This makes it hard to use new technologies like cloud services, mobile apps, and third-party tools. Without proper integration, businesses risk falling behind and facing inefficiencies.

Here are tips to manage this challenge:

• Adopt API gateways: Use API gateways to connect legacy systems with modern services, simplifying communication and reducing integration complexity.
• Decouple services: Break down monolithic legacy systems into modular components, making it easier to integrate with new services.
• Implement middleware: Use middleware to bridge the gap between legacy systems and modern APIs, facilitating smoother data exchange and system integration.

Kodesage helps you create OpenAPI specs from legacy services, supporting you with creating modern API interfaces that enable smooth integration with newer systems. Also being able to generate integration tests and API documentation, Kodesage can surface important dependencies that will help you you spot potential integration issues early and ensure seamless connections between old and new technologies.

5. Talent shortages and skill gaps

As legacy systems rely on outdated programming languages like COBOL and FORTRAN, finding developers with the necessary expertise becomes increasingly difficult. Many of these skilled professionals are retiring, and fewer new developers are learning these languages. This creates a talent shortage, making it challenging to maintain, update, or migrate legacy systems. 

For example, many developers who originally built and maintained COBOL-based banking systems have retired or switched careers, leaving a shortage of skilled developers. As a result, banks struggle to keep their old systems running smoothly and securely.

Here are tips to manage this challenge:

• Cross-train developers: Train developers in both legacy and modern technologies to ensure the team can manage both old and new systems effectively.
• Outsource legacy work: Consider outsourcing specific legacy tasks to specialized third-party developers to fill the skill gap.
• Invest in recruitment and training: Actively recruit and train the next generation of developers skilled in both legacy systems and modern technologies.

Kodesage’s unified knowledge base is perfect for onboarding new developers. It allows new intakes to have access to a comprehensive, integrated set of resources from multiple sources, helping them get up to speed quickly. 

The Ask Kodesage chat interface can be used to simulate the role of a senior developer, guiding newcomers through best practices and teaching them how to write production-ready code faster. This ensures a smoother onboarding process and helps bridge skill gaps more effectively.

6. Long timelines

Modernizing legacy systems is a complex process that can take a long time. Extensive planning, testing, and gradual implementation often cause projects to exceed initial timelines. As the project stretches on, the risk of disruptions, unexpected costs, and project fatigue increases, leading to missed deadlines and reduced business agility.

Ford launched a project in 2021 to modernize its vehicle software and develop a new electrical architecture. Due to integration challenges and high costs, the project was canceled in 2025. The complexity of merging legacy systems with new EV technologies caused delays. 

Here are tips for managing long timelines in legacy modernization:

• Set realistic milestones: Break the modernization process into smaller, manageable phases to ensure timely progress and reduce risk.
• Use agile methodologies: Adopt agile practices to continuously review, adapt, and deliver improvements in shorter cycles, rather than waiting until the entire system is ready.
• Prioritize critical components: Focus on the most important parts of the system first, and gradually modernize the less critical components.

Kodesage’s automated tools streamline tasks like code analysis and migration, speeding up the modernization process. The platform also helps break down the process into smaller, manageable parts by providing clear documentation, customizable templates, and progress tracking, ensuring that timelines are met more efficiently.

7. Security and compliance risks

Older systems were designed for past security needs and often don’t have modern features like encryption, multi-factor authentication, or audit logs. They may have security loopholes with no updates, especially if they run on unsupported platforms, leaving organizations vulnerable.

The modernization process also brings new risks. Sensitive data could be exposed during migration, and connecting old and new systems might create security gaps. For regulated industries, making sure both systems meet strict requirements adds complexity and cost to the process.

Here are tips to manage this challenge:

• Regular security audits: Conduct frequent security assessments to identify vulnerabilities and ensure that the system complies with current standards.
• Implement encryption: Use encryption to protect sensitive data during migration and while stored in legacy systems.
• Adopt automated compliance checks: Implement tools that automatically check for regulatory compliance, ensuring that the system meets required standards.

Kodesage can be deployed on-premise and in air-gapped environments, providing an added layer of security for organizations working with highly sensitive data or facing strict compliance requirements. This ensures that modernization can proceed securely, without compromising on security, giving businesses control over their data throughout the process.

Best practices for legacy modernization 

Set executive-level measurable goals

Set clear, measurable goals to keep your legacy modernization project on track and ensure it delivers real value. Having executive-level goals, like cost savings or system improvements, helps guide the project and makes sure everyone knows what needs to be done. These goals keep the team focused and aligned, ensuring the project meets expectations.

The CEO of Commonwealth Bank of Australia set a clear goal: customization of their off-the-shelf product shouldn’t exceed 10% of the requirements. The program team was required to track and report progress monthly. This approach kept the project on track, preventing unnecessary changes and dependency on the vendor.

Analyze through six critical drivers 

Before modernizing legacy systems, evaluate your current architecture using these six key drivers:

• Business value: How well the system supports business goals.
• Technology obsolescence: Identifying outdated technologies that may no longer be supported.
• Operational risks: Assessing risks that come from using old systems.
• Agility and scalability: How flexible and scalable the system is for future growth.
• Cost efficiency: Comparing the costs of maintaining the old system versus modernizing.
• Regulatory compliance: Ensuring the system meets current legal and regulatory standards.

This analysis helps pinpoint areas that need modernization by evaluating how well the old systems align with business needs and their cost-effectiveness.

Use the Strangler Fig strategy 

The Strangler Fig pattern means building a new system around the old one, replacing it gradually instead of all at once. This method lets the old system keep running while the new one is put in place, reducing risk by making small changes over time. It also gives you the flexibility to adjust if your business needs shift along the way.

Prioritize consumer adoption and feedback loops 

When modernizing your legacy system, make sure to focus on getting consumer buy-in and setting up feedback loops. Involve your users early and ask for their input regularly. This helps you understand what works, what doesn’t, and what can be improved before the full system goes live. 

By keeping the feedback flowing, you can make adjustments along the way, making sure the system meets their needs and is easy to use.

Modernize your legacy systems seamlessly with Kodesage

Modernizing legacy systems is not without its challenges. From tangled codebases and monolithic structures to data migration, integration, and skill shortages, every challenge introduces risk. But avoiding modernization is even riskier. Businesses that cling to outdated systems lose agility, security, and competitiveness.

Kodesage streamlines the whole process with intelligent automation, advanced system analysis, automated testing and AI-assisted guidance. With comprehensive documentation, system mapping and a living knowledge base, Kodesage helps you modernize confidently and execute with precision.

Book a demo now to see how it works.