Modernization is a natural step organizations take in order to gain better returns on their investments (ROI). Legacy application modernization is crucial when companies compete with market leaders. Organizations that own legacy applications on their own premises will struggle to release their products frequently and if their application doesn’t cater to their users, they will remain a minor player in their operating environments. They attain market share, competitive edge and innovative streak only when they embrace the right technologies or innovate themselves. New technologies such as microservices, cloud with multi-tenancy, end-to-end DevSecOps and continuous improvement are the best ways to attain the highest modernization maturity level. Legacy systems are slow, complex and are not cloud compliant. They drain company resources and cost the companies their market leadership positions and value. It is therefore wise to invest in modern technologies that complement the business strategies of your organization. But how do you choose the right technology for your organization? Not all technologies will work for your organization but the right technologies will improve your business value if implemented properly. Let us take microservices and cloud technology. 78% of organizations around the world have the former and 85% of all organizations use the latter in one way or the other. This is because return on investment (ROI) for microservices and the cloud is high post-adoption. To reiterate this fact to the naysayers, Aspire has designed a simple ROI calculator. In order to calculate the ROI of digital transformation, we have to consider the following.

  • Application modernization need
  • Cloud Compliance
  • Constraints and risks
  • ROI Calculator

This compartmentalization is to separate the customers’ business priorities, cloud readiness, and their risk taking abilities from each other and predict the return of investment as accurately as possible.

Application Modernization Need

Our ROI calculator takes into account the primary needs to evaluate your business decision to modernize. Any company that is looking to migrate to microservices has a legacy system that is difficult to scale up. These applications usually belong to any one of the four stages of the product life cycle. In this case, it makes sense to consider whether the software is in active development phase or sustenance phase. Modernizing a critical application yields a lot better than non-critical ones. Any application that faces customers has potential and is susceptible to slowdowns or even breakdowns. Internal applications too might have the need for scaling up, but that’s usually due to expansion which happens rarely. Another important factor that warrants modernization is the frequency of software releases. These releases can be major like a separate module or minor like a new feature. Monoliths generally resist addition of such features and customers will find microservices a better option. With these variables added to the ROI equation, let us move on to the next section. Clicking on “Next” will direct you to Cloud Compliance.

Cloud Compliance

Does your organization have proper resources and IT environment to determine whether you are cloud ready? One of the prerequisites for migrating to the cloud is your application’s ability to enable infrastructure scale up. Applications built specifically for the cloud can perform better and are readily available for scaling up. However, on-premise applications need to be checked for scale-up abilities before migrating to the cloud. The ROI equation also takes into account the application’s specific hardware such as registry setting and IP address as well as its ability to thwart security threats. Licensed components unsupported by the cloud are likely to cause issues after the migration and it is necessary to update them for the cloud. The ROI calculator considers the ability to make multiple calls to third party applications because these communication lines might change on the cloud. Now that the cloud compliance of your organization is determined, the ROI calculator moves on to Constraints and Risks.

Constraints and Risks

Any organization that chooses to migrate to a microservices architecture pattern and the cloud must allocate resources and calculate the cost of the process. Frequent releases and the ability to time them is a huge advantage for organizations across the board. Sometimes, the cloud application must be re-architected to make sure it can support growth and expansion and the ROI equation considers that as well. The application’s test scripts should be in place during the migration process. Lastly, the client’s ability to modernize applications must be considered because outsourcing it to a nearshore or offshore partner would cost more than doing it in-house. After considering the constraints and risks, the calculator proceeds to the actual ROI calculator part.

ROI Calculator

Operational cost consists of maintenance cost, development cost, and infrastructure cost. Generally, the maintenance cost of a software application is 20% of the development costs. For the purposes of calculating the ROI, we need to calculate the additional maintenance cost per year using the current maintenance cost and the bug ratio which equals number of bugs per thousand lines of code. The development cost requires the average team velocity in the current year and the year before along with the average number of agile team members. The infrastructure cost considers the current infrastructure costs per week and the application operation time at near peak load. Software license costs should also be included in the ROI calculation. Any software engineering services provider  knows reworks are inevitable when it comes to developing software and the efforts must be included while calculating the ROI. After entering the revenue loss due to legacy architecture, the survey ends and you will be directed to the results page which will display the ROI in US Dollars along with the areas of improvement and risks.

Modernization done rightly will improve your business value and pave way for a well-rounded organization that fosters innovation and leads the market. Microservices and Cloud technology while giving them a competitive edge also makes them resilient to a turbulent future. This ROI calculator was designed for you to gain insights on your organizations position and its ability to modernize. We hope it helped you realize the benefits of modernization.

Ready to predict the ROI for modernization of your legacy applications? Learn how Aspire Systems can help you get in the forefront of innovation.

Sriram Sundaresan