Application modernization

Your applications may still be reliable, but that doesn’t mean they’re adaptable—or ready for what your business needs next.

Slalom helps organizations build toward Zero Legacy through disciplined modernization of applications, data, and core platforms. We combine strategy, engineering, cloud, data, and AI expertise to help organizations prioritize the right investments, modernize without unnecessary disruption, and keep critical systems running.

This guide breaks down what application modernization involves, when it makes sense, the approaches available, and how to build a strategy that delivers lasting value.

Slalom’s application modernization experience

Our customers around the globe are modernizing mainframes, applications, and enterprise data with results that include:

• 2–4x faster delivery for a US education agency through AI-enabled engineering
• $100MM projected savings and a 60% reduction in refactoring time for a global technology leader
• 30% reduction in technical debt and $1.1MM reduction in annual mainframe operating costs for an iconic manufacturer and retailer
• 66% lower compute costs and 50% faster workflows for a major federal healthcare agency
• 5–9x engineering velocity increase using AI-accelerated modernization for a leading financial services provider

We partner with Amazon Web Services (AWS), Databricks, Google Cloud, Microsoft, Open AI, Salesforce, Snowflake, and over 700 of the world’s leading technology providers to support modernization across complex enterprise environments.

Build the business case for application modernization

The case for application modernization should begin with understanding your business constraints, not targeting new technology. This is how organizations can modernize what matters—with a mission and shared outcomes—without disrupting what still works.

What is application modernization, and why does it matter?

Application modernization updates legacy applications to better support a business’s current and future adaptability and performance. While app modernization can involve cloud adoption, architectural redesign, automation, new engineering practices, or replacing applications that no longer justify continued investment, it’s not just a technology refresh.  

The goal of application modernization is to move businesses from applications that constrain the business to platforms that enable it.  

Get full context: What application modernization is and why it matters

What are the benefits of application modernization?

Application modernization can improve operational speed, resilience, cost efficiency, security, software delivery, data accessibility, and AI readiness. Near-term benefits can include faster releases, lower maintenance costs, and greater operational stability. Longer-term value can come from benefits like lower cost-to-serve, greater engineering capacity, more adaptive operating models, and sustained innovation.  

Modernization creates the most value when organizations establish measurable outcomes before choosing technology changes, and when they continue measuring whether those outcomes materialize after implementation.  

Orient your team and stakeholders: Benefits of application modernization

What are real-world application modernization examples?

Real-world application modernization follow many strategies because organizations face different constraints and name unique priorities. One company may move an aging application to the cloud to improve scalability and resilience. Another may refactor a strategically important application to release new capabilities faster. A third may replace commodity custom software with a SaaS platform. A fourth may do all that and more.

Look behind the curtain: Explore real-world modernization examples

Choose the right modernization strategy and architecture

There is no single correct modernization strategy for an enterprise application portfolio. The right architecture follows the workload.  

Leaders should evaluate availability, latency, integration needs, data sensitivity, regulatory requirements, change frequency, cost predictability, team capability, and business criticality before selecting a target state. The strongest approach combines AI speed with deterministic validation, engineering judgment, and clear accountability.

What are the main application modernization strategies?

The main application modernization strategies are commonly organized around seven choices: retire, retain, relocate, rehost, replatform, repurchase, and refactor. These are often called the 7Rs of application modernization. The strongest enterprise strategy is therefore usually a portfolio of modernization approaches rather than one approach applied everywhere.  

Start comparing approaches: Understand what the main application modernization strategies are

How do you choose the right application modernization strategy?

Choose an application modernization strategy by evaluating the business value of the application alongside its technical condition, risk, operating economics, data constraints, architecture fit, organizational readiness, and required time to value. A defensible modernization decision makes those tradeoffs explicit. Establish a baseline, quantify the economics, identify important assumptions, phase the work, define measurable outcomes, and maintain an exit path if the evidence changes.  

Weigh the tradeoffs: How to choose the right app modernization strategy

What technologies and architectures enable app modernization?

Application modernization typically combines cloud platforms, APIs, modern data architectures, microservices, containers or serverless computing, DevOps practices, and AI-assisted engineering. Together, these architectural approaches can make applications easier to scale, integrate, secure, deploy, and change. But the right architecture depends on the workload.  

No matter what you enable, you should create an architecture that supports the application's business requirements today while preserving options for how it needs to evolve tomorrow.

Explore enablement: Technologies and architectures that enable application modernization

What tools are used in application modernization?

Application modernization uses a combination of tools for assessment and discovery, AI-assisted software engineering, cloud migration, containerization and orchestration, DevOps and CI/CD, infrastructure as code, integration and API management, observability, data modernization, and security. Examples of app modernization tools include AWS Transform, Azure Migrate, GitHub Copilot, Claude Code, Docker, Kubernetes, GitHub Actions, Terraform, MuleSoft, Apigee, Datadog, Dynatrace, Snowflake, and Microsoft Fabric.  

The right tool stack depends on the modernization strategy, existing architecture, team capabilities, governance requirements, and business outcomes. Don’t be seduced by which platform has the longest feature list.

Review the tools: What tools are used in app modernization

Create an executable application modernization roadmap

A credible modernization roadmap shows what to modernize first, why it comes first, what value it will create, and how the organization will control risk. The best roadmaps break modernization into deliberate, measurable waves, so leaders know when to stop, continue, and adapt.

What does an app modernization roadmap look like?

Leaders should start building the roadmap by understanding the application estate (e.g., business function, architecture, dependencies, costs, technical debt, risk, data, users, and strategic importance). Then sequence modernization into waves with defined outcomes, acceptance criteria, dependencies, investment gates, and measures of success.  

A strong roadmap will get more precise as evidence appears and outcomes improve. Remember: discovery reduces uncertainty, early modernization work tests assumptions, and results inform later investment decisions.

Understand signal and sequencing: How to build an application modernization roadmap

What are application modernization best practices?

Best practices start with a goal to remove business constraints locked up by legacy technology. Then, investments should be prioritized based on business value, risk, cost, and speed to impact (instead of modernizing just because a technology is old).  

Other best practices include modernizing incrementally where possible; establishing measurable outcomes; and building security, risk, and governance into the work early; standardizing reusable architecture and delivery patterns; addressing data and integration dependencies; investing in workforce readiness and knowledge transfer; and measuring whether modernization is actually improving the business and technical performance.

Sustain value over time: Application modernization best practices  

What challenges should you expect in application modernization?

Application modernization challenges include poorly understood legacy dependencies, technical debt, architecture complexity, data migration and integration, scarce skills, security and regulatory requirements, budget pressure, organizational resistance, and the risk of disrupting critical operations. Large app modernization programs become particularly vulnerable when organizations try to transform too much before proving value.

Anticipate and overcome risks: Common application modernization challenges  

Fund, govern, and scale the modernization program

Modernization scales when funding, governance, and delivery reinforce one another. Clear guardrails and decision rights give teams autonomy without sacrificing control, while measurable outcomes make value visible and prove progress.

How do you fund application modernization initiatives?

Funding may come from enterprise transformation budgets, individual business units, technology-provider incentives, or joint and co-investment structures. Partner funding can sometimes offset assessments, proofs of concept, mobilization, migration, or modernization work when eligibility and technology strategy align. Whatever the source, funding should be connected to measurable outcomes and explicit decision points. These are part of a phase-gated funding model (versus one large “big bang” transformation commitment).  

Understand the implications: The most effective funding models for app modernization

How do you prove application modernization value to keep funding?

To sustain application modernization funding, manage modernization as an ongoing portfolio investment where there’s continuous evaluation happening around modernization business value, risk, and cost. Those analyses will inform red, yellow, and green light decisions about where to invest, maintain, or retire. The analyses also sets an organization up for funding work in phases, using measurable results and validated assumptions to see if, indeed, additional investment is justified.  

It can’t be overstated: make sure that evaluation phases measure business outcomes, not just delivery milestones. Cost optimization, resilience, risk reduction, customer impact, engineering capacity, and AI readiness—all of it needs to demonstrate incremental value gains.

Earn and keep trust: Principles for funding ongoing app modernization

How do you govern and scale application modernization programs?

Governance should accelerate good decisions rather than add unnecessary approval layers. Define who owns consequential decisions, which decisions teams can make independently, and exactly what conditions require escalation. For example, standardize capabilities that benefit the enterprise—such as architecture patterns, CI/CD, security, observability, and shared services—while giving teams autonomy within those boundaries.

See the recommendations: How to govern and scale app modernization

How do you balance application modernization governance and team autonomy?

Standardize what matters and give teams freedom everywhere else. That looks like this: stakeholders define decision owners, decision forums, risk and architecture thresholds under centralized guardrails, exception and escalation paths, and the conditions under which major decisions should be revisited. Then they give teams freedom to operate within those boundaries.

This allows the enterprise to standardize decisions that materially affect security, architecture, investment, and risk without forcing routine delivery decisions through centralized governance.

Get more guidance: Balancing app modernization governance with team autonomy

Choose an application modernization partner that reduces risk and optimizes outcomes

The right modernization partner helps you make better decisions before asking for bigger commitments. Look for technical depth, transparent economics, measurable early value, and a clear approach to managing risk and building internal capability.  

How do you choose the right application modernization consultant?

The right application modernization partner should combine technical depth with business, industry, delivery, risk, and organizational change capabilities. They should be able to explain their recommendations and all the assumptions, alternatives, risks, and tradeoffs behind the recommendation. As you evaluate their ideas, dig into the evidence of their capabilities, technical expertise, partner relationships, industry fit, delivery confidence, risk, and overall value.

Price, certifications, and company size should not become proxies for the ability to deliver modernization outcomes.

Review the criteria: How to choose an app modernization consultant

How do you evaluate application modernization pricing to see the most value?

Application modernization engagements can use time-and-materials, fixed-fee, milestone, capacity, outcome-based, or hybrid pricing models. The appropriate structure depends on how much is known about the scope, how much delivery risk remains, whether outcomes can be measured reliably, and how responsibility is divided between the organization and its partners.

Avoid comparing vendor proposals based only on headline price. Consider total cost, operating costs after modernization, hidden dependencies, transition requirements, decommissioning, organizational change, risk, and the cost of carrying technical debt forward. Leaders need to feel confident they will make an investment with a consultant that provides the strongest risk-adjusted value and the best evidence that the expected outcomes can be achieved.

Compare pricing models: How to evaluate app modernization pricing

How do you compare application modernization vendors and make a final decision?

Compare app modernization vendors based on risk-adjusted value. Do not compare price, certifications, or company size alone. Instead, evaluate each partner’s ability to connect modernization to measurable business outcomes, make credible architecture decisions, manage security and risk, transfer capabilities to your teams, and deliver within your industry and technology environment. Look for transparent assumptions and dependencies, realistic phase gates, and clear commitments around milestones and outcomes—not just a project estimate.  

The strongest partner should provide credible evidence that its approach can work in your environment and a low-risk way to prove remaining assumptions before you make a larger commitment.

Ask the right questions: How to compare application modernization vendors before making a final decision