Modernization that earns its spend

The question isn’t, why do we need to modernize?  

As technology leaders, you know the stakes: 

• Obsolescence is a threat. 70% of enterprise software is over 20 years old, and the talent pool that knows how to maintain it is shrinking.  

• Innovation is kneecapped. 60%-80% of IT budgets are gobbled up by maintaining mainframes and static, legacy systems that aren’t designed for current or future business needs, like adaptability and AI transformation. 

• Every moment without modernization compounds opportunity costs. From technical debt and talent risk to security exposure and slow, siloed decision-making, legacy infrastructure puts growth and long-term value generation in a lockbox. 

The question is actually two parts: what do we modernize first, and how do we know it’s the right call for the best ROI?  

Modernization isn’t operational maintenance. It’s not even systemic technology upgrades or a one-time, everything-at-once transformation that IT owns all by itself.

Modernization is an enterprise-wide effort in reimagination and reinvention, so you can use intelligent operations with AI transformation, data strategy, and adaptable workflows as (you guessed it) strategic levers that unlock new value via new business models, customer channels, and workforce productivity.

The good news?

• 60% of CIOs consider IT modernization their top priority. (Info-tech, 2025) 
• 75% have already completed small-scale modernization efforts. (Redhat, 2024) 
• Another 18% have already achieved their goals for continuous modernization. (Redhat, 2024) 
• Only 6% of CIOs say they’re doing nothing to modernize. (Radix, 2025) 
• 87% say modernizing critical apps has been a key success driver, setting them apart with new competitive advantages. (Business Wire, 2023)

The bad news? Most digital transformation spending fails to meet business outcomes when leaders spread it across too many priorities.

Typical enterprise modernization entry points, by industry

Organizations that focus on modernization efforts where they matter most can cut, automate, or optimize the systems that slow them down—then double down on the capabilities that drive growth.

Here are some of the typical entry points we see organizations invest in first:

While your organization is doing the hard work of modernizing, it’s incumbent upon executives and key leaders to avoid overloading your teams with too many priorities. Here are three strategies to help you avoid sinking into distractions and instead unblock real advantages.

1. Stay business outcome-oriented

Modernization begins by aligning on your organization’s priority business outcomes:

• Are your customers demanding access through new channels of communication? Do they expect intelligent, engaging, immediate service? (Renown Health’s did. Same with United Airlines.)
• Are you trying to fast-track R&D and bring new bets to market quicker than your competition? (Takeda Pharmaceuticals and PUMA understand.)
• Do you need to reskill and upskill teams into AI fluency, so they’re supervising AI agents or designing AI automations with new data capabilities and efficiency standards? (Clariant pulled it off with precision, too.)

Document your current state, envision your future state, name the gaps, and agree on how to fill them. Also agree on (and document) how your team and other stakeholders will partner with explicit roles and responsibilities. This alignment and visibility will help you map modernization to outcomes.

2. Set, communicate, and benchmark against clear governance structures and KPIs

Make your success criteria clear, measurable, and accountable. Consistently update your team and organization on how the efforts are going. Leaders who define the work, the process, the guardrails, and desired outcomes get tangible results that often exceed expectations.

Here are some examples of strong modernization KPIs:

Here are a handful of typical modernization funding models:

• Annual CapEx program funding for continuous modernization
  This multi-year “big rock” model works well when scope is clear and when you have the flexibility to shift the funding across a run-grow-transform framework quarter-by-quarter. 
• Tranche-based funding for risky or novel initiatives
  If your gates aren’t bureaucratically problematic, this incremental, stage-gated approach to modernization is also effective. Especially if you hybridize the approach with product- or domain-based funding where teams own outcomes, not delivery milestones. 
• Self-funding loops for cloud and automation
  In this OpEx reallocation, modernization is funded by cloud cost savings, vendor consolidation, and automation/toil reduction. Savings are explicitly recycled into modernization. This CFO-friendly funding model forces ROI discipline and can responsibly signal the “kill switch” if revenue dips below your strategic number. 
• Mandated funding only where risk is existential
  Boards understand downside risk, and this funding is justified when you need to meet regulatory requirements, derisk your security posture, address end-of-life risk, or operate under resilience mandates. The key is not to overscope “must-have” work, so you’re not starving out innovation opportunities. 
• Technology partner funding for enterprise modernization
  This isn’t a blank check or a venture-style co-investment. This is incentive-based, usage-tied, and contractually-governed commercial support that reduces friction and accelerates time-to-value. Boards like it because it reduces near-term cash outlay, brings in scarce expertise and partners who can upskill teams (not just modernize systems), and de-risks early modernization phases. 

Modernizing systems unlocks the ability to reimagine and rebuild process workflows, internally and externally. This reinvention and adaptability allow for more effective, rewarding ways to work, engage customers, and propel your organization into the future.