Three principles for how to manage funding for app modernization
Published:
3 minute read
TL;DR
- Slalom recommends three core principles for treating modernization as an ongoing portfolio management discipline rather than a one-time transformation project.
- Treat technology like an estate: Continuously assess applications as a portfolio, deciding where to invest, protect, modernize, or retire assets based on value, risk, and cost.
- Fund outcomes, not promises: Use phase-gated investments with clear decision points, so you can evaluate assumptions and business value before committing to more funding.
- Govern for business value, not delivery activity: Measure success through outcomes such as cost optimization, resilience, risk reduction, customer impact, engineering capacity, and AI readiness, rather than simply tracking milestones and project completion.
Principles for funding ongoing modernization
Application modernization can lose momentum even after a promising pilot or successful first release. Often, the problem isn’t the technology. It’s that funding, priorities, and business expectations weren’t aligned at the start—or weren’t kept aligned as conditions changed.
Continuous re-alignment matters because modernization isn’t a one-time event, even after you work through bounded phase-gates. Applications continue to age. Business priorities shift. New security vulnerabilities emerge. Platform costs change. AI creates new requirements for data, integration, and infrastructure. And the application that deserves investment today may not be the application that deserves it a year from now.
Technology leaders need a funding and governance model that can make those tradeoffs continuously. These three operating principles can help:
1. Treat your technology like an estate
Mature organizations treat modernization as portfolio management, not a collection of independent projects.
Think about the way you manage a physical or financial estate. You don’t make every investment once and walk away. You continually assess what you own, what it is worth, what it costs to maintain, where risk is accumulating, and where additional investment could create greater value. Where do you buy new, and where do you divest? After all, some assets deserve improvement. Some need protection. Some have outlived their usefulness and should be retired.
Your application estate deserves the same discipline.
This also changes how leaders think about technical debt. Technical debt isn’t an engineering problem where you have to squeeze into whatever budget remains after new development. Legacy infrastructure, unsupported technologies, brittle integrations, and growing maintenance requirements can constrain agility and increase operational risk. In some cases, they can also prevent organizations from taking advantage of newer, real-world capabilities.
Portfolio governance makes those tradeoffs explicit. Funding a new capability may create more immediate value than refactoring an existing application. In another part of the estate, reducing a critical dependency or retiring an expensive system may be the better investment.
It also never goes without saying: You wouldn’t let “just anyone” manage your estate. You also need to work with the right partners who can strategize, deliver, coach, and attune based on your unique needs.
2. Fund outcomes, not a vision or promises
Instead of committing to a multi-year transformation upfront, it's better to fund modernization incrementally. A phase-gated funding model creates discipline:
- A discovery establishes priorities.
- An assessment maps the application landscape, dependencies, risks, modernization options, and business case.
- A bounded proof of value can then test important assumptions against real applications and delivery conditions before leaders authorize broader investment.
At each phase gate, executive sponsors can ask a straightforward set of questions:
- Are we producing the expected business value?
- Have the assumptions behind the investment held?
- Has the risk profile changed?
- Is the organization ready to absorb the next stage?
- Should we increase investment, maintain it, change direction, or stop?
This makes funding a series of informed decisions rather than one large bet.
The same discipline should apply to technical debt. Treating technical debt as part of portfolio investment planning makes it possible to compare the value of maintaining an existing system, modernizing it, or redirecting that money toward another priority. The result is a healthier portfolio that can improve continuously instead of simply creating another generation of systems that will eventually require a large transformation.
3. Govern for business value, not delivery activity
As some leaders have experienced, a project can hit its milestones and still fail to create enough value to justify continued investment. Conversely, new information may make changing the original plan the best business decision.
That’s why executive governance should focus on measurable outcomes such as:
- Increasing revenue
- Cost optimization,
- Engineering capacity
- Customer impact
- Resilience
- Risk reduction
- Readiness for priority AI use cases
Delivery and roadmap measures still matter, but they are evidence about program health—not the ultimate definition of success.
Portfolio reviews can use those measures to make active investment decisions:
- High-performing modernization efforts may warrant additional funding or capacity.
- An initiative with assumptions that no longer hold may need to be re-scoped.
- Speed and velocity may not be healthy, so resources may need to shift.
These potential pivots need a forum for discussion, and they require clear decision rights. Delivery teams should be able to make day-to-day decisions within agreed boundaries, while executive governance retains authority over material changes to investment, scope, priorities, and risk.
Over time, this changes application modernization from a succession of transformation projects into endless peak performance with repeatable enterprise capabilities.
