AWS Smart Business Blog

How to Make the Case for Application Modernization to Non-Technical Business Leaders

How can you use technology to overcome the biggest hurdles in the way of innovating your business? In today’s complex economic environment, small and medium-sized businesses (SMBs) are navigating through myriad challenges—rising inflation, unpredictable supply chains, and tight labor markets, to name a few. According to the Gartner 2023 CIO and Technology Executive Agenda: A Midsize Enterprise Perspective report, over 50 percent of SMBs anticipate increasing their IT budgets this year. However, what’s concerning is that these planned increases may not even keep up with the projected rate of IT inflation.

So, what’s the solution? The same report reveals that Application Modernization—or “AppMod,” as it is commonly known in the industry—is slated to see a 42 percent budget increase, serving as a beacon for strategic improvement. However we also recognize how difficult it can be to translate tech value into business value—especially if you report into or have a budget managed by non-technical stakeholders.

This blog post aims to demystify the concept of AppMod and provide you with easy-to-understand explanations and actionable insights for educating business leaders effectively.

What is App Modernization?

AppMod is the process of updating and enhancing legacy applications to meet current technology and business needs. It involves revamping or migrating existing applications to more contemporary setups to improve team workloads, scalability, and functionality. If you struggle with slow software, too many dependencies, or have outgrown a current development process, you are facing technical debt. Similarly, if you work in a highly-regulated industry such as financial services or healthcare, AppMod could help you address digital transformation compliance standards.

What are common examples of AppMod?

Practically for SMBs, this could mean upgrading to a new version of CRM software (where you store customer contact information) or moving your on-premises accounting software into the cloud so it can be accessed from any device and not saved to one employee’s work computer. If your SMB develops or sells software to customers, AppMod can also help improve the speed and reliability of your product.

Financial benefits of modernization for SMBs

When asked, the number one reason why SMBs resist modernization initiatives is due to the perceived price. However, older systems—while appearing functional—often come with hidden costs that slowly and stealthily deplete resources. This often overlooked hidden tax encompasses challenges such as low efficiency (staff performing manual processes) and expensive proprietary software licensing (which ties businesses into costly agreements and high maintenance costs for outdated systems).

As an SMB, these opportunity and financial costs might not be easily absorbed compared to large enterprises or venture capital-backed startups. The operational expenses, inefficiencies, and resource consumption can mount rapidly. Modernization offers a resounding solution. It introduces businesses to new, scalable technologies and the cost efficiencies. Embracing modernization doesn’t just remove the hidden costs; it revolutionizes the very fabric of IT operations. By cutting down these covert expenditures, businesses unlock the potential to reallocate money and staff to innovation, propelling both revenue and sustainable growth.

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What should be included in an AppMod strategy?

You do not need a degree or experience in computer science to understand the value of AppMod. In fact, it isn’t just about a shift in technology—it is a blend of IT, organizational, and operational enhancements. As you delve into modernization, think of it as a process that encapsulates these aspects:

Technology and architecture

For an SMB to thrive in today’s fast-paced world, it’s crucial to have IT guidelines that evolves over time. By modernizing, your business applications can adopt state-of-the-art technologies such as AI. This move allows businesses to speed up, cut operational overhead, and maintain focus on delivering unmatched features to its clients. It’s all about focusing on capabilities rather than platforms and striving for evolutionary and adaptable architectures. The goal is to hone in on core competencies and do away with redundant operations. Whether you have in-house IT or work with a third-party advisor, having all parties aligned around a singular vision is important.

People, process, and culture

Modernizing your tech ecosystem goes hand-in-hand with revamping the way teams function. It means a departure from the conventional, siloed approach to embracing independent product teams utilizing agile methodologies. The power of agile processes, the importance of ownership, and the significance of cross-functional teams cannot be overlooked. As SMBs shift to a modern work approach, empowering teams through training becomes pivotal. It’s not about setting barriers; it’s about setting the right guidelines. In fact, Amazon Web Services Training & Certification offers educational IT resources specifically for SMBs.

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Operations and governance

You might be wondering how you can scale your modern IT efforts with a small SMB team or heavy reliance on a managed service provider (MSP). At AWS, our recommendation is automation, which helps you augment your existing team. While the initial stages might need significant investments, the returns, in the long run, are exponential. From automated fraud detection to deployment and pipeline automation, it means your operations are designed to grow without direct linear increases in costs.

Strategy to modernize

Using Amazon’s Working Backwards approach to define modernization business cases

At Amazon everything begins by Working Backwards from business drivers and customers. In this specific case, it can help move your application modernization journey toward defined business outcomes. For example, if your intended business outcome is to increase revenue by 30 percent next year, then the business driver might include developing new application features that will enable that growth. With a business outcome-focus, all technical conversations then center upon modernizing the application technology to move your SMB forward.

Next, establish a single leader accountable for defining specific application-related business drivers and setting a timeline for delivering results. The final step is communicating your business outcome vision to all IT staff or MSPs and aligning teams on working backwards toward achieving the defined outcomes.

Prioritize your application portfolio

A sincere desire to modernize everything all at once is a common approach that fails to make measurable progress towards defined business goals. If your business uses several applications (both customer-facing and internal tools), quantify the risk and value per application, then select a single application that is most likely to influence your near-term business goals.

Next, identify and document what gaps in application features or business processes that are obstacles to realizing your objectives, and rank them in descending order of impact. Once you select the most impactful application to modernize, engage cross-functional teams to fully understanding its current state and assign ownership.

Design and deploy application updates that enable business outcomes

Achieving success in application modernization is fundamentally about enhancing your workforce, streamlining your operational procedures, and selecting the most suitable technological tools—all in service of your business objectives. This is not merely an exercise in adopting the latest technological innovations or redoing your application with new programming techniques.

You can work with AWS to choose the right technologies that enable your business. Once designed, allocating the necessary staff and funding to build the future state is key. If your development team is not yet ready for the task—or you do not have one in-house—AWS can connect you with an AWS Partner Network consultant with deep experience in AppMod to help you implement.

Conclusion and next steps

AppMod is the strategic tool for bridging the gap between current challenges and future business growth. Working backwards from business outcomes, prioritizing the most impactful application, and incorporating modern technologies including AI will give you the right tools to realize financial benefits of increased revenue and decreased IT total cost of ownership.

AWS can help guide your team with a low touch engagement called the Application Modernization Program that covers all aspects of the strategy to modernize and provides you with a future state architecture and plan to follow to achieve the business outcomes you define. To take part in this valuable program, you can contact us so we can help you determine your initial modernization priorities.

Mukund Rao

Mukund Rao

Mukund Rao is a Sr. Solutions Architect at AWS supporting SMBs. He is passionate about business modernization and has spoken on the topic as part of AWS Smart Business Day. Before joining AWS, he worked in technical roles for companies such as Q2, Electronic Arts, Oracle, and more. Mukund holds a Master of Science in Management Information Systems from Texas A&M University. He is based in Texas (US).

Alan Lytz

Alan Lytz

Alan Lytz is a Sr. Solutions Architect at AWS supporting SMBs. Before joining AWS, he worked as a Solutions Architect Team Lead at SUBNET Solutions, and Asset Data Analytics Lead at PPL Electric Utilities. Alan holds a Bachelor of Science degree in physics from Gettysburg College and is based in New York (US).

Kumar Karra

Kumar Karra

Kumar Karra is a Sr. Solutions Architect at AWS supporting SMBs. He is an experienced engineer with deep experience in the software development lifecycle. Kumar looks to solve challenging problems by applying technical, leadership, and business skills. He holds a Master's Degree in Computer Science and Machine Learning from Georgia Institute of Technology and is based in Virginia (US).