Modernizing IT infrastructure has become essential for organizations striving to remain competitive. This modernization extends beyond merely upgrading hardware or software; it involves strategically leveraging new technologies like AI and cloud computing to enhance operational efficiency, increase data accessibility, and improve the end-user experience. To better understand the current state of IT modernization, in August 2024, Rocket Software commissioned Forrester Consulting to conduct a comprehensive survey of over 300 global decision-makers. The insights gleaned from this survey shed light on the critical role of IT modernization in achieving business objectives.

Notably, 69% of decision-makers identified IT modernization as very or extremely important for their organizations to meet key business goals within the next 12 months. This statistic reveals the growing recognition that technological innovation must be tightly integrated with broader business strategies for long-term success. However, while the importance of modernization is clear, the journey is fraught with challenges.

Challenges in IT Modernization

One of the main barriers to success is the high failure rate of application rewrite projects, a challenge highlighted in the survey. 51% of respondents had attempted six or more mainframe application rewrite projects as part of their cloud migration strategies, many of which were unsuccessful. Even more alarming, the majority of these rewrite projects (90%) failed on the first attempt, leading to wasted resources, missed opportunities, and significant operational setbacks. Compounding these issues, on average, 18% of IT modernization budgets are dedicated to rewriting applications, indicating substantial financial commitments that organizations are making for projects that are not successful.

These stats should serve as a wake-up call for IT professionals: while modernization is essential for staying competitive, how you approach doing it will impact the success rate and cost. The complexity of rewriting core systems applications as part of a cloud strategy, combined with the high failure rate of initial attempts, demonstrates the need for a more effective approach — one that minimizes disruption and ensures long-term success.

IT Modernization Through Hybrid Strategies and Strong Partnerships

Organizations face significant complexities during their IT modernization journeys. Rather than adopting a "rip-and-replace" mentality, which can introduce substantial risks and disruptions, businesses can benefit from strategies that facilitate seamless modernization. By integrating advanced technologies like AI and cloud computing into existing systems, organizations can enhance their IT environments — especially mainframes — boosting resiliency, scalability, and agility. This approach facilitates a more efficient transition, mitigating the common risks associated with a rewrite approach to modernization and allowing businesses to evolve without starting from scratch.

A highly effective strategy in this context is the adoption of a hybrid approach. This allows organizations to keep data where it is most effective, allowing critical workloads to remain on-premises or in private clouds while leveraging the flexibility and scalability of public cloud environments for other functions. With the balance of both environments, organizations can optimize performance, security, and cost-efficiency. Hybrid solutions reduce the risks associated with full-scale migrations and empower companies to modernize in place, maintaining control over their data while benefiting from the agility and innovation the cloud offers.

The survey highlights the critical role of external partners in successful IT modernization. For instance, 83% of decision-makers believe it is important for partners to provide capabilities for code and data modernization, while 79% seek expertise in DevOps and CI/CD. These partnerships extend beyond mere technical skills; they are about aligning with the right partners to achieve an organization’s strategic goals. With 74% of leaders indicating that they have been on their modernization journey for over a year, it’s evident that long-term collaboration is essential. Partners with AI expertise, for example, can enhance internal capabilities, accelerate project timelines, and ensure that modernization efforts remain aligned with overarching business objectives. With the right support, companies can confidently navigate their modernization paths, avoiding the common disruptions associated with traditional cloud migrations.

Recommendations for Successful IT Modernization

Successfully navigating IT modernization involves aligning technology investments with broader business objectives to drive innovation, customer satisfaction, and growth. Embracing AI and automation is crucial for overcoming challenges posed by legacy systems, as these technologies streamline processes and improve decision-making. Partnering with external vendors, especially those specializing in AI, cloud technologies, agile applications, and low-code development, can be transformative. According to the survey, 70% of decision-makers believe it is important for vendors to provide AI and automation capabilities, as these tools are vital for enhancing efficiency. By leveraging the insights and resources of these partners, organizations can effectively navigate their modernization journey and ensure their IT initiatives align with their strategic goals.

The insights from this survey highlight the vital role of IT modernization in driving business transformation. With 75% of decision-makers naming customer experience as a top business objective over the next year and 69% recognizing the importance of modernization for achieving business objectives, it’s clear that the future of IT relies on aligning technological advancements with strategic goals. While obstacles like application rewrite failures remain, leveraging external partners and AI technologies offers promising pathways forward. For organizations committed to innovation and growth, embracing effective IT modernization is key to staying competitive.