Software modernization is one of the toughest, highest-risk endeavors for software companies to take on. Software CEOs often underestimate and miscalculate just how complex and costly it can be to launch a software modernization project, and more importantly, to stick the landing.
CEOs might think, “We can just replace this, and upgrade that – add new features here, update the code there.” But modernizing an existing piece of enterprise software is far more complex than building a new piece of software from scratch, or so it may seem at first. You already have a functioning, revenue-generating machine. And now you’re going to risk breaking it.
Changing the Tires on a Moving Race Car
Your legacy software product is like a reliable race car. It’s still winning races, it still works, but it’s not shiny and new anymore. Some people on your team are saying that the car needs a complete overhaul. Others say that it just needs a few incremental improvements.
What’s the right thing to do? Should you really scrap your existing car design and replace it with a whole new one? If so, you’re going to need the right engineering staff to make that happen.
Software modernization is like changing the tires on a moving race car. You’re trying to upgrade the engine while it’s in motion. This is much harder to do than going into the shop and building a new car. This is why, before you embark upon a software modernization project – whether it’s a next-gen, Big Bang full rewrite, or just adding some in-demand new features – it’s essential to choose the right software development partner.
Choosing the right partner will improve your software modernization project’s chance of success, manage your risks, and increase your potential ROI. The right software development partner will not only have the right technical expertise but they’ll also be laser-focused on making sure that this modernization project delivers value for your business.
So, how do you find that partner? Let’s look at a useful framework for evaluating and choosing the right software development partner for your software modernization project:
Find a Partner Who Won’t Slay Your Golden Goose
Sometimes software company tech teams are too eager to embark on a new software modernization project because they’re excited about new technology and new features. Despite these good intentions, they don’t pay enough attention to the possible risks and costs for the business.
Most of the time with software modernization projects, a company is looking at upgrading or rewriting a software product that is already successful: it has a customer base and is making money. This product is a Golden Goose. You don’t want to kill the goose! Keep that goose alive while continuing to give customers what they want.
Too often, software companies undervalue their legacy product and underestimate the risks of software modernization. They look at their software product and say, “It’s too old. It’s time to depreciate it, to EOL it, and replace the whole thing.” And too many software consulting firms are eager to jump right in and sharpen their knives to kill that golden goose. “Sure no problem, whatever you want, we can replace this for you,” the consultants say.
Then, too many years and millions of dollars later, the modernization project has failed. The consultants have had cost overruns, something has broken in the back end of your platform, and your existing customers are getting impatient. Instead of a long life of laying golden eggs, now your goose is cooked.
A good software development partner isn’t just an order-taker, eager to sign a contract and start billing hours on your full rewrite modernization project right away. Instead, the right partners may push back on you and ask tough questions, even if it means getting you to re-evaluate the entire project.
Here are a few questions that the right software development partner should ask you:
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Why are you considering this modernization project?
Modernization projects happen for a few reasons. Customers might be asking for new features or complaining that your legacy software product isn’t doing what they want. Competitors might be out-innovating you. The product might be functioning fine, but looking a bit old and stale.
All of these can be good reasons to upgrade your product. But you usually have choices as to whether or not you need to replace the whole thing. Once a good partner knows your “why,” they can help you find the best path toward the business goal.
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Instead of replacing your legacy software product, why not improve it and extend it?
You don’t always have to do a full rewrite and try to replace your legacy software product. Sometimes, a full replacement is unavoidable. But often, you can choose an incremental approach instead of a full replacement.
Full replacement of a legacy software product is much riskier. A good partner should recognize this and offer ideas and alternatives to a full replacement, especially when it reduces risk and maximizes your potential return on investment.
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How can you modernize in a way that delivers more value to your customers without risking your existing revenue?
When full-rewrite, Big Bang, next-gen modernization projects fail, it tends to happen in two major ways:
One type of failure is when the project never gets finished, and has to be scrapped – after burning through millions of dollars.
Another type of failure is when the project does get finished, but it takes so long and consumes so many resources that your existing product suffers.
Either way, your existing customers get impatient and walk away. They get tired of hearing the word “no,” or feeling like their present-day needs aren’t being met, while your company bets everything on this one future launch that isn’t happening anytime soon.
A good software development partner will be cognizant of these risks from Day One. They will ask you, “While you’re waiting for your next-gen product to launch, how can you keep delivering incremental value to your existing customers along the way? How can you keep your existing customers happy during the modernization process, so they don’t feel ignored or neglected, or unheard?”
Throughout my career, I’ve seen situations where a next-gen project has been underway for 3 years, the company keeps saying “not yet” to customers, and the customers stop believing that the project will ever get done. Even if a full rebuild and replatform is the right thing to do, you must keep providing value to your existing customer base.
Software companies need to calibrate the investment that they make in modernization projects. Don’t bet everything on a full rebuild that ends up driving away your existing revenue. Try to strike a balance and keep everybody as happy as you can.
Choose a Software Development Partner That Has an Investor Mindset
I’ve written before about how CEOs need to “think like an investor” to be successful in software modernization projects. This effort isn’t just about technology, it’s about business objectives, business risks, and business ROI. Your company has already invested millions of dollars of capital in your legacy software product. From an investor lens, you should ask:
- What are the financial risks of doing this modernization project, and what’s the potential ROI?
- If you add a new mobile app or a new screen or a new GPS feature, how much net new revenue will it generate?
- How can this software modernization project connect “dollars spent on software development” with “dollars of revenue gained or retained?”
A good software development partner should be thinking along these same lines – not just “we’re excited about this technology” but “we’re interested in the long-term success of your business.” Your software company and your prospective software development partner need to be aligned around this mindset of delivering value to customers, giving customers what they’ve been asking for, and staying ahead of the competition. Stay focused on doing it in a way that keeps your risks low, and potential ROI high.
Choose a Software Development Partner Who’s Worried About Your Business, Not Their Billable Hours
Lots of software development consulting firms are in the billable hours business, and they have a bench of talent that they need to keep busy. Unfortunately, software modernization projects can become a big driver of billable “busywork.”
Some consultants might charge based on time, and so the longer and more complex the project becomes, the more profitable their business is. Other consultants might charge based on a fixed bid, but extra complexity or new requirements might lead to change requests that cause cost overruns. Even worse, corners may get cut in the name of improved margins: and that may have a long-lasting impact on the stability, scalability, profitability, or serviceability of your product.
This doesn’t mean that consultants aren’t acting in good faith. The software industry is full of smart, hard-working, talented people who are doing their best every day. But sometimes there are situations where the incentives or objectives are misaligned. Software consultants sometimes get incentivized to make the modernization project “bigger” and charge more money, even if that doesn’t deliver the most value to your customers – and exposes you to more risk.
When interviewing potential software development partners, try to choose a partner who understands this dynamic. Find a partner who thinks like an investor, who’s aligned with your business goals, and who’s driven by delivering value and results. The best software development partners will try to put your business’s overall success and growth front and center – not just maximize what they can squeeze out of it.
This is a way of doing business that I’m personally passionate about. 23 years ago I decided to quit my job and start my own company. I had been working for a consulting firm for a client, and the project was going well – we were on track and on budget.
One day my boss came to me with four new consultants and said, “Hey, can you put these guys to work?” And I said, “We’re good, I don’t need more resources.” My boss told me, “We really need the billable hours, put these guys to work.”
Two days later, I turned in my two weeks’ notice. I couldn’t in good conscience work that way.
At Modularis, we want to sit down with you and look at the big picture of your business challenges. We want to deliver value and recommend the right approach for your company – even if it makes your modernization project budget smaller.
Choose a Software Development Partner With Experience in Delivering Product-Centric Success
Software modernization projects are so complicated, risky, and potentially costly that not every consulting firm can do them right. Avoid working with companies for whom software modernization is “just another type of project” that they say they can do.
Instead, look for a partner that has:
- Expertise in specific technologies that you need for your modernization project goals.
- Capabilities to be engaged at multiple levels of your organization – not just with the CIO and the technology team, but with the customer service team, with the sales & marketing team, with the CEO and board, and with end customers. Modernization projects need to happen in tight coordination with the entire business, not a hands-off approach of “just let IT figure it out.”
- A proven track record of helping clients achieve desired business results, not just “technology results.” Software modernization projects that deliver ROI are not just about good technology, they’re about product-centric successes. Has your prospective software development partner worked on successful modernization projects where they helped other companies achieve business growth, improve customer acquisition, or prevent customer attrition? Don’t just look at tech case studies if they’re disconnected from business results. It’s all too possible for a software modernization project to deliver an elegant, successful technology project – and still be a failed software product.
When evaluating prospective partners, avoid firms that are happy to work on a modernization project that is a technical success but a business failure. The best partners will ask honest questions and offer generous ideas that can make the best use of your investment capital.
Software modernization projects need to be strategic, not just tactical. The stakes of modernization are too high and the risks are too great to just hire a software vendor who will eagerly take your money (and kill your Golden Goose). Instead, hire a partner. Choose a software development firm that puts your business success first, and helps you achieve your desired business outcomes – not just bigger billable hours.
Estimate Your Software Modernization Project’s Chance of Success with a Tech 360 Assessment
Our free Tech 360 self-assessment can give you insights into your current team and tech stack’s performance. See how ready (or not) your company might be to take on a software modernization project. Let’s schedule a 1:1 to talk about your software modernization project and how it can best serve your business.