How to Build a Business Case for Application Modernization

The act of “modernizing” is everywhere — in cities people may not have lived in a decade ago, in major markets like medicine, transportation and journalism, and of course, most notably in IT. With change comes hesitation and discomfort in moving to the next phase, particularly with application modernization. As a result, an extra layer of convincing management to buy into the proposed change comes into play.

“ Application leaders often struggle to develop a successful business case when it comes to modernizing their application portfolios”

“Application leaders often struggle to develop a successful business case when it comes to modernizing their application portfolios, especially those across multiple platforms,” says Thomas Klinect, Gartner Senior Director Analyst. “Those who succeed take a business-focused approach, chunking the work to target the most critical business capabilities in multiple waves.”

There are four areas that require the most attention when building your modernization business case.

Problem statement

This is much more complex in a modernization business case than it is in a regular business case presentation. Boards of directors are usually not technical and instead look for concise, easy-to-comprehend explanations. Your business case must address the concerns, issues or impediments of the problem you are trying to solve.

Technology migration

Given the cost involved, draw a direct correlation between the transition from the current state to the end state, as well as the resulting benefits to the organization as a whole. Touch on how the current business process is no longer sustainable, how technology has improved over the intervening years and how the proposed change will make the product more capable of evolving without significant development cycles.

Project description

The project description must be clear, or the board will deny the proposal altogether. The mistake most often made in most IT modernization proposals is pushing for every application to be modernized immediately. Instead, offer the board a prioritized and multistage program design to increase chances of acceptance. Include the number and types of applications or databases, as well as the amount of resources required to complete the transition.

Cost-benefit analysis

A clear problem statement, along with cost-benefit analysis rooted in business value, is critical. A business case should clearly define the impact on the business and use relevant business metrics to monitor and report the effect during execution. Something particularly effective is the “do nothing” option, demonstrating the correlation between doing nothing and the technical debt that is crushing the organization.

Recommendations for application leaders

Apart from focusing on the four critical sections referenced above, application leaders building an application strategy and governance business case for modernization must:

• Execute a business-led analysis of IT assets to ensure only applications that contribute to critical business capabilities are selected for modernization
• Structure the business case to reflect division of the work into smaller waves of application migration across multiple years
• Implement a continuous modernization program to ensure all modernized applications are kept current for technology and business purposes