In custom software development, an application is built from the ground up. This path is usually chosen when building a completely new system or when migrating from a legacy application is no longer viable. In contrast, application modernization updates key aspects of existing software—such as functionality, architecture, tech stack, frameworks, or programming languages—while guaranteeing seamless co-existence within the organization's active IT environment.
Application modernization addresses a pressing corporate need: businesses must update their IT infrastructure and software solutions to deliver exceptional customer experiences and drive digital transformation. According to MarketsandMarkets, the global application modernization services market is projected to grow from USD 11 billion in 2020 to nearly USD 25 billion by 2025, expanding at a Compound Annual Growth Rate (CAGR) of almost 17%.
Modernization leverages the efficiencies of modern systems while preserving the business logic, familiarity, and security foundational to legacy software. Conceptually, it is the process of updating legacy software programs to run on modern infrastructure. This generally involves replacing, re-platforming, refactoring, or upgrading the tech stack and hosting platform, as well as enhancing architecture or introducing cutting-edge features to unlock new business value.
Custom Development vs. Application Modernization
What gets updated during application modernization? The underlying platform infrastructure, internal IT architecture, and application functionalities. The process involves re-platforming, refactoring, repurposing, or consolidating codebase architecture to align software capabilities with evolving business requirements.
While these initiatives typically target legacy systems, modernization is not limited to aging software. Relatively recent enterprise applications can also be evaluated through a modern, forward-looking lens to enhance performance and scalability.