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digital transformation vs. digital modernization
Quixy Editorial Team
November 8, 2023
Reading Time: 9 minutes

In today’s world, digital is an immensely popular buzzword. The technological landscape is ever-changing, and companies must be ready to change. You might get confused while deciding between digital transformation vs. digital modernization regarding which is appropriate for your requirements, so we’re here to clarify all of your doubts.

What is Digital Transformation?

Digital transformation is an all-encompassing change in ideology, processes, people, and technology. This transformation can be done by companies from all industries as this involves reimagining the business to suit the new digital age. Digital transformation revolves around finding better ways to provide service to the customers as well as interacting with the customers. This enables companies to remain flexible, agile, and ready for future digital developments and growth.

Advanced technologies help transform a company’s entire structure and processes to prepare for the future. Digital transformation requires strategies and roadmaps to help implement these tools in place of existing processes and tools.

Also read: Digital Transformation Demystified !!

Digital transformation can often be confused with digital modernization, so businesses must understand what digital modernization is and how it differs from digital transformation. This can later help companies choose between digital transformation vs. digital modernization.

Infographic Digital transformation vs. modernization

What is Digital Modernization?

Digital modernization, in simple language, is the process of upgrading existing processes and adopting new technology systems to meet the needs of the industry. This is often under the CIO’s purview and is mainly undertaken to better the operations and infrastructure of the business. This modernization can help a business by increasing efficiency, improving existing processes, and reducing costs.

Also read: Digital Modernization a Must. Modernize your Enterprise IT today!

Digital modernization is also more focused on creating a more engaging front-end interface to give customers a great experience with the company or website. UI and UX are the focus points for this process. It is undertaken to help companies move from legacy systems to online platforms and services such as Google Cloud, Microsoft Office 365, etc. New visualization tools are also ideal for gaining better and more innovative insights from existing systems and data through digital modernization. Read more about digital modernization here!

Digital modernization is ideal for companies that are looking for fast, efficient, and cost-effective solutions while ensuring that their existing processes aren’t disrupted. Understanding digital modernization is important when choosing between digital transformation vs. digital modernization. This can involve legacy modernization, IT modernization, and application modernization, depending on the requirements of the business or company.

Digital Modernization Strategies

1. What is Legacy Modernization?

Legacy modernization involves upgrading the existing legacy systems to reduce the complexity of IT processes and costs, improve data consistency, and enable collaboration and flexibility in teams across platforms.

In an increasingly competitive and digital world, your software and systems can set you apart from the rest of your competitors. This has caused many companies to undergo legacy modernization to ensure that they can keep up with customer demands and enterprise norms. Depending on the requirements of the company, when choosing between digital transformation vs. digital modernization, legacy modernization may be enough to help companies catch up and remain in the competition.

Legacy systems include any software, systems, or technology that are causing issues, slowing down growth, and preventing businesses from adapting to new environments. If an existing system cannot support the needs of the organization, it can be considered a legacy system. If existing software cannot integrate efficiently with new technology or software, it can be considered legacy software.

The rising demand for application modernization tools, fueled by the imperative of digital transformation, is expected to propel the global market to a valuation of $36.86 billion by 2027.

Although business innovation is at the forefront of every company nowadays, these companies need to have robust and flexible systems in the backend that can handle newer processes and technology. Many older existing systems and software can’t cope with this workload, which is where legacy system modernization comes in.

There are multiple ways of going about legacy modernization, and it is necessary to decide which method suits the needs of your organization:

  • Complete transformation: This form of modernization involves completely starting from scratch. Once the older systems are analyzed, new technology and new systems can be implemented to completely overhaul existing systems.
  • Step-by-step replacement: This form of modernization involves replacing components one-by-one as it becomes necessary. This may work well for simpler architectures and short-term requirements.
  • A quick fix: This form of modernization involves prioritizing the biggest problems to ensure that downtime is minimized as much as possible. This can help minimize the time spent on this project as well.
  • Improve the existing systems: This form of modernization involves retaining the existing systems and software while redesigning the systems with a focus on efficiency. Rehosting or refactoring code can also be helpful in making systems more efficient without replacing them entirely.

2. What is IT modernization?

IT modernization is the process of shifting away from older technological solutions like Traditional ERPs to more innovative and automated solutions and technology. This also involves accepting the cloud, cloud-first solutions, and data centers as viable options where your business can consume as much hardware or software as it needs. This process is vital for ensuring that you have the correct resources, people, and processes in place to ensure that your company is ready for innovation.

In an IDG survey, it was found that although only 25% of the enterprises pursuing IT modernization have achieved their first goals, they are all experiencing significant benefits such as improved quality of service (65%) and more customer satisfaction (52%).

IT modernization also involves ensuring that your IT professionals are up to the mark for undertaking a modernization effort. This can be solved by looking for managed services or as-a-service offerings. Digital modernization is ideal between digital transformation vs. digital modernization while shifting towards newer technologies.

Modernizing your business may require an in-depth understanding of the existing data flows and the further effects of upgrading or changing any applications. These data-movement patterns need to be completely analyzed, and a plan needs to be decided upon before beginning an IT modernization effort. Legacy modernization may also be a part of IT modernization as older, inefficient applications and software may need to be replaced or changed to suit the current business needs.

Also Read: Implementing ERP System? These Top 11 Tried and Tested Tips will guide you

3. What is Application Modernization?

Application modernization involves updating and modernizing existing applications to suit the needs of the company or business. This can require changing and upgrading the platform infrastructure, internal architecture, or features to ensure the application suits the current digital landscape. Using scalable app environments like the cloud, a company can ensure that the applications will also help meet customer needs in the future. Companies that are heavily dependent on existing applications may choose digital modernization when choosing between digital transformation vs. digital modernization.

Application modernization also requires a thorough analysis of which applications can benefit from being upgraded. These applications need to be able to offer better customer satisfaction and ROI after being upgraded with cloud, new features, improved speed, better performance, scalability, etc.

Legacy applications can become exceedingly difficult to update/upgrade and expensive to scale, so it’s a good idea to modernize these applications to be ready for the future. The modernization of these applications could save you time and money in the future, and it might get the job done without having to turn towards any new solutions or digital transformation. Here are a few ways to modernize an application:

  • Breaking down monolithic applications into microservices can help slowly modernize applications without disrupting processes in place.
  • Cloud migration involves re-platforming or rehosting applications to a cloud-based platform. This can also involve restructuring the application during this process to leverage the cloud platform better.
  • Exposing data via APIs can help securely allow new, cloud-native applications to use existing systems and data.
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Phases of Digital Modernization

Digital modernization can be difficult without a well-thought-out roadmap in place. While deciding between digital transformation vs. digital modernization, you need to know how to build this roadmap. Here are a few steps that you can follow to undergo successful digital modernization:

steps to undergo successful digital modernizatio

1. Decide your goals

By the end of the modernization process, you need to be able to see the results of your hard work. Using a focus-gap analysis, you can accurately identify the gap between your current digital state and the level of modernization you want to achieve. This will also help you decide your final goals, which may be more efficient applications that perform better and are free of the problems that caused issues in the previous system.

2. Eliminate unnecessary functions

After conducting a thorough analysis, you need to identify which functions and processes can be safely removed without causing problems in the new configuration. Each business process can also be evaluated, which can help you identify the importance of each business process and function carried over.

3. Simplify your processes

The tangle of services, applications, and programs used in companies today is often accompanied by isolated architectures. Understanding how critical apps will work in the future will help you set up principles, standards, and procedures that will be followed by your team throughout the new process.

4. Re-engineering the functions

Find ways to re-engineer the existing functions to work well in the digital and cloud environments. This reconfiguration can ensure that you keep the value of the legacy programs while cutting out all of the problems in the program. The gap analysis from the first step could help you define the capabilities that you want, which can help you identify the business processes you need to improve or extend to reach your goal.

5. Automate your processes

Automation can help reduce errors and provide consistency across elements of the enterprise. However, despite the obvious benefits like increased satisfaction and productivity, automation requires a lot of thought and planning. It is imperative for you to identify which processes you want to automate according to the cost reduction and efficiency you can gain from automating them. You can build a good short-term and long-term roadmap for your automation efforts using this information.

Digital Transformation vs. Digital Modernization

While many individuals use these two terms interchangeably, the difference between digital transformation vs. digital modernization has slowly become evident, and the definitions became clearer for these two processes. Here are a few ways to differentiate between digital transformation vs. digital modernization:

Digital TransformationDigital Modernization
A change in the ideology of the company involving new ways of working and new core values focused on digital solutions.Adopting new technology systems, platforms and solutions to replace legacy solutions which are becoming inefficient.
Involves using advanced, innovative technologies to look into alternative lines of business that are undiscovered.Involves moving towards cloud-based solutions such as Google Cloud, Microsoft 365 or other as-a-service offerings to increase efficiency.
Involves changing the way that business is conducted and making fundamental changes to the company.Involves migrating existing systems to cloud-based platforms to increase the capabilities, flexibility and stability of the company.
Strategies involve cloud, AI, blockchain technology, no-code, etc.Strategies include legacy modernization, application modernization, IT modernization, etc.

It’s important to decide which is best for your company- digital transformation vs. digital modernization. Digital transformation vs. digital modernization is a choice that can help you create a digitally prepared company to overcome future problems.

Conclusion

Digital transformation and digital modernization are both important methods of finding ways to join the digital wave that sweeping across industries. Digital transformation is a good idea for companies ready to completely change their ideology and basic processes. Digital modernization is a good idea for companies that are interested in increasing efficiency for certain processes through digital solutions. Regardless of what method you choose, you’ll definitely reap the benefits of going digital!

Quixy is a no-code platform that can help you with your digital transformation vs digital modernization needs. We can help you build a variety of digital solutions that can help accelerate your growth and boost the processes in your business. Don’t miss out on the chance to elevate your processes. Take the first step and get started with Quixy today. 

Frequently Asked Questions(FAQs)

Q. What’s the fundamental difference between digital transformation and digital modernization?

Digital transformation is a holistic, organization-wide shift that reimagines processes and business models using cutting-edge technologies. In contrast, digital modernization focuses on updating existing systems and infrastructure, optimizing them for improved performance and efficiency.

Q. How do digital transformation and modernization impact business competitiveness?

Digital transformation can significantly enhance a company’s competitiveness by fostering agility, enabling quicker adaptation to market changes, and improving the customer experience. It can also lead to the development of new revenue streams and business models. On the other hand, digital modernization primarily improves operational efficiency but may not inherently create a competitive advantage.

Q. Can we combine digital transformation and modernization strategies?

Many organizations opt for a hybrid approach, combining elements of both strategies. This allows them to maintain and optimize existing systems while exploring innovative solutions that can drive long-term growth. The balance between the two approaches depends on a company’s goals, resources, and competitive landscape.

Q. How to choose between digital transformation and modernization?

When deciding between digital transformation and modernization, key factors to consider include your business goals, the state of your current infrastructure, your available budget, and the competitive environment within your industry. Assessing these elements will help you make an informed decision that aligns with your organizational objectives.

Q. Which industries or situations favor one approach over the other?

Industries and situations differ in their preferences for digital strategies. Tech startups and native companies often prioritize digital transformation for rapid growth and innovation. Meanwhile, traditional or heavily regulated sectors may lean toward digital modernization as it allows for a more gradual transition, which is easier to manage within their constraints. The choice ultimately depends on the specific context and goals of the organization.

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