Rapidly advancing technology is forcing companies that do not keep their handwork up to date to fall behind competitors, compromise security, miss out on efficiency gains, and even frustrate customers and employees.
Nevertheless, upgrading entrenched business-critical software is not as easy as it sounds. Such projects have high risks of budget/timeline overruns, business disruption, functionality issues and project failure unless carefully planned and executed.
In this article, the key challenges that companies face when embarking on large software update and modernization projects are analyzed. It goes into detail about compatibility issues, skill gaps, workflows, data, costs, disruption, testing, and change management. The purpose of the analysis is to provide actionable insights to the IT leaders and the decision-makers who are responsible for planning and executing application modernization services or software updates.
Challenge #1: Integrating Updated Software with Existing Systems & Workflows
A core challenge stems from integration between new and existing systems. Software rarely operates in isolation; rather, it interconnects with other business systems and feeds data between applications.
Upgrading a customer relationship management (CRM) platform, for example, requires integrating the new CRM with surrounding systems for inventory, order processing, marketing automation, enterprise resource planning (ERP), etc. Failing to synchronize the updated CRM risks broken business processes and data inconsistencies.
To showcase, if the new CRM platform utilizes data structures or interfaces that do not comply with the legacy ordering and ERP systems, issues will arise in processing the orders, tracking the inventory and segregating customer data from one application to another. As size grows (for example, large enterprises with hundreds of high interconnection of systems), such challenges of integration become exponential.
Early in upgrade projects, all system touchpoints must be mapped and the interoperability validated. The engineering challenge also includes the actual software integration tasks: data migration, testing many use cases/scenarios, and flexibility for future integrations.
Challenge #2: Retraining Employees & Changing Processes
Beyond technical integration, software upgrades significantly impact business workflows and employee duties. People and processes must align to leverage new capabilities and updated interfaces.
Expectations for adopting new workflows, inputting data differently, and using new self-service functionality lead to sizable change management initiatives surrounding software upgrades. Employees accustomed to legacy systems often resist learning new processes or feel overwhelmed by updated platforms with unfamiliar interfaces.
Retraining and supporting the employee base to enable the adoption of upgraded software, therefore, represents a sizable “people challenge”. Companies risk wasting investments in new technologies if workers lack the knowledge, desire, and direction to use systems properly.
Proactive planning for workflow changes, training programs, knowledge transfer, and post-go-live support helps ease transitions. However, such efforts compete for scarce time and budgetary resources for projects centered around technical implementation activities. Failing to gain user adoption, however, negates the value delivered by software upgrades.
Challenge #3: Mitigating Implementation & Migration Risks
There are inherent project risks associated with all software upgrades: budget, timeline, and delivery of expected capabilities. Nevertheless, large modernization initiatives, especially, are complex, multiyear programs with high uncertainty and risk.
The problems are both with initial software implementation and migration to new systems of legacy data and configurations. There is a lot of room for error when moving a decades-old history of customer transaction history or complicated pricing rules away from legacy platforms to modern ecommerce. Such data migrations require meticulous validation to confirm completeness and accuracy.
Legacy customizations and integrations that are unsupported in upgraded software also necessitate cleanup projects. Decisions must be made regarding which custom functionality to keep, re-engineer on new platforms, or eliminate. Rationalizing convoluted custom modifications accumulated over decades poses engineering and risk management challenges.
Careful scoping, planning, governance and quality assurance provide some mitigation of implementation downsides. However, unforeseen technical hurdles, resource/testing gaps, unexpected complexity, and faulty migration scripts still drive cost/timeline overruns. Proactive risk management and contingency planning help minimize disruption when the inevitable hiccups occur on major modernization programs.
Challenge #4: Aligning Software Updates with Business Objectives
Technology leaders tend to be fascinated with the promise of new tools and tend to respond to vendor hype cycles. However, without business cases that enable modernization projects, software upgrades tend to struggle to make lasting value.
Companies, therefore, face challenges in rationalizing investments and staying focused on real performance outcomes from software updates, not theoretical capabilities. All project phases and technical requirements should be linked to the targeted use cases, data insights, customer experiences, or concrete business goals.
To achieve such strategic alignment, technology and business leadership need to be aligned. It also encourages performance metrics that are usage, adoption, and business impact versus technical metrics, such as uptime or response time.
Without intelligent focus on realizing business value, companies end up creating “shiny new systems” that fail to move key metrics. Or they accumulate piles of unused data and features while wasting time and money on unused capabilities. Proper alignment and tracking help ensure resources spent on software updates deliver proportionate business impact.
Challenge #5: Future-Proofing Upgraded Platforms
However, in a climate of constant technology change, future-proofing is increasingly imperative and challenging, especially due to software upgrades. Companies need to ensure that updated tools and data structures will support business evolution over 5-10 years and not need rework after 12-18 months.
Web content management platforms that are upgraded to match the current website design may have rigid templates that prevent future experience enhancements. There may not be enough extensibility provided in ecommerce systems to enable the extensibility necessary for adding currently emerging personalization and recommendation functionality. Data platforms like customer data lakes or analytics warehouses may lock businesses into proprietary technology stacks, hindering agility.
Ideally, upgraded software offers user configurability, open APIs, and standards-based technology to accommodate future needs. However, such flexibility requires extra diligence, given vendors’ propensity to overstate the adaptability of proprietary platforms and cloud services.
Detailed capability planning focused on longer-term business scenarios helps avoid the pitfalls of frozen-in-time software upgrades that are unable to support tomorrow’s innovations.
Challenge #6: Avoiding Custom Overlays
Many legacy systems have accumulated vast layers of custom code modifications over the preceding decades to address the capabilities or configurability that are absent from the original packages.
But the downside of custom overlays shows through when attempting upgrades. Heavily customized platforms require extra effort in assessing upgrade readiness, pose trickier data migration paths, and heighten the risk of losing unique functionality during cutover to modern systems.
Custom modifications also introduce ongoing maintenance and operations costs that are absent from standardized platforms. So, companies often target the removal of unnecessary customizations when migrating from legacy environments.
However, avoiding short-term custom overlays that eventually require removal during upgrades poses its challenge. Business leaders still expect software projects to meet current feature needs that out-of-the-box applications regularly lack.
As a result, IT teams have to balance between immediate configurability and ease of upgrading downstream through sustainable customization approaches and off-the-shelf configurations. There are distinct “Catch-22” scenarios around excessive customizations or shortchanging business requirements.
Challenge #7: Keeping Within Budget
Software modernization initiatives that cost hundreds of millions of dollars have high financial expectations. However, complexity that is unforeseen, requirements that are incomplete, customizations that are unexpected, and project changes all conspire to increase costs.
Long project timeframes also make budget creep easier to occur compared to shorter implementations. For example, integrating new ERP financial modules with several other systems can take over a year or more. Many junctures exist for such unbudgeted work efforts or shifting business needs to emerge in such lengthy modernization programs.
Procurement processes pose another area for cost overruns if license models and vendor contracts don’t address needs for enterprise-wide deployments, integrated systems, user types, and multi-year coverage. What appears as a large yet affordable licensing deal early on may require renegotiation once the deployment scope fully materializes.
Ongoing budget management challenges also surface regarding software licenses going live (e.g., user growth, added functionality modules). So, pursuing upgrade initiatives under tight budget caps requires financial discipline and controls across planning, procurement, and operational phases.
Challenge #8: Avoiding Business Disruption
Ideally, companies strive to upgrade core software platforms like ERP, CRM, and ecommerce without interrupting key operations or customer experiences. However, such seamless transitions rarely occur with complex legacy migrations.
Some functionality gaps or business process changes should be expected when modernizing aged software infrastructure and workflows. Frequently planned ahead, strategic planning can introduce phases in deployment and operations between old and new frameworks to minimize disruption during the transition.
However, data issues turn out, and the unplanned bugs, complex capability mapping, productivity, and workload balancing missteps usually wash out business continuity. There is always a new scenario that will be missed no matter how much testing gets done because real-world software deployments are always at a scale and complexity that will always find new scenarios.
Inevitable hiccups become critical to change management and contingency response capabilities to address without customer-facing disruptions or profit losses. Allied to wishful thinking, it might indeed be. The hope may be premature that cutovers will be silky, but advanced crisis planning, escalation protocols, and broad awareness of executives can, at the very least,t protect overall business functions.
Challenge #9: Closing Testing & Experience Gaps
Modern business software relies intensely on positive user experiences and interoperability to deliver business value. This amplifies the importance of stability, usability, and integration testing with upgraded platforms.
However, complexity and constraints around legacy migrations leave testing shortfalls vis-à-vis typical software deployments:
- Limited windows to test modernized software under real production workloads before cutover
- Inability to completely replicate decades of legacy data, users, and transactions in test environments
- Intricate dependency chains between connected enterprise systems are difficult to simulate fully for end-to-end regression testing.
- Overlooked edge cases around legacy data abnormalities, user access nuances, and customized functionality
Such gaps heighten the chances of post-deployment bugs, user confusion, system glitches, and integration failures. Staff availability and costs also limit the feasibility of comprehensive, multi-month testing efforts.
However, imperfect, expanded user acceptance testing, automated regression testing, staged test migration, and data sampling techniques do mitigate risk. Nevertheless, nearly all major business software upgrades require some level of post-go-live tuning and system refinement.
Challenge #10: Ensuring Long-Term User & Stakeholder Adoption
Moving forward with software modernization actually requires sustaining that usage and buy-in from executive stakeholders and end users. Despite all of that, adopting new interfaces, data structures, and workflows seems intimidating to many employees who have used legacy environments.
Reluctance to utilize upgraded systems leads to spotty data inputs, productivity declines, and the inability to retire legacy applications. People may also revert to previous tools to complete familiar tasks despite inefficiencies.
Such adoption risks mean overlooking long-term change management. Beyond initial training and go-live support, the true test comes months later when reinforcement and help resources deplete. Sustaining user mindshare and capability amid competing priorities and opposing obstacles without continued coaching, communications, system refinement and power user networks.
If the modernized software does not show continuous performance value after launch, the risk of ongoing executive adoption also rises. To maintain funding and leadership endorsement, analytics and reporting must show improvement in productivity, costs, revenue, and other targets.
The game after the go-live weekend is getting people to buy into using upgraded platforms. The payoff of modernization investments is determined by maintaining stakeholder enthusiasm through sustained engagement, communications and tracked benefits.
Key Takeaways & Recommendations
Successfully navigating the obstacles of legacy software upgrades to achieve ROI requires thoughtful mitigation across technology, process and people dimensions:
- Seek maximum future configurability during software selection to accommodate business evolution and innovation down the road
- Assign specialized team members to focus intently on integration testing and data migration validation
- Engineer end-to-end regression testing, usage monitoring, and select remediation windows into project plans upfront
- Construct workflows and “day-in-the-life” usage scenarios focused on typical user journeys versus just technical capabilities
- Spotlight software upgrade business cases, timelines and outcomes across leadership discussions to maintain executive buy-in
- Emphasize capability transfer and post-go-live support to drive long-term adoption amid employee turnover
- Implement gradual rollout strategies via pilot testing periods to contain risk and prime teams for larger deployments
- Frame software changes around employee empowerment and capability gains, not just preserving the status quo
Business software modernization challenges should not keep us from upgrading but rather should inform us of what to expect from technology change. With enough mitigation planning, legacy migrations offer paths to better stability, experiences, and strategic progress than outgrown solutions. The bumps on the road are not the greatest, but companies that can change will take updated platforms and make them a competitive advantage.
To read more content like this, explore The Brand Hopper
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