State of application modernization 2024 report

2024 Comprehensive Report
State of Application
Modernization
Research conducted by Illuminas

RESEARCH BACKGROUND
2
RESEARCH BY ILLUMINAS
Methodology: Avg. Survey Length: Field Dates: Sampling: Target Audience: Frequency:
Online Survey
(self-administered and
conducted over the phone)
25 minutes Oct 12 – Nov 8, 2023 Third-party databases IT Decision Makers
Developers
Software Architects
Second Wave
(Wave 1 fielded in 2021)
RESEARCH OBJECTIVES GEOGRAPHIC COVERAGE
METHODOLOGY
Red Hat partnered with Illuminas to better understand how organizations
plan to approach modernization and migration, and what success looks like.
Specific objectives include:
Understanding how modernization is perceived
Determining how modernization will be handled
Identifying the challenges modernization brings
Exploring what successful modernization looks like
1000
total survey responses gathered
500 from the US
250 from the UK
250 from English-speaking APAC
(ANZ, Hong Kong, Singapore)

AUDIENCE PROFILE
3
TARGET AUDIENCES JOB LEVEL
COMPANY SIZE TOP FIVE INDUSTRIES REPRESENTED
50% 25% 25%
IT Decision Makers
(500 individuals)
Backend Developers
(251 individuals)
Software Architects
(249 individuals)
35% Medium Enterprise
65% Large Enterprise
C-Level/VP Director Manager and below
COMPANY SIZE DEFINITIONS: Medium = 1,000-4,999 employees (US) or 500-999
employees (ROW) | Large = 5,000+ employees (US) or 1,000+ employees (ROW)
13% 12% 11% 7% 7%
Wholesale
or Retail
Trade
Computer
Software
Developer
Finance Telecom Healthcare

4
AUDIENCE PROFILE CONTINUED

CONSIDERATIONS WHEN INTERPRETING RESULTS
Considerations for trending & statistical testing
5
STATISTICAL TESTING
This is the second wave of the study, the first wave ran in the fall of 2021. There were significant changes to the survey design
and sampling strategy compared to the 2021 survey. Trended results are included where possible to provide directional
insight, but given the extent of the changes, trended data should be interpreted with caution.
To demonstrate differences between regions in this study, statistically significant differences are denoted with the use of letters, with the higher score noted.
If a letter is displayed on a region’s bar, that indicates a statistically higher score compared to another region (see example below). When interpreting these
differences, it is important to keep in mind base sizes have an impact on whether a given audience is significantly different from another. Consequently,
similar percentages may not always have similar significance notations.
Q20c. Which, if any, of the following benefits has your organization already experienced since deciding to modernize its applications?

Executive summary
6

Base size: Total = 1000
See slide notes for question text.
EXECUTIVE SUMMARY
7
Understanding of application modernization
Most organizations associate application modernization with improved CI/CD pipelines and data modernization.
These definitions remain consistent across regions, roles, and an organization’s maturity in modernization.
However, as organizations become more experienced with app modernization, they also define it as automating
or reducing operations, while less mature organizations associate it with serverless computing.
PRIMARY DEFINITIONS OF APP MODERNIZATION SECONDARY DEFINITIONS OF APP MODERNIZATION
Improving CI/CD
(selected by 68%)
Data Modernization
(selected by 66%)
Automating Workloads
(selected by 53%)
Serverless Computing
(selected by 51%)

EXECUTIVE SUMMARY
Attitudes about application modernization are positive
8

9
EXECUTIVE SUMMARY
Modernization delivers benefits in the areas that matter most

10
EXECUTIVE SUMMARY
Top challenges: individual vs. organization

11
EXECUTIVE SUMMARY
Organizations are taking action to address challenges

12
EXECUTIVE SUMMARY
Where organizations are in the modernization lifecycle

13
EXECUTIVE SUMMARY
Organizations are optimistic in their expectations for modernization

14
EXECUTIVE SUMMARY
Modernization strategies are varied

15
EXECUTIVE SUMMARY
Emerging role of AI in application modernization

EXECUTIVE SUMMARY
Key takeaways
16

Understanding the
application modernization
landscape
17

MATURITY IN MODERNIZING APPS
18
While organizations in the US are further along in app modernization as a whole, those in English-speaking
APAC are more likely to indicate they are continuously modernizing applications.
Three-quarters of organizations surveyed are already modernizing
Q2a. How would you rate your organization’s maturity in modernizing applications?
Base sizes: Total = 1000, US = 500, UK = 250, APAC = 250
Letters denote statistically significant differences between audiences at a 95% confidence level (with the higher score noted)
Question added in 2023, no trend available RESEARCH BY ILLUMINAS
Continuous modernization
Large scale modernizations completed
Small scale modernization completed
Early stage, learning
A
A
C
A
C
B

Q1. What does modernizing applications mean to you?
* New attributes added in 2023, no trend available
DEFINING APP MODERNIZATION
19
Regional definitions of app modernization are mostly consistent
Improving CI/CD
Data modernization*
Automating or reducing
operations
Serverless computing*
Containerizing
workloads
Bringing workloads to
the cloud
UI modernization*
Using microservices
architecture in the cloud
A
A
A
A
C
C
BC
C
C
BC
Organizations associate app modernization with CI/CD pipeline improvements and data modernization.
Those in the US are more likely to connect app modernization with the use of microservices architecture.
Total US (A) UK (B) APAC (C)
2021 Results

Q2NEW_TB. How important were each of the following factors in your organization’s decision to modernize its applications?
Question not trended due to design changes in 2023
TOP DRIVERS OF APP MODERNIZATION: PERCENT EXTREMELY IMPORTANT
20
Security, reliability, and scalability drive app modernization
Total US (A)
Security improvement is a more important factor in the UK and APAC. The promise of increased future
development speed is a stronger driver in the US, though it’s still less important relative to other factors.
Improve security
Increase reliability
Increase scalability
Improve customer
experience
Decrease costs
Increase future
development speed
Increase employee
productivity
Pay back technical debt
BC
A
A
A
C
A
AB
A
A
UK (B) APAC (C)

S17. What percent of your organization’s total modernization budget is being put towards each of the following?
BUDGET ALLOCATION FOR MODERNIZATION: MEAN PERCENT
21
Organizations are increasingly prioritizing legacy apps/infrastructure
Compared to two years ago, budget allocation for modernization has shifted more toward updating
legacy apps and infrastructure as opposed to building new apps/infrastructure in the cloud.
Modernizing existing
(legacy) infrastructure
and apps
Delivering or building
new infrastructure,
cloud services,
modern or
cloud-native apps or
other modern IT
services
2021 Results

Q13. Which type of application does your organization plan to modernize first?
PRIORITIES FOR MODERNIZING APPS
22
Business applications remain a top priority for modernization
The types of apps to be modernized first varies slightly by region. Organizations in the US and UK prioritize
back-end business apps, while those in APAC plan to lead with data and analytics apps.
Core back-end business
applications
Data/analytics/BI
applications
Customer-facing
applications
Employee productivity
applications
C C
A
2021 Results

Q20a. How will your organization measure the success of application modernization?
Question added in 2023, no trend available
HOW ORGANIZATIONS MEASURE SUCCESS
23
Top KPIs are consistent with key drivers of app modernization
Reliability, scalability, and security are the most important success measures for app modernization across
regions. Other outcomes are increased customer sat. and decreased costs, especially in the UK and APAC.
Increased reliability
Increased scalability
Improved security
Increased customer
satisfaction
Decreased costs
Increased development
speed
Increased employee
productivity
A
A
A
A
AB

Q20b. Which of these is the BEST indicator of success for your organization?
SINGLE BEST INDICATOR OF SUCCESS
24
There is little consensus on a single BEST indicator of success
The best measures for success reflect organizations’ unique needs and priorities. Many are focused on
security, others on scalability, while some place more emphasis on customer sat. or employee productivity.
Improved security
Increased customer
satisfaction
Increased employee
productivity
Decreased costs
speed
C
B
A
A
A
2%
7%
2%
6%
5%
2% 1%
Customer satisfaction
is more important to
ITDMs (17%)
Employee
productivity is more
important to
Developers (20%)
Decreased costs are
more important to
SW Architects (17%)

Q20c. Which, if any, of the following benefits has your organization already experienced since deciding to modernize its applications? (asked of those who are currently modernizing)
BENEFITS ALREADY EXPERIENCED FROM APP MODERNIZATION
25
Organizations are seeing benefits in the areas that matter the most
98% of the organizations surveyed have already experienced at least one benefit since deciding to
modernize their applications. Over half have benefited from improved security, scalability, and reliability.
Improved security
Increased customer
satisfaction
Decreased costs
speed
Increased employee
productivity
A
A
A
AB
AB
AB
A

Attitudes and experiences
related to modernization
26

ATTITUDES ON MODERNIZATION: PERCENT WHO STRONGLY AGREE OR AGREE
27
App modernization experience is positive across regions
The vast majority believe that app modernization is essential, and they have the support they need to be
successful. IT Decision Makers value community forums more than Developers and Architects.
I believe application
modernization is
essential for my
organization's success
I have access to the
resources/tools I need
to be successful
I get the support I need
from our vendors
Access to community
forums for questions
and support is critical for
my success
Q1a_T2B. How much do you agree with the following statements as they relate to application modernization at your organization?
AB
B
90% of ITDMs believe access to community forums is critical to their success.

Q1b. What challenges have you personally experienced related to modernizing applications?
CHALLENGES WITH MODERNIZATION: INDIVIDUAL-LEVEL
28
Individuals cite security concerns as the top challenge
Integration challenges and competing priorities/time constraints are also key challenges. In addition, those
in APAC see a need for more effective project management to support app modernization.
Security concerns
Integration challenges
Competing priorities
Lack of effective
project management
Demonstrating ROI
Lack of training/
knowledge
BC
A
6%
Have not faced any barriers/
challenges to modernizing apps

Q3x4. What challenges has your organization experienced during the process of modernizing its applications?
CHALLENGES WITH MODERNIZATION: ORGANIZATION-LEVEL
29
Organizations are challenged by complexity and competing priorities
Difficulties determining the right approach, resistance to change, and risk aversion are also core challenges,
which speak to the need for organizations to build a better business case to support modernization.
Complexity of legacy
systems
Competing priorities
Difficulty determining
the right approach
Resistance to change
Risk aversion
Lack of skilled resources
Cost/budget
constraints
Did not see the value of
modernizing
BC
A
B
C C
Have not faced any barriers/
challenges to modernizing apps
7% 3%

Though tools stand out as the number one area, there are regional differences in how orgs are addressing
challenges. Interestingly, those in the US are less likely to rely on vendors/communities for best practices.
MITIGATING CHALLENGES
30
Organizations look to tools to address modernization challenges
Q3x4a. What, if any, actions has your organization already taken to address challenges to modernizing its applications? (asked of those who have faced barriers/challenges)
Base sizes: Total = 928, US = 458, UK = 227, APAC =243
Researching/adopting
additional tools
API-driven development
Building a business case
Implementing DevOps
practices
Outsourcing
Consulting w/ vendors/
communities on best practices
Additional training
Incremental modernization
Microservices architecture
Hiring subject matter experts
C
B
C
A AB
AB
A
40%
believe that
additional
training is still
needed

ADVICE TO ORGANIZATIONS STARTING MODERNIZATION
Advice for those starting application modernization
Q2b. What advice would you give organizations just starting their application modernization journey?
START WITH ALONG THE WAY
✔ Establishing goals and requirements - top goals include
security, flexibility and scalability.
✔ Evaluating legacy systems and new technologies.
✔ Forming a clear strategy/plan.
✔ Taking small or incremental steps.
✔ Ensuring you have a well-equipped and knowledgeable team.
✔ Track, test, and monitor.
✔ Implement vulnerability scanning.
✔ Invest in training and education (to both keep teams
implementing up-to-speed and drive adoption across the
organization).
“Setting realistic and clear goals before you start your modernization journey gives you
greater control over the upgrade process.”
– ITDM, APAC
“Set clear objectives and goals for the modernization process, establish a dedicated
modernization team, and conduct a comprehensive assessment of your current
application portfolio.”
– ITDM, US
“I recommend that firms should invest in monitoring and visualization solutions for more
successful application and system modernization. These tools provide more
information about the current state and performance of applications.”
– ITDM, UK
“According to me, one piece of advice I would like to give is to train your workforce to
use and maintain new applications through best practices and governance.”
– ITDM, US
31

Technical implementation
32

WORKLOADS IN PLACE TODAY VS TOMORROW
33
Growth is expected in AI/ML and high performance computing
Q6a_In place today_2 Years from now. Which workloads are in place at your organization today? And which do you expect to be in place two years from now?
Base sizes: Total = 1000 RESEARCH BY ILLUMINAS
The expected decline in web servers for the future is likely tied to question wording, which references
workloads “in place at your organization” thus could imply on-premise.
Web
servers
Analytics Databases Data caching
tools
Business
process
applications
AI/ML
software
High
performance
computing
88% 85% 77% 82% 82% 84% 58% 70% 86% 87% 59% 71% 46% 56%
2021 Results
In Place Today
Expect to Be in Place Two
Years From Now

Q6a_In place today. Which workloads are in place at your organization today?
WORKLOADS IN PLACE TODAY BY AUDIENCE
34
Web servers and analytics are the top workloads in place today
Usage rates among top workloads align across all regions. Again, declines since 2021 are likely driven by
respondent interpretation of question wording given that organizations are increasingly shifting to the cloud.
Web servers
Analytics
Databases
Data caching tools
Business process
applications
AI/ML software
High performance
computing
AB
A
2021 Results

S10. What proportion of your organization's applications fit in each of the following categories?
APPLICATION CATEGORIES: MEAN PERCENT
35
One-third of the organizations surveyed have custom apps
Across regions, SaaS has higher adoption rates than custom or commercial apps.
Custom
Commercial,
off-the-shelf
SaaS
2021 Results

Q7. What percentage of your applications are developed in-house vs. purchased?
Base sizes: Total = 995, US = 498, UK = 247, APAC = 250 (don't know responses excluded from mean scores)
APPLICATION DEVELOPMENT: MEAN PERCENT
36
Nearly three in five apps are developed in-house or by 3rd parties
Development practices are similar across regions: most apps are developed in house or by third-party
partners, followed by commercial purchase. The role of third-parties has grown in the past 2 years.
Developed in-house
Developed by
third-party (partner)
Commercial,
off-the-shelf
Commercial,
off-the-shelf + custom
add ons or extensions
A
C
A
2021 Results

Q8_Deployed today_2 years from now. Where are your organization's production applications deployed today? Where will they be deployed two years from now?
Base sizes: Total = 1000
APPLICATION DEPLOYMENT TODAY VS TOMORROW
37
Three in four production apps are deployed to a public cloud today
Private clouds (both on and off-premise) are being used by over half today, and are expected to be used at
about the same rate two years from now. In contrast, public cloud usage is expected to decline slightly.
Deployed Today
Expect to Be Deployed Two
Years From Now
2021 Results
Public cloud Private cloud,
on-premise
Private cloud,
off-premise
98% 88% 40% 45% 43% 55%

Q8_Deployed today. Where are your organization's production applications deployed today?
APPLICATION DEPLOYMENT TODAY BY AUDIENCE
38
Public cloud declines as companies shift to private cloud
App deployment across public vs private cloud is consistent across regions and has seen a similar trend over
the past two years - organizations are increasingly deploying in private cloud (both on and off-premise).
Public cloud
Private cloud,
on-premise
Private cloud,
off-premise
A
2021 Results

Q8a. Why do you expect to see these differences in application deployment over the next two years?
Base size: Those expecting a difference in App Deployment over the next 2 years = 300
39
REASONS FOR DIFFERENCES IN APP DEPLOYMENT OVER NEXT 2 YEARS
Reasons for expected differences in application deployment

Organizations expect to transition from legacy to modern apps
Q9_Today_2 years from now. What percent of the custom applications your organization has built are legacy vs. cloud-enabled or cloud-native today? And what percent do you expect for each two
years from now?
Base sizes: Total = 1000
LEGACY AND CLOUD APPS BUILT TODAY VS TOMORROW: MEAN PERCENT
40
38% of organizations’ custom apps are not cloud-enabled today, but this figure is expected to decrease to
28% over the next two years with companies moving to cloud-enabled or cloud-native applications.
In Place Today
Expect to Be in Place Two
Years From Now
Legacy applications
(non-cloud-enabled)
Modern, cloud-enabled
applications
Cloud-native
applications
35% 39% 34% 39%
31% 23%
2021 Results

Q9. What percent of the custom applications your organization has built are legacy vs. cloud-enabled or cloud-native today?
LEGACY AND CLOUD APPS BUILT TODAY BY AUDIENCE: MEAN PERCENT
41
Over a third of custom apps remain legacy (non-cloud-enabled)
Cloud-enabled and cloud-native apps make up the majority, but the audience surveyed this year has a
slightly higher rate of legacy non-cloud-enabled apps relative to the respondents from two years ago.
Legacy applications
(non-cloud-enabled)
Modern, cloud-enabled
applications
Cloud-native
applications
2021 Results

Q14. Thinking of all the custom applications your organization plans to modernize, what percent of them do you plan to have modernized by in-house staff versus external partners?
Base sizes: Total = 988, US = 498, UK = 240, APAC = 250 (don’t know responses excluded from mean scores)
MODERNIZING IN-HOUSE VS USING EXTERNAL PARTNERS: MEAN PERCENT
42
Two-thirds rely on external partners for app modernization
Rates are remarkably consistent across regions, with around 1 in 3 organizations handling modernization
completely in-house and the remaining either outsourcing entirely or consulting with external partners.
Handled completely by
in-house staff
Handled completely by
external partners
Led by external
partners, with in-house
staff doing the
execution
AB
2021 Results

Q10. What does your organization plan to do with the custom production applications it wants to modernize over the next two years?
MODERNIZATION STRATEGY FOR LEGACY APPS: MEAN PERCENT
43
SaaS loses ground relative to other modernization strategies
Though their app modernization strategy remains diverse, organizations plan to replatform, rehost, or
refactor over half of their apps, while expectations for SaaS are in decline.
Retire: Sunset or decommission
apps that are no longer needed
Retain: Leave critical apps as-is
until refactoring required
Rehost: Lift-and-shift apps
without architectural changes
Replatform: Optimize for cloud
while migrating to new platform
Refactor: Rearchitect as
cloud-native
Repurchase: Move from perpetual
licenses to SaaS model
AB
C
C
A A
2021 Results
C
Reporting the percent of custom applications expected to be modernized using each of the listed options.

The APAC audience is more likely than those in the US to rehost and then replatform prior to refactoring,
which could be the result of more US organizations having already rehosted more of their apps.
Q12. Which of the following options best describes the path you plan to take? Will you…? (asked of those who plan to refactor their custom applications)
PATH FOR REFACTORING LEGACY APPS
44
Nearly half plan to replatform before refactoring their apps
Rehost then replatform
before refactoring
Replatform before
refactoring
Just refactor
A

Organizations are optimistic about their modernization timeline
Q11. Thinking of all the custom applications your organization plans to modernize, what percent of those custom applications do you expect to have modernized in each of the following time frames?
EXPECTED TIME TO COMPLETE MODERNIZATION: MEAN PERCENT
45
Organizations across regions anticipate half of their apps will be modernized within the next year.
Within the next 6 months
6 months to less than 1 year
1 to less than 2 years
2 years or longer
C
2021 Results
Reporting the percent of custom applications expected to be modernized within the listed time frames.

Three-quarters anticipate running apps on multiple platforms
Q21. Thinking of all the applications your organization plans to modernize, which of the following best describes how your organization anticipates running its applications once all planned modernization
is completed?
DESIRED APP MODERNIZATION END STATE
46
Though most envision applications running on multiple platforms in the future, those in the US are more
likely than other regions to indicate all apps will run on a single platform once modernization is complete.
Applications running on
multiple platforms
All applications running
on a single platform
A
B
2021 Results

How organizations are
leveraging AI
47

AI USE CASES
48
Organizations are utilizing AI across many areas of the business
Q6b. In what areas of the business is your organization using or planning to use AI? (asked of those who have AI/ML software in place today or expect to have it in place 2 years from now)
Base sizes: Total = 928, US = 468, UK = 226, APAC =234
IT Operations
Data analytics/management
Cybersecurity
Risk management/fraud
detection
Research & development
Customer services
Customer insight
Production process optimization
Supply chain optimization
HR analytics
Marketing
C
C
The audience surveyed identify IT Ops, data analytics, and cybersecurity as the most common AI use cases
today. Organizations in the US and UK are more likely than those in APAC to use AI for R&D.
C
REMINDER
63% have AI/ML
workloads in place
today and 77%
expect to have
them in place 2
years from now.

Q15a. Is your organization leveraging or planning to leverage AI to support the process of application modernization itself?
SUPPORTING MODERNIZATION WITH AI COMPUTE
49
78% of organizations are using AI to support app modernization
Many are using AI to facilitate app modernization itself. The US audience is significantly more likely than
those in the UK and APAC to add AI to legacy applications.
Yes - Adding to legacy
applications to
modernize them
Yes - Using AI to
facilitate the application
modernization itself
No
Don’t know
BC
A
B
AC
B
A
1% 0% 3% 0%

Q15b. How is your organization using or planning to use AI for application modernization? (asked of those who are leveraging or planning to leverage AI)
LEVERAGING AI FOR APP MODERNIZATION
50
AI is most frequently used in modernization to optimize performance
In addition to leveraging AI to optimize performance, APAC organizations are also using it to reduce or
eliminate manual tasks at a higher rate than those in the US and UK.
Optimizing performance
Reducing or eliminating
manual tasks
Automated testing/QA
Identifying legacy code
to modernize
Coding assistance
AB
B

Q22. Thinking ahead to the next 2-5 years, what technologies do you expect to have a significant impact on the need for companies to modernize their applications?
IMPACT OF TECHNOLOGY ON MODERNIZATION
51
The biggest future driver of modernization will be AI/ML integration
The impact of serverless computing technology is a distant second. Low-code/no-code development is
also expected to have a greater impact on app modernization among US organizations in particular.
AI/ML integration
Serverless computing
Edge computing
Low-code/no-code
development
Green computing
(sustainability)
Quantum computing
BC
A
C
A

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