Strategically Replacing Core Applications: Your Guide to Successful Migration

What Drives Software Portfolio Reviews

Software costs are ranked as one of the biggest challenges by 68% of CIOs. Beyond seeking cost-saving opportunities amid rising licensing and maintenance costs for individual products, performance issues from outdated legacy systems are also driving the need to review software portfolios. The trend toward cloud adoption offers new opportunities for scalability and innovation. Additionally, strategic changes such as mergers, new compliance requirements, critical dependencies, or digital transformation initiatives are forcing a fundamental realignment of software portfolios.

What Makes Software a Migration Candidate?

Various factors can turn an application into a migration candidate. Here are the most important ones at a glance:

Due to the effort and complexity involved in migration, sourcing decisions – especially for core applications – are often strategic in nature and viewed from a medium- to long‑term perspective. A sound decision-making basis is therefore crucial. A corresponding preliminary study could be conducted in the following phases:

Phase 0: Requirements Gathering

• Objective: Identification of technical, functional, and business requirements
• Method: User workshops to identify which functions your employees actually need
• Outcome: Requirements list as the foundation for vendor evaluation

Phase 1: Market Analysis

• Objective: Overview of market leaders and niche solutions
• Method: Market analysis to determine which vendors potentially meet your requirements (e.g., based on Gartner Reports)
• Outcome: Longlist of potential vendors

Phase 2: Request for Information (RFI)

• Objective: Detailed requirements alignment
• Method: Detailed information, fulfillment of Phase 0 requirements, and cost projections are requested from and evaluated for potential vendors
• Outcome: Shortlist of qualified vendors

Phase 3: Proof of Concept (PoC)

• Objective: Validation of shortlisted vendor products
• Method: Pilot implementation in an environment as close to reality as possible to validate whether requirements are truly met as described in the RFI
• Outcome: Final vendor selection

When evaluating vendors, the focus should be on the target state. Often, organizations simply try to replicate the current solution by asking, "Can I implement my use cases from the old solution in the new one?" Instead, you should seize the opportunity to holistically evaluate how the required function can be delivered in the future. For example, migrating a core application can serve as a catalyst for greater standardization, and the new implementation can simplify both usage and operations. For the final decision for or against a new vendor, a complete cost assessment is essential.

Complexity

Many projects fail due to an incomplete analysis of system dependencies. Deviations from the standard and a high degree of customisation make migration more difficult. Because of the high level of integration, thorough preparation is indispensable, especially for core applications.

Lack of Change Management

A purely technical migration that ignores user acceptance leads to resistance and loss of efficiency. When a central core application is replaced, users must be enabled to work effectively with the new solution. Otherwise, your IT landscape risks becoming unintentionally fragmented, with decentralised replacement solutions for individual use cases.

Insufficient Risk Mitigation

Any migration involves risk. These risks can be reduced through a thorough initial study, where you can evaluate new products as effectively as possible. However, acceptance and operational risks can never be completely ruled out, which is why rollback strategies and parallel operation during the transformation phase are sensible mitigation measures.

Replacing core applications is often demanding and complex – yet it can be financially, strategically and technically worthwhile to take this step. By analysing your IT portfolios, you gain clarity about your weaknesses and can turn them into competitive advantages.