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In Japan, the 2025 Cliff has become a pressing issue, driven by the overwhelming number of legacy systems still in operation across the country. Modernization, or Legacy modernization has emerged as a strategic imperative for businesses seeking to remain competitive, agile, and innovative in an increasingly digital landscape.
This article will answer “What is modernization?”, highlight the differences between migration and modernization, and help businesses choose the right method for their situation. Case studies will also be provided for clearer insights.
What is Legacy Modernization?
Legacy modernization, easy to understand, is the transformation of legacy systems, outdated processes, or decades-old technologies into modern solutions that embrace the latest innovations while leveraging existing assets.
The systems analyzed in this investigation are primarily mainframes—large, general-purpose computers—from the 1980s or core systems reliant on office computers. These systems typically run proprietary operating systems, use languages like COBOL for applications, and were custom-built to align with business needs. Additionally, open systems introduced in the late 1990s may also fall within the scope of this investigation.
According to METI, 80% of Japanese companies are still using the legacy systems, 40% of them are spending 90% of their budget simply to keep these outdated systems alive. This has led to a growing trend of companies exploring legacy modernization. Yet, many still lack a clear understanding of migration versus modernization and how these two approaches differ.
Difference between Legacy Modernization and Migration
Migration is the process of moving data, applications, or systems from one environment to another, often without changing their core functionality.
In a nutshell, migration shifts your system to a new environment, but it doesn’t guarantee improved performance. Modernization reimagines the system, making it better, faster, and aligned with your goals. One is a transfer — the other, a transformation, they work together to make your system fully optimized.
Legacy Modernization and Migration Methodology
In Modernization, these 4 practices are the most well-known:
- Re-architecting: Redesign the application’s architecture to meet modern requirements like scalability or performance.
- Rebuilding: Create a new system from scratch to replace the old one entirely.
- Refactoring: Restructure the existing code to improve efficiency and maintainability without altering functionality.
- Replacing: Discard existing apps and use commercial software
On the other hand, there are 3 common practices in Migration:
- Rehosting (“Lift-and-Shift”): Moving applications or workloads to a new environment (e.g., cloud) without making any significant changes.
- Re-platforming: Adjust and optimize the system slightly while migrating it to a modern platform.
- Data Migration: Transferring data from one system to another, such as upgrading databases or moving to the cloud.
When to Choose Legacy Modernization or Migration?
Not all systems, data, or applications need full migration or modernization. The rise of hybrid platforms—combining on-premise and cloud solutions—shows that a one-size-fits-all approach no longer works. Decisions depend on the current setup, business needs, budget, and priorities.
You Should Choose Modernization When:
- Current systems are inflexible and complex
- Business requires significant technological transformation
- Scalability and agility are critical
- Existing applications limit innovation
- Long-term digital strategy demands comprehensive technological overhaul
Detailed advantages, disadvantages, and use cases of modernization methods are shown in the table below:
| Practices | Advantages | Disadvantages | When to use |
| Re-architecting | – Enhanced performance and scalability – Tailored solution to current needs – Future-proofing the application | – High development time and cost – Significant changes to existing architecture – Requires skilled resources for implementation | – Significant improvement is needed – Optimizing for future growth – Facing maintenance difficulties |
| Rebuilding | – Complete modernization – Opportunity to implement best practices – Can effectively eliminate legacy constraints | – Very high costs and time investment – Complete redesign requires thorough planning – Risk of project scope creep | – Current application is entirely outdated – Seeking a completely new approach – Fresh business process is needed |
| Refactoring | – Improved code maintainability – Easier future development – Reduces complexity of code | – Does not address major performance issues – May still retain some of the original design – Requires deep understanding of existing code | – Needing to clean up old code – Gradual improvements are needed – Enhancing existing applications |
| Replacing | – Completely addresses outdated systems – Opportunity for innovation with new technology – Tailored solutions can greatly improve efficiency – Lower maintenance cost | – High cost and resource demand – Implementation risk with new systems – Could disrupt business operations during transition | – Comprehensive overhaul is needed – Lack the resources to build an in-house IT team for system maintenance |
You Should Opt for Migration When:
- Your existing systems are fundamentally sound
- Core business processes work efficiently
- You need quick technological upgrades
- Budget and time constraints are significant
- Minimal changes to application logic are required
Detailed advantages, disadvantages, and use cases of migration methods are shown in the table below:
| Practices | Advantages | Disadvantages | When to use |
| Rehost | – Quick migration to the cloud – Minimal changes required – Lower immediate costs | – No performance improvement – May retain legacy issues – Limited optimization opportunities | – Quick migration is needed – Reducing infrastructure costs – Immediate relocation is a priority |
| Replatform | – Improved performance with minimal changes. – Utilizes cloud capabilities – Better scalability | – More complex than rehosting – Costs may increase due to additional changes – May still face some legacy constraints | – Seeking some performance improvements – needing to leverage cloud features – moderate changes can bring benefits |
| Data Migration | – Streamlined data management – Improved data accessibility – Consolidation of multiple data sources | – Potential data loss during migration – Time-consuming process – Requires thorough planning and testing | – consolidating multiple data sources – integrating new data sources |
Businesses can combine both when they need to migrate and ensure the system operates more effectively in the new environment. The methodology used will depend on the specific challenges and needs of the business.
Legacy Modernization and Migration Case Study
As a technology company with 7 years of experience, VTI has successfully helped many clients in Japan with legacy modernization. Here are two outstanding migration and modernization case study that help businesses gain a better understanding:
AWS Cloud Migration for Japan’s Top Retailer
Cloud migration is becoming a prevailing trend, and VTI has had the honor of partnering with numerous clients to migrate their data to cloud-native platforms like AWS. For these case studies, VTI implemented AWS’s 6R Strategies for Cloud Migration to fully leverage the advantages of new technologies for the system.
Read more about VTI’s successful case study of AWS Cloud Migration for Japan’s Top Retailer here.
Replacing legacy systems with SAP S/4 HANA
As the legacy SAP software will be unsupported after 2027, transitioning to SAP S/4 HANA is essential for businesses to maintain smooth operations. However, replacing an outdated system with a new one requires careful planning and effective change management to ensure a seamless transition. With years of experience, VTI has successfully helped many companies implement this shift smoothly, ensuring uninterrupted operations and a hassle-free experience.
Dealing with Migration Challenges
Transitioning to new platforms is essential when legacy systems become outdated and unsupportive of scalability. There are various components that may require migration, such as data, platforms, and infrastructure. 
VTI had the opportunity to collaborate with a Korean security company to migrate their graphical user interface (GUI) to a more modern platform. This was a challenging case, as the legacy system was completely unsupported by the original provider, while the new platform introduced a different architecture and technical requirements, necessitating a complete restructuring.
Discover how VTI expertly navigated and overcame this complex migration challenge here.
Conclusion
This article provided an overview of modernization, clarified the key differences between migration and modernization, highlights when to use it, and provides case studies for better understanding. The choice of methodology depends on a company’s needs, budget, and strategic vision. To avoid costly mistakes and select the best path forward, expert consultation is often essential.
With legacy modernization being a challenging, costly, yet urgent journey, having the right partner can make all the difference. VTI Group, a top 10 outsourcing company in Vietnam with extensive experience supporting Japanese clients, offers the expertise, cost-effective solutions, and skilled workforce needed for successful modernization. From evaluating current systems to delivering tailored solutions, VTI helps businesses confidently transform their legacy systems and achieve long-term success.
