A Comparative Study of Modernisation and Replacement Initiation Factors
Irja Kankaanpää
Information Technology Research Institute, University of Jyväskylä, Mattilanniemi 2, Jyväskylä, Finland
Päivi Tiihonen
Jyväskylä University of Applied Science, Piippukatu 3, Jyväskylä, Finland
Jarmo J. Ahonen
Department of Computer Science, University of Kuopio, Kuopio, Finland
Jussi Koskinen
Department of Computer Science and Information Systems, University of Jyväskylä, Jyväskylä, Finland
Tero Tilus, Henna Sivula
Keywords: Legacy system evolution, evolution initiation, decision making, initiation factor.
Abstract: Decisions regarding information system evolution strategy become topical as the organisation’s information
systems age and start to approach the end of their life cycle. An interview study was conducted in order to
compare factors influencing modernisation and replacement initiation. System age, obsolete technology and
high operation or maintenance costs were identified as triggers for both modernisation and replacement
projects. The results show that the most prevalent individual reason for modernisation initiative is business
development. Common initiation factors for replacement projects were end of vendor support and system’s
inability to respond to organisation’s business needs.
Continuous evolution is necessary in order to
maintain a system’s ability to respond to the
requirements of its environment (Lehman 1998).
When a system ages and conventional maintenance
faces increasing difficulties with system up-dates the
organisation often faces a ”legacy dilemma”
(Bennett 1995). A system with a long lifetime often
contains accumulated business critical data yet
preserving its functionality as such would require
extensive use of resources and face difficulties due
to obsolete technology (Bennett 1995).
There are three strategies to tackle a legacy
system: 1) continuing maintenance despite of
possible complications, 2) replacing the legacy
system with a new system, or 3) modernising it
(Bennett 1995, Seacord et al. 2003, p. 8-10).
Modernization and replacement are significant
economical investments with wide range of
organisational effects. Consequently, evolution
decisions are of great importance. In practice, the
Kankaanpää I., Tiihonen P., J. Ahonen J., Koskinen J., Tilus T. and Sivula H. (2007).
LEGACY SYSTEM EVOLUTION - A Comparative Study of Modernisation and Replacement Initiation Factors.
In Proceedings of the Ninth International Conference on Enterprise Information Systems - DISI, pages 280-287
DOI: 10.5220/0002378102800287
assessment of potential evolution options is
challenging and decisions are often made informally
and largely based on intuition (Saarelainen et al.
The aim of this study is to compare replacement
and modernisation projects in order to provide an
understanding of the factors influencing evolution
initiation. A comparative study is important because
when the differences and similarities of evolution
types are known they can be taken into consideration
in evolution planning and decision processes. The
term evolution initiative refers to “a formally
established and organized effort to evolve a system”
(Bergey et al. 1997). Here, the term initiation factor
refers to the decision basis and the reasons that
trigger evolution activities.
In the past, several decision frameworks and models
have been developed to systemise legacy system
management and decision making. These include
SABA – a decision model for legacy systems
(Bennett et al. 1999), Renaissance (Warren and
Ransom 2002), A decision framework for Legacy
System Management (De Lucia et al. 2001), and
Enterprise Framework for the Disciplined Evolution
of Legacy Systems (Bergey et al. 1997). All these
models emphasise the fact that legacy system
decisions should include consideration of a number
of factors and that the decision process should be
rather formal in order to assure the success of system
evolution. It has been proposed that the essential
elements influencing legacy system evolution
initiative are organisation, project, legacy system,
target system, systems engineering, software
engineering and technologies (Bergey et al. 1997).
Modernisation aims at improving the existing
system to correspond with the requirements of its
environment. It involves such radical modification
that it cannot be considered as regular maintenance
(Seacord et al. 2003, p. 9). Despite the significant
improvements, a considerable proportion of the
legacy system is conserved in the modernisation
(Seacord et al. 2003, p. 9). Aversano et al. (2004)
propose that prior to modernisation decision the
technical and the business value of the existing
system should be assessed. Koskinen et al. (2005)
list twenty decision criteria influencing
modernisation decision making, the ten most
important criteria being: system usability, end of
technological support, changes in business
processes, maintenance costs, system correctness,
system efficiency, expected remaining system
lifetime, size of required changes, application
domain expertise of maintainers, and delocalized
system logic.
Replacement refers to an activity as a result of
which a legacy system is replaced with another
system providing the same functionalities (Warren
and Ransom 2002). The replacing system can be
purchased as an off-the-shelf application (Seacord
2003, p. 10) or it can be a result of a redevelopment
project (Seacord 2003, p. 10, Bisbal et al. 1999).
Bandor (2006) suggests that software selection
process often focuses on the system functionality
while ignoring the intangible factors related to the
use and organisational influences of the system, and
system management and operation related risks.
The goal of the study was to compare two evolution
types, i.e. modernisation and replacement, with
respect to evolution initiation triggers. Therefore, it
was relevant to collect empirical evidence on the
topic. A qualitative research approach was chosen
for it was desired to produce new information on the
topic and not only to verify the results of previous
research. For this purpose, semi-structured interview
was considered as the most suitable data collection
method (see Seaman 1999). Interview topics were
selected and questions formulated based on a
literature survey.
A set of pre-requirements were defined for
acceptable projects for the interviews. The selection
criteria were: 1) the project fitted either the
modernisation or the replacement definition
presented earlier, 2) the project was completed, and
3) a new or modernised system had been
implemented in the organisation by the time of the
interview. Also, an interview could relate to one
evolution project only.
3.1 Data Acquisition
Data was acquired with phone interviews. Randomly
picked organisations were contacted and inquired
whether there had been suitable modernisation or
replacement projects in the organisation’s past
(between years 2000 and 2005). If the response was
positive, a key person involved in the project was
contacted and requested an interview. The suitability
of projects was assessed with the key person before
LEGACY SYSTEM EVOLUTION – A Comparative Study of Modernisation and Replacement Initiation Factors
the interview. If there had been more than one
project that fitted the given criteria it was negotiated
with the key person which project would be best
suited to for discussion.
The person interviewed was most commonly the
person with the deepest involvement or knowledge
about the selected project. Prior to the interview, the
interviewees were sent a list of the topics that were
to be covered in the interview so that they could
refresh their memory on the project and check
documents or other data sources if necessary.
Data collection took place between autumn 2004
and autumn 2005. A total of 60 interviews were
gained but all of them could not be used in the
analysis for the following reasons: the project did
not meet with the pre-requirements; or the project
was a borderline case between the definitions of
modernisation and replacement. These interviews
were excluded from the analysis. The final material
sample consists of 29 interviews from which 14
concerned modernisation and 15 replacement
projects. Data was collected from 28 organisations,
including both private companies and public
organisations, and from 29 evolution projects within.
One person was interviewed per project. One
organisation yielded two suitable projects and thus
the number of projects (and interviews) is higher
than the number of organisations.
Most of the interviewees were upper or middle
level managers in data administration. The sample
also included IT development executives and other
IT personnel. The study focused on user
organisations and, consequently, system suppliers
were excluded.
3.2 Data Analysis
Interviews were recorded by the permission of the
interviewee and then transcribed. Data collection
was closed when the material was saturated, i.e. new
cases did not bring new information on the topic. In
data analysis, classification by theme, type, and
content breakdown were used. Before the analysis
the material was read through several times in order
to gain familiarity with it and to identify features
that describe the material in general. The material
was coded by theme in order to increase the fluency
of handling. After the theme classification, the
material was classified according to the frequency of
response types in order to increase the comparability
of the results.
3.3 Reliability of the Results
The reliability of the results was assured by using
two researchers to analyse the material. They were
not connected to the organisations and approached
the material from an outsider’s perspective. It was
noted for that the reliability of the results could be
weakened by the fact that the material was relatively
heterogeneous, i.e. it consisted of different types and
sizes of organisations and information systems.
However, the responses were fairly homogenous in
both evolution types. This indicates that the diversity
in target organisations and systems have not
undermined the reliability of the results.
The use of semi-structured interview provided a
possibility to acquire in-depth information on the
same topic from a variety of interviewees. The
issues and viewpoints the interviewees brought up in
addition to the pre-designed questions were relevant
to the topic and added depth to the material. The
reliability of the results could have been improved
with additional quantitative data collection.
In the following, the results on evolution initiation
comparison are reported. Citations
from the
interviews are included in the text in order to clarify
the results. The proportion of the appearance of each
factor with respect to the total amount of projects is
given in brackets (number of appearance / total
amount). Abbreviation “R” is used for replacement
and “M” for modernisation.
A total of 15 initiation factors were identified in
the study. Some of these appeared in both
modernisation and replacement projects, while some
were evolution type specific. Factors influencing
both modernisation and replacement initiation are
system age, obsolete technology and high operation
or maintenance costs. Identified replacement
specific initiation factors were end of vendor
support, need to unify disintegrated systems and
scattered data, need for a system compatible with
organisation’s other systems, software or hardware,
and to follow organisation’s IT strategy or the
prevailing IT trends within the industry.
Modernisation specific initiation triggers were the
desire to develop organisation’s business or business
processes, the requirements presented by a business
Citations have been translated from Finnish to English
by the author.
ICEIS 2007 - International Conference on Enterprise Information Systems
partner, responding to customer needs, legislation
changes, and competitive advantage.
Table 1 summarises the initiation reasons and the
number of their occurrence in replacement (column
“R”) and modernisation (column “M”) projects. The
number or occurrence presents the total number of
projects where a presented factor appeared.
Table 1: Reasons for evolution initiation.
Reason for evolution initiation R M
System age 9 5
Obsolete technology 3 4
High maintenance or operation costs 1 2
Maintenance difficult or not possible 1 3
End of vendor support 7 -
Incompliance with business needs 7 -
Disintegrated systems and scattered data 3 -
Incompatibility with other systems 3 -
Incompliance with IT strategy 2 -
IT trends in the field of industry 1 -
Business or business process development - 7
Customer needs - 2
Business partner requirements - 1
Change of legislation - 1
Competitive advance - 1
4.1 Replacement Initiation
The results suggest that replacement initiation is
triggered by ten factors. These factors and their
distribution throughout the replacement projects is
depicted in Table 2, where R# denotes replacement
project and x indicates the appearance of initiating
factor in a project. Column T
gives the total
number of initiation factors’ appearance across the
replacement projects.
Three factors appeared significantly more
frequently than the others: the system age (9/15), the
end of vendor support (7/15), and the system’s
inability to respond to company’s current business
needs (7/15). Often these three major reasons
appeared together or combined with other factors.
(R7): "The system was mainly from the year 1985
and then further developed. Its basic structure was
nearly 20 years old … operations had changed
significantly during that time and business
requirements had changed so much that it was
decided to renew the system.”
In almost half of the replacement projects (7/15),
the reason for acquiring a new system was the
legacy system supplier that had stopped or had
announced the termination of system updates,
maintenance or technical support. Typically, the
vendor had informed the customer that development
of the system would be discontinued. In R5, R11 and
R12, the existing system was not compatible with
other systems in its operational environment, with
new operating systems or up-dated hardware. In the
following, an interviewee (R5) describes a project
where both of these factors were present: ”… we had
a very old, about 10 years old, information system in
use and we were in a situation that we could not
really get updates for it and it was not compatible
with these new operating systems any more. So in
that situation we had to renew the system.”
In R4, R9 and R12, the legacy system consisted
of interoperating sub-systems and problems with
scattered data arose. The goal was to unify separate
systems by replacing them with a single ERP system
that would store all data in one location. An
interviewee (R4) concludes: “…when there are
various small systems and their maintenance costs
are fairly high we aimed at [getting them] within
one system. On the other hand we were thinking
about the transparency of customer data, and that
we were transferring the same data in so many
places, so that was one reason why we wanted to get
rid of those separate systems.”
In addition to old age and disintegrated systems, IT
trends in the field of industry encouraged system
replacement (R12): Well, it [system] was aged and it
consisted of separate systems and at some point we
should have changed it anyway … and what I have
heard is that those [companies] who used the same
systems, they have had quite a strong changing wave
going on.
Organisation’s IT strategy guided the decision
making in two cases. In R12, the system was
completely rewritten in order to comply with new
architecture and operating system requirements
defined in the IT strategy. In R4, according to
organisation’s IT strategy all systems were to be
united and, hence, individual systems were
integrated into one organisation wide ERP system.
4.2 Modernisation Initiation
The results suggest that modernisation initiation is
influenced by nine factors. From these three types of
modernisation initiatives can be identified: business
development driven modernisation, legacy system
The largest individual modernisation trigger was the
desire to develop the organisation’s business or
business processes (7/14). It was typical that the
weaknesses of the legacy system were
acknowledged and action was taken in order to
improve related operations.
Modernisation activities were considered as a
natural part of organisation’s operations and they
took place in regular intervals (M11): “This project,
LEGACY SYSTEM EVOLUTION – A Comparative Study of Modernisation and Replacement Initiation Factors
we called it ‘the development of IT environment for
better business process support’. … the whole IT
environment and architecture was developed. It
supports business processes and business objectives
better. … one can say that it is an endless [process]
but now [in this project] the basic improvements
have been done.”
In one case, where modernisation was seen as
an enabler of organisational development, it was
anticipated to provide competitive advance. The
motive for modernisation was to be the first
organisation in the national markets to use new
technology (M12): ”Yes, it has reference value if we
are the first ones to do something. In another case,
the prevailing IT trends within the industry were
regularly reviewed and assessed from business
development perspective (M5):
“I belong to a national data administration group
and we meet fairly regularly and discuss about the
state of the art of software development in our line
of business.
In four modernisation projects the initiative
originated solely from business development
motives (M4, M12) or as response to external
pressure (M6, M14). In M6, legislation had changed
and required rapid changes in the system. In M14,
modernisation was initiated by the change request of
an important business partner and responding to it
was perceived as an opportunity for system
improvement to better respond to customer needs
and for business development.
The results indicate that legacy system related
factors form the largest group of modernisation
initiation reasons. Old age (6/14), obsolete
technology (5/14) and impossible maintenance
(3/14) were typically mentioned. Economical factors
accompanied obsolete technology. High operation
costs (2/14) were additional motivators. In extreme
cases, old age (M3, M9) or obsolete technology
(M7) was the only reason for modernisation.
The third identified modernisation initiation type
includes both technical and business reasons: system
was old and did not serve the user organisation as
well as in the past (M5), system was old and did not
respond to new customer needs (M1), maintenance
was not possible and organisation wanted to develop
its business operations by modernising the existing
system (M11), or maintenance was nearly
impossible due to obsolete technology and system
Table 2: Reasons for replacement initiation.
Initiation factors R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 R11 R12 R13 R14 R15 T
System age x x x x x x x x x 9
Incompliance with business needs x x x x x x x 7
End of vendor support x x x x x x x 7
Obsolete technology x x x 3
Incompatibility with other systems x x x 3
Disintegrated systems and scattered data x x x 3
Incompliance with IT strategy x x 2
IT trends in the field of industry x 1
Difficult maintenance x 1
High maintenance costs x 1
Table 3: Reasons for modernisation initiation.
Initiating factor M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 T
Business or business process
x x x x x x x 7
System age x x x x 4
Obsolete technology x x x x 4
Maintenance not possible x x x 3
High operation costs x x 2
Customer needs x x 2
Business partner requirements x 1
Change of legislation x 1
Competitive advance x 1
ICEIS 2007 - International Conference on Enterprise Information Systems
Table 4: Comparison of evolution initiation criteria.
No. Modernization decision criteria (D)
(Koskinen et al. 2005)
Modernisation initiation factors
Replacement initiation factors
1. System usability Business development System age
2. End of technological support System age End of vendor support
3. Changes in business processes Obsolete technology Incompliance with business needs
4. Maintenance costs Maintenance not possible Obsolete technology
5. System correctness High maintenance costs Disintegrated systems and scattered
6. System efficiency Customer needs Incompatibility with other systems
7. Expected remaining system lifetime Business partner requirements Incompliance with IT strategy
8. Size of required changes Change of legislation IT trends in field of industry
9. Application domain expertise Competitive advance High maintenance costs
10. Delocalized system logic Maintenance difficult
… …
15. System age
16. Changes in business environment
was modernised in order to better supported business
processes and objectives (M13).
The distribution of initiating factors throughout the
modernisation projects is depicted in Table 3, where
M# denotes modernisation project and x indicates
the appearance of a factor in the left hand side
column in a project. Column T
gives the total
number of initiation factors across the modernisation
The reasons behind replacement and modernisation
initiatives were noticeably similar but varied in
nuances. Legacy system related factors proposed in
earlier studies (see e.g. Aversano et al. 2004, Bergey
et al. 1997), i.e. system age, obsolete technology, or
difficult and costly maintenance, influenced
evolution initiation in both project types.
A separating factor concerning evolution
strategy selection was the degree of evolution
initiative anticipation. Organisations that decided to
modernise their legacy system wanted to develop
their business processes. They were, in general,
aware of IT trends in their business line and
launched modernisation in order to develop their
business. The interviewees were not directly asked
about their organisation’s business perspective, yet it
was mentioned as an important factor in half of the
interviews. Thus, strategic business planning as
management activity (see Bergey et al. 1997) was a
central element. On the contrary, interviewees from
organisations that had chosen replacement as an
evolution strategy did not express the desire for
business development. Instead, replacement was a
reaction to the vendor’s announcement of ending
system support or to the system’s inability to support
organisation’s business operations. This would
suggest that a system management related risk
appeared real (see Bandor 2006) and caused action.
It is proposed that modernisation took place as a
result of proactive situation assessment while
replacement was a reaction to a change in
organisation’s internal or external environment. The
reasons behind this phenomenon require further
The results show that legacy system replacement
and modernisation differ from each other with
respect to vendor influence on evolution initiation.
Nearly half of the replacement projects were
initiated because the system supplier had given up
system development or support. However, in
modernisation projects, vendor’s actions did not
influence evolution initiation. It is concluded that
organisations that decide to replace legacy systems
are more dependent on system suppliers than
organisations that choose modernisation.
When compared to the earlier findings, it can be
noticed that there is clear divergence between
initiation factors although similarities exist, too.
Table 4 lists the decision criteria reported by
Koskinen et al. (2005), which are in the text denoted
with D, and the findings of this study, denoted with
(modernisation initiation factors) and R
(replacement initiation factors) in a descending order
of importance. An interesting finding was that
system usability, which was listed as the most
LEGACY SYSTEM EVOLUTION – A Comparative Study of Modernisation and Replacement Initiation Factors
important modernisation decision criteria, did not
occur among the evolution initiation factors of found
in this study. An explanation for this phenomenon
was not found and would require further research.
Another observation is that the modernisation
decision criteria reported by Koskinen et al. (2005)
correspond to replacement initiation factors better
than modernisation triggers found in this study.
Correlation for all but one replacement initiation
factor, i.e. end of vendor support (R
2), exists: R
1 = D15, R
3 and R
7 = D3, R
4 = D2, R
5 and
6 = D5, R
8 = D16, R
9 = D4, and R
10 = D7.
5 and R
6 correspond to system efficiency (D6)
because they led to inefficient system use in studied
organisations. It should be noted that D2 refers to
general technology changes and, hence, it should not
be mixed with R
Six of the identified modernisation initiation
factors match with the previously presented criteria.
The following correlations exist: D2 = M
3, D4 =
5, D7 = M
4, D15 = M
2, and D16 = M
7. New factors, not appearing in the list by
Koskinen et al. (2005), are business or business
process development objective (M
1), end of
vendor support (R
2), and competitive advance
The amount of factors influencing evolution
initiation decision is significantly smaller than given
before (see Koskinen et al. 2005). The results
strengthen the previous findings of the importance of
engaging both business and technical aspects in
evolution decision making (see Aversano et al. 2004,
Bergey et al. 1997).
The aim of this study was to compare replacement
and modernisation projects with respect to the
reasons that initiate evolution activities in order to
provide evidence on their differences and
similarities to support evolution planning and
decision processes. The differences and similarities
were mapped with an empirical study where data
administration managers, IT development executives
and other IT personnel from 29 evolution projects
were interviewed.
The results confirm the previously suggested
modernisation criteria but challenge the order of
their importance. The findings question the
importance of system usability, previously claimed
to the most important modernisation decision
criteria. New factors complementing earlier findings
are business or business process development
objective, end of vendor support, and gaining
competitive advantage.
System age, obsolete technology and high
operation or maintenance costs were identified as
triggers in both evolution types. The most common
initiation factors in replacement projects were
system age, end of vendor support, and system’s
incompliance with the organisation’s business needs.
The most common reasons for modernisation were
the desire to develop organisation’s business or
business processes, system age, and obsolete
This work has been carried out in ITRI (Information
Technology Research Institute) and financially
supported by TEKES (Finnish Funding Agency for
Technology and Innovation).
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LEGACY SYSTEM EVOLUTION – A Comparative Study of Modernisation and Replacement Initiation Factors