Thought Leadership

App Modernization

This whitepaper provides guidance on a capability-led approach to legacy application
modernization. Common challenges with modernization projects are:

  • increased business risk
  • technical complexity
  • unclear value proposition
  • sheer size of the effort

The capability-led approach attempts to tackle the inherent size and scale of modernization by segmenting scope, delivering often and adapting to changing business needs. This whitepaper outlines the approach, tools and techniques to rapidly progress from business capabilities to working software.

The Challenge with Legacy Modernization

Change is complex and expensive and change at-scale even more so. Organizations with a long industry presence enjoy the benefits of longevity, but also grapple with the reality of old and outdated technology (“legacy”) that dominates core processing and houses mission-critical business logic. The traditional view of technology as a tool rather than an asset has led to accumulation of “technical debt,” deferring necessary upgrades and enhancements to an undetermined future date. To be competitive in a disruptive market, organizations are increasingly aware of the need to address technical debt sooner than later while continuing to deliver business outcomes side by side. The challenge is achieving both objectives in a business environment that is value-driven, where technical debt and business value seem to be at cross purposes.

Daugherty's Approach - Capability-led Modernization

Daugherty’s industry experience shows that the success rate of Legacy Modernization improves drastically by limiting scope, building in increments and delivering value continuously. A technology focused approach to modernization can succeed in execution but not value and a business focused approach can deliver value but struggles to limit scope.

Our recommended approach is capability-led modernization, which ties core business capabilities to the underlying technology architecture and infrastructure to fully package the business capability being modernized. We work with organizations to create a primary business capability map of the end-to-end business process, prioritize capabilities and create the modernization capability roadmap.

Business architects and analysts decompose high-level capabilities into functions, and software engineers work hand in hand to extract business rules. Our architecture teams design an ideal future state fit for the capability, and our engineering teams build software on the new platform. Daugherty leverages industry partnerships with AWS, Databricks, Snowflake and others to build best-in-class solutions for our clients.

Figure 1 – Business Capability Placemat of an end-to-end business process flow. Capabilities are bucketed into 1 of 4 categories -to enable prioritization

Why Our Approach Works
  • Capability-led modernization establishes a clear value proposition, aligns business and IT and is built on a strong technical foundation.
  • Daugherty’s Rapid Process Mapping (RPM) approach accelerates business rule extraction, often orders of magnitude faster than the competition.
  • Industry-leading software like CAST Imaging provide rapid insights into the architecture and functioning of complex applications and saves hundreds of person hours of effort.

When it comes to modernizing with CAST products, there are two main solutions designed to help organizations through their transformation:

CAST Imaging: CAST Imaging automatically understands how an application works. It takes all application source artifacts and reverse-engineers the internal structures into a visual representation of software internal architecture. This solution assists organizations in comprehending and analyzing codebases by highlighting key elements, including components, dependencies, and data flows. The visualization capabilities of CAST Imaging facilitate informed decision-making, pinpoint areas for improvement, and optimize software assets for enhanced efficiency

Figure 2 – Imaging automatically creates a blueprint of the application (main image), showcasing the technologies and their interdependencies. Each object can be expanded to reveal its children (right image), providing a detailed representation of their relationships

Figure 3 – Illustrates the transaction and data call graph views. The transaction view (left) displays top-down data flow while the data call graph view (right) shows a bottom-up data flow. These mechanisms allow for analysis on specific functions of the application.

Figure 4 – Combines data and application objects, revealing their relationships. It enhances understanding of both.

CAST Hightlight: Serving as a comprehensive software portfolio analysis software, CAST Highlight offers organizations a holistic perspective on their software portfolios. This solution automatically provides insights and recommendations about the applications’ cloud maturity, health, green impact, as well as intellectual property and security exposures associated with third-party components. By delivering actionable recommendations for enhancements, CAST Highlight proves invaluable for organizations engaged in modernization, cloud migration and digital transformation initiatives.

Figure 5 – Illustrates the automatic segmentation performed by Highlight. Each circle in the visualization represents a distinct application within the portfolio, with the color coding serving as a clear indicator of their respective segmentation (5Rs).

Figure 6 – Combining technical analysis and qualitative insights gathered from surveys, Highlight seamlessly offers automated recommendations for prioritizing the modernization of applications, visually represented as blue circles.

Figure 7 – Highlight offers valuable insights regarding potential cloud blockers that could impede the progression toward Container as a Service (CaaS) or Platform as a Service (PaaS).

Our approach can deliver Packaged Business Capabilities (PBCs) which simplify the way businesses understand and use technology. PBCs are defined as software components representing a well-defined business capability which is functionally recognizable as such by a business user. This is an added value for businesses that are growing increasingly complex.

Methodology & Deliverables

Central to the approach of capability-led modernization is the ability to deliver incremental value for both IT and the business we support. The journey begins by identifying business capabilities through discovery, followed by prioritization and alignment with the business to target a specific outcome. Logic extraction from legacy code follows, with design and delivery of the packaged business capability as the result. Transforming one capability at a time, sometimes at a more granular level, allows business and IT to target investment in response to market pressures and priorities. The following is a description of the high-level approach and recommended deliverables:

The discovery phase helps organizations align business and IT stakeholders to key capabilities that are central to their core business. During discovery, existing capabilities are consolidated, new capabilities are identified, and workshops are held to bring consensus and alignment with key stakeholders.

  • High-level business process map(s) help organizations trace the value stream and understand the actors and hand-offs as work progresses from intake through delivery
  • Identify primary business capabilities by consolidating existing capability maps, and/or creating new capability maps in partnership with enterprise SMEs
  • Align business capabilities to process map which provides context to how a capability is delivered and what impact it has on the overall business process, as well as resolve fragmentation, duplication and ownership
  • Categorize capabilities to aid prioritization. Examples of categories are Operational Efficiency, Future Capability, Tech Debt, Commodity Service, etc. Categories are best defined by stakeholders to reflect their immediate and strategic priorities
  • A Capability Roadmap helps order and sequence work. It provides guidance on where the organization is planning to invest near term & long term and should be factored into strategic planning and budgeting
  • A Target Technology Architecture begins to envision the future state and helps IT establish guidelines to work towards the end goal
  • A Value Proposition ties capability development to expected benefits and outcomes (how capability modernization impacts people, process and technology)

The logic extraction phase begins to de-mystify business logic built into legacy code. A focused team of logic extraction experts aided by business analysts begins building a repository of business rules, data elements and logic flow charts to unravel the complexities of the current state system. Some recommended deliverables are:

  • A detailed list of business rules that capture what validations, data processing and data transformations are being performed in the code
  • The beginnings of a current state data model that captures which business entities are being acted upon by the business rules, and what elements are involved
  • Business requirements (including NFRs) that are identified by analyzing rules and data and deriving a natural language algorithm to describe logic flow

The design phase is key to transformation, in that it determines the future state logic and capabilities that the business envisions. Identifying what is relevant to current and future state, and being disciplined in what is carried over from current state is critical to the success of modernization. Recommended deliverables are:

  • A future state process flow that re-defines what is done and how it should be done. This is a combination of business process transformation and identifying the IT capabilities that are
  • required to achieve the end state
  • Updated business logic requirements that streamline requirements, rethink ways of working in a modern context and look to leverage technology to gain efficiencies that translate into benefits
  • A detailed technical architecture that outlines the technology transformation journey – how the organization moves from current state to target state, with intervening hybrid states needed to sustain business
  • A detailed ROI that starts to quantify benefits for a particular capability
  • An updated feature roadmap which is a living document that aligns business and IT expectations
  • A feature backlog for MVP that will enable IT teams to rapidly build our the capability MVP

The deliver phase creates the software based on the feature backlog with a target to stand up a minimally viable product (MVP) in the shortest amount of time. The goal of the MVP is to begin the cycle of deliver, inspect, adapt to kick-start the modernization engine.

AWS Accelerators for Modernization

Infrastructure for Modernization Discovery can be rapidly deployed using CAST Imaging AMIs on Amazon EC2. The Daugherty team leverages CAST Imaging which can be rapidly stood up as an instance in a client AWS environment in a matter of weeks. CAST Imaging can execute code and database analysis and begin extracting business rules in short order. Deploying tools in the cloud saves significant time that would otherwise have been spent standing up datacenter infrastructure. Daugherty and CAST teams were able to collaborate in real time while maintaining data security standards and operating within the client environment.


Capability-led modernization can address several impediments that organizations typically face when embarking on a change journey. In addition to delivering modern technology, it can enable businesses to realize their short and long-term goals given the right level of alignment and partnership with IT. It is easier to build the value case and fund incremental efforts than a single large program. Limiting scope and shortening time to value also reduces program risk to manageable levels. Furthermore, the investment made to package business capabilities positions the organization well for future growth and operational efficiency.

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