Leadership Strategies

Unleashing Digital Transformation in Canada

How Application Modernization Will Impact Professional Services Firms and Their Customers
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In today’s rapidly evolving digital landscape, businesses across industries are recognizing the significance of application modernization as a strategic priority. The ability to adapt, innovate, and leverage emerging technologies has become crucial for driving digital transformation.

Professional services firms play a vital role in supporting organizations on this journey, offering their expertise to navigate the complex landscape of modern applications and modern application infrastructure options.

This blog explores the impact of application modernization on the ability of professional services firms to drive digital transformation now and in the next five years using data from a recent IDC Canada survey of medium and large businesses. Business leaders are urged to consider the growing importance of:

  • Security expertise.
  • Potential of packaged applications.
  • Rising need for updating and modernizing SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), and cloud-native applications.

Application Modernization as a Strategic Priority

According to a recent IDC Canada survey, over 50% of Canadian businesses currently rank application modernization as a top strategic priority for their organization. In the next 2 to 3 years, more than 75% of Canadian businesses surveyed expect application modernization to be a strategic priority for their organization.

Application Modernization Priority Ranking

The rapid advancement of technology, changing customer expectations, and the need for agility in a competitive market are driving organizations to overhaul their legacy systems, upgrade aging packaged applications, and update custom-built applications to embrace modern application solutions.

Professional services firms are well positioned to assist clients in this process by providing comprehensive strategies, implementation frameworks, and managed services methodologies that address the challenges associated with application modernization. The critical nature of application modernization services is so high that many ISVs are increasing their services capabilities through internal investments that enhance resources and service offerings. They are actively pursuing M&A opportunities, acquiring professional and managed services firms to extend the range and depth of their addressable market.

Security Expertise: A Vital Capability

As organizations embark on application modernization initiatives, survey results show that security expertise has emerged as the top-rated expertise requirement for professional services firms. With the increasing complexity of modern applications and the growing threat landscape, ensuring the integrity, confidentiality, and availability of data and systems has become paramount.

Professional services firms with robust security practices can guide businesses in adopting best practices, implementing robust security controls, and ensuring compliance with industry regulations. Their expertise enables organizations to navigate potential risks and safeguard their digital transformation journey. As with cost and value for money, security services are critical components to the buying decision of customers. This makes security services an essential feature for every sales pitch.

Packaged Applications: Seizing the Largest Opportunity

While application modernization encompasses a variety of software models, packaged applications present a significant opportunity for professional services firms in Canada. Using the same survey results, roughly ¼ of the average application portfolio is comprised of packaged applications such as enterprise resource planning (ERP) systems or customer relationship management (CRM) software. The survey also indicated that approximately 10% of the application portfolio is based on out-of-support packaged applications. A key application modernization strategy is the move away from traditional on-premises/client-server implementations using a variety of different options.

A key application modernization strategy is the move away from traditional on-premises/client-server implementations using a variety of different options.

The market opportunity for professional services firms can range from helping clients in the selection process, customizing packaged applications with custom coding or add-on modules, and packaged application implementation to ensure the product works seamlessly across the entire enterprise and its application portfolio. This collaborative effort enables businesses to optimize processes, improve productivity, and accelerate their digital transformation initiatives.

The Future Landscape: SaaS, PaaS, and Cloud-Native Application Modernization

Looking ahead, the next five years will witness surging demand for updating and modernizing enterprise application portfolios using SaaS, PaaS, cloud-native, web-native, and mobile-native applications. The growing share of cloud, web, and native mobile applications comes at the expense of mainframe, custom, and packaged applications.

As businesses increasingly use cloud-based solutions and the enterprise software platform to drive business agility and scalability, the need to modernize and enhance these applications will become paramount. Professional services firms will play a pivotal role in assisting organizations with the migration, integration, and optimization of SaaS, PaaS, and cloud-native applications. By leveraging their expertise, these firms can ensure seamless transitions and enable businesses to harness the full potential of these modern technologies.


In order to capitalize on application modernization as a strategic imperative, professional services firms will still have to follow the traditional business axiom: meet the customers ‘where they are.’

In an area as complex as application modernization, there are a variety of solutions that buyers need to consider. The options for application modernization services start with five key considerations: development strategies, application tools, infrastructure considerations, application types, and service delivery. Additional options branch off from this starting point. The above figure illustrates some of the options for application modernization from both a buy-side and supply-side perspective.

In the era of digital transformation, application modernization has emerged as a critical enabler for organizations striving to remain competitive and meet evolving customer expectations, a view supported by IDC Canada’s research. Professional services firms, with their deep knowledge and experience, have a significant role to play in driving this transformation.

By recognizing the strategic importance of application modernization, investing in security expertise, and capitalizing on the opportunities presented by packaged applications and cloud-native solutions, professional services firms can empower businesses to navigate the complex landscape of modern applications successfully. As we move forward, these firms will continue to be instrumental in helping organizations unlock innovation, optimize processes, and achieve their digital transformation goals.

Jim Westcott is a Research Manager for the Canadian Digital Transformation: Application and Professional Services program. In this role Jim manages IDC's research on enterprise applications and application services.