Net Benefits
Based on our simplistic example model we can also build a net benefits calculation by subtracting costs from the benefits:
Net Benefit Example
To calculate a comparison of the different approaches, we have deducted the costs from the benefits and normalized to a 1-5 score:
| Pattern | Net Score |
|---|---|
| Retain |  |
| Rehost | |
| Replatform |  |
| Refactor |  |
| Revise | |
| Rebuild | |
| Replace |  |
| Retire | |
| Reimagine |  |
Although we have made huge and sweeping generalizations across these assessments, it’s worth noting that the outcome is at least partly borne out by how the cloud market is developing. A 2021 report estimated SaaS compound annual growth rate (CAGR) of 20.8% ([Global Market Report]). However, even today, only a limited number of common business functions (e.g. finance, SCM, HCM etc) are covered by SaaS, and so IaaS is also growing at a similar rate of 27% ([Business Wire])
The comparatively low score for Rebuild is worthy of note. While the benefits can be very high, the costs are similarly high, and the risk of project failure should never be underestimated. Rebuild is always an option, but should be used sparingly - reserved for the most critical business applications where the investment required can be covered by potential business benefits and where a SaaS application that covers the business functionality required is not available.
Broader considerations
After consideration of all the benefits and costs, then you might find that there is no medium or long term return on the necessary investment in changing a specific application - even though that application still required by the business. In this case, the application it may be appropriate for an application to remain unchanged. However, this is always a point-in-time decision, and as hardware and software becomes deprecated over time and technical debt is accrued, then any decision to retain unchanged should be revisited regularly.
In some situation, even though there is no return of investment possible on a single application, it is quite possible that as part of a larger group of applications, then a return is possible. We will cover these in Compelling Events.
In addition, there are a number of ways in which the basic modernization patterns can be combined to provide a greater return over time, and this is the subject of the next section.