Many retail businesses find themselves at a crossroads. The legacy systems they’ve long relied on may continue to offer steady, cost-effective performance. But with limited scalability and issues integrating with modern tools, these systems may also be holding them back.
Modernizing retail applications may seem like an obvious response, but it is not without its challenges. While modern systems help to future-proof businesses and align tech with customer demands, they come with high costs and potential technical issues.
So, what should retailers do? Persevere with legacy tech, or take the plunge and shift to a modernized application architecture? In this guide, we’ll help answer that question by exploring the trade-offs and benefits of application modernization in retail. Read on to explore:
- The hidden costs of avoiding retail application modernization
- The business case for targeted modernization vs complete replacement
- Key retail systems to modernize for better performance
- How to build an implementation framework for retail app modernization
- Why it pays to work with a technology expert like Intellias
Why modernize retail applications?
The retail sector is undergoing a major transformation. Instead of traditional shopping experiences, customers now expect real-time personalization across multiple digital channels. Facilitating this level of service is a major technological challenge, requiring modern retail applications and a modern technology architecture.
Despite the reliability of legacy solutions, persevering with legacy technology limits your options going forward. It makes it harder to integrate the modern technologies and applications you need to deliver an exceptional customer experience. Other hidden costs include:
- Expensive maintenance and customization
- Operational inefficiencies
- Security and compliance risks
These issues aren’t isolated. They ripple across your entire retail tech stack. And with the pace of technological change, these issues will compound fast. Modernizing retail software may seem disruptive, but doing nothing is often more costly in the long run.
App modernization in retail isn’t just about avoiding issues, however. It also opens the door to opportunities. With modernized applications, your retail business can leverage technologies like machine learning and artificial intelligence (ML/AI), augmented and virtual reality (AR/VR), and the Internet of Things (IoT) to deliver incredible shopping experiences. Modern applications can also power omnichannel interactions and personalized recommendations at scale. The result is happier customers and a more future-ready business.
What trade-offs and challenges are involved in retail app modernization?
Despite the clear benefits of modernized retail applications, the decision to overhaul legacy systems isn’t always an easy one. Many retailers continue to use legacy systems that have served them well for many years. Why? Because these systems are often highly reliable and relatively cheap to run.
At the same time, transitioning to a modern architecture and modern applications represents a major undertaking. There are inherent risks, such as service disruptions, technical issues, and internal resistance to change. Modernizing retail applications also requires major upfront investment in technology, expertise, and change management.
It’s important to weigh these risks alongside the benefits of application modernization. Nevertheless, one thing is clear: most legacy systems simply aren’t compatible with the technologies and real-time omnichannel experiences that customers now expect. Yes, modernization can be a major challenge. But can you afford to do nothing?
Targeted modernization vs complete replacement: What’s the best approach?
How you approach app modernization will depend on the specifics of your situation. Some retailers opt for a targeted modernization approach, upgrading specific components while retaining core legacy systems that still provide value. The benefits of targeted modernization include lower overall costs and reduced disruption.
Other retailers choose to completely replace their legacy systems with modern, cloud-based platforms. This approach is more disruptive, costly, and resource-intensive. However, it can be the most viable choice if your existing systems are fundamentally incompatible with modern retail demands.
Not sure what the best approach is for your retail business? A technology expert like Intellias can help you make the right decisions and align app modernization with broader organizational goals.
Key areas for retail app modernization
So, how can you know if you’re in need of retail software modernization? As a starting point, let’s look at some of the core systems retailers rely on. We’ll highlight pain points of legacy systems that we typically come across when working with retailers and show how you can solve them through app modernization.
ERP modernization
Many retailers still rely on legacy on-premises systems like SAP ECC or old Oracle platforms. These require customizations that are expensive to maintain and upgrade. If you fall under this category, you may suffer performance issues such as:
- Long batch processing times
- Inflexible data models
- Troublesome integrations
Modernization strategies
You can overcome these issues by transitioning to a cloud ERP like S/4HANA or NetSuite. These systems are more scalable, flexible, and cost-effective than their on-premises predecessors. Integrating these modern ERP systems with your existing technology stack requires careful consideration, however. We recommend using tried-and-tested integration patterns to provide a clear framework for effective data flows.
Some retailers we work with choose to pivot towards a microservices architecture for core ERP functions. By breaking down the monolithic ERP into smaller, independent components, our customers benefit from phased modernization while preserving core functionality.
OMS and WMS transformation
Homegrown or decades-old order management systems (OMSs) and warehouse management systems (WMSs) are often built using coding languages such as COBOL or early Java frameworks. This can significantly limit system flexibility and scalability due to:
- A lack of support for APIs, complicating real-time data exchange
- Hardcoded rules that limit customization and innovation
- Limited support for real-time order or inventory tracking
The cost implications of maintaining a legacy OMS/WMS can be huge. In addition to system inefficiencies, there are high labor costs due to manual workarounds.
Modernization strategies
We help retailers overcome these issues with OMS/WMS modernization. This often involves working closely with internal teams to identify and prioritize homegrown systems most in need of replacement.
We also assist retailers in transitioning to modern cloud-native systems such as Manhattan Active and Blue Yonder. These offer the scalable, AI-powered, omnichannel solutions that forward-thinking businesses need to thrive in today’s retail environment.
Furthermore, we help companies enhance the impact of a modernized OMS/WMS by implementing event-driven architectures. Using tools such as Kafka or RabbitMQ, this approach unlocks powerful capabilities for real-time data synchronization, including:
- Dynamic inventory management
- Omnichannel customer experiences
- Seamless integration with transformative tech such as AI and IoT
Integration layer modernization
Legacy enterprise service bus (ESB) systems can be a thorn in a retailer’s side. Systems like IBM WebSphere and Oracle SOA Suite are slow to adapt, becoming performance bottlenecks due to:
- Difficulty adding new integrations
- Challenges syncing data in real time
- High maintenance and operational costs
As a result, it’s challenging for retailers using legacy ESBs to build agile, omnichannel ecosystems that support real-time data exchange. These issues can cause significant hidden costs as a result of poor service and missed opportunities.
Modernization strategies
We typically recommend a step-by-step approach to integration layer modernization. While each business has unique challenges to solve, this process usually involves:
- Identifying and prioritizing critical integrations before migration
- Transitioning to lightweight API gateways such as Kong or Tyk to support standardized REST/GraphQL APIs
- Implementing tools like Apache Kafka for real-time event streaming, enabling dynamic pricing and inventory updates
- Using canary deployment to test integrations and ensure business continuity
Monolithic eCommerce platform transformation
Legacy eCommerce platforms such as Magento 1.x or custom-built PHP/Java monoliths are still prevalent today. Their inability to support modern B2B requirements can cause various performance issues, including:
- Slow release cycles and missed opportunities
- Scalability issues and downtime
- Mixed B2B/B2C logic that increases complexity
Modernization strategies
When modernizing monolithic eCommerce platforms, we help retailers transition to headless commerce, which decouples the front end from the back end using APIs. Platforms like Commercetools, Fabric, and BigCommerce B2B Edition are ideal for B2B retailers due to their cloud-native, API-first architectures.
EDI and B2B transaction handling modernization
Electronic data interchange (EDI) systems often rely on legacy standards like ANSI X12 or EDIFACT. These systems are common in retail supply chains, handling transactions for purchase orders, invoices, and shipping notices. While they were reliable in the 1980s and 1990s, they cannot support the modern retailer’s need for real-time data exchange, resulting in the following pain points:
- Batch-based scheduled file uploads, often performed nightly
- Frequent transmission failures and format mismatches
- Limited visibility into tracking and status updates
Modernization strategies
Your retail business can overcome the issues above by switching to API-first EDI platforms like Orderful or SPS Commerce. These replace outdated FTP and batch-based systems with cloud-native, real-time solutions. The result is instant data interchange, fewer errors, and enhanced visibility and scalability.
Search engine modernization
Legacy search engines still power product search and navigation in many retail eCommerce platforms. Examples include older versions of Apache Solr and Elasticsearch. These setups were designed for basic keyword-based search and indexing, and they lack the AI-driven personalization and real-time capabilities expected by today’s shoppers. Common issues include:
- Slow indexing, resulting in delays for new or updated product lines
- Static algorithms that fail to account for user context
- Time-consuming manual configuration
Modernization strategies
We help retail enterprises modernize their search capabilities by adopting managed search services or search-as-a-service platforms. Examples include Algolia and Bloomreach. These provide cloud-native, AI-powered solutions that are optimized for retail. Businesses that adopt them enjoy a range of benefits, including:
- Faster indexing
- AI-driven personalization and automation
- Omnichannel consistency
- Enhanced search scalability
Building an implementation framework for legacy modernization
If you’re experiencing some of the pain points we highlighted above, perhaps it’s time to think seriously about retail application modernization. While modernizing your retail tech stack represents a serious undertaking, doing nothing can lead to worse issues and a competitive disadvantage going forward.
Effective retail app modernization requires careful planning and a methodical approach. Your efforts should be underpinned by a coherent framework that defines the processes and standards you will follow. Below, we outline specific steps you can take to modernize your retail application.
Prioritize systems for modernization
When modernizing your retail technology stack, you should start with the most problematic and costly systems. To identify them, we recommend developing an assessment methodology that looks at potential ROI. To do this, you’ll need a clear understanding of how much your current systems are costing you in terms of:
- Maintenance and technical debt
- Downtime and system lag
- Poor customer experience
- Missed opportunities
Choose modern platforms and integration tools
Select modern, cloud-based systems that align with your business needs. We help retailers implement systems such as Blue Yonder, S/4HANA, and Commercetools, as well as integration tools like Kafka. When considering which platforms to adopt, look for those that support:
- Real-time data exchange and standardized APIs
- Integration with transformative tech such as AI/ML, IoT, and VR/AR
- Incredible omnichannel experiences
Follow a phased implementation approach
Your retail tech stack is a highly complex ecosystem of interconnected components. By taking a phased approach to app modernization, you can transform your capabilities incrementally. This reduces risk, disruption, and downtime compared to a big bang approach in which all systems are replaced simultaneously.
Starting with the systems you’ve prioritized, migrate data incrementally to your new platforms. Use ETL (extract, transform, load) tools to automate the process and ensure compatibility with your new tech stack. Given how complex and error-prone this stage can be, many retailers choose to work with an expert technology partner like Intellias.
Support your staff
Modernizing your retail applications isn’t just a technical challenge. It’s also a human one. To ensure a smooth transition to modern systems, you’ll need to support your staff through targeted training and effective change management.
In addition to the practical skills needed to adopt new systems, your training should cover the why. Your staff may be resistant to switching from systems they are familiar with, despite the issues those systems are causing. Highlighting the benefits of retail app modernization will help to ensure smoother adoption among your staff.
Measure and validate cost savings
Retail app modernization represents a major upfront investment in technology, training, and change management. Measuring and validating cost savings verifies that your investments in modern platforms and integration tools are having the tangible impact you expect. It also helps justify the effort and cost to key stakeholders. Steps involved in measuring and validating cost savings include:
- Establishing baseline metrics. Start by quantifying the performance and associated costs of your legacy systems. Look at areas such as maintenance, staffing, and support costs, as well as costs associated with poor performance and system limitations.
- Defining goals and KPIs. Set clear, measurable goals that are tied to business outcomes: for example, reduced maintenance costs, improved system uptime, faster deployment cycles, or higher conversion rates.
- Tracking post-modernization performance. Use system logs, financial reports, customer feedback, and other data sources to track performance-related metrics over a defined period.
- Calculating savings. Quantify direct and indirect cost savings as a result of modernization. Attribute savings to specific systems or improvements to gain a granular understanding of impact and ROI.
Intellias — your partner for retail app modernization
Retail application modernization is complex and resource-intensive. Transitioning from legacy systems to modern cloud alternatives requires a level of expertise that many retailers simply don’t have in-house. This is where Intellias can help.
We work with some of the world’s biggest retailers to bring their legacy architecture and applications in line with modern use cases and customer expectations, ensuring the success of modernization projects through a combination of deep technical expertise, retail experience, and a tailored end-to-end approach. When modernizing systems, we typically follow a two-speed strategy that enables both quick wins and long-term transformation.
Our services cover everything from hands-on technical support to bigger-picture consulting around digital transformation. We can help plug gaps in your current team or build an entire outsourced team dedicated to your modernization project. As your partner, we can help you:
- Understand current system inefficiencies and prioritize platforms for modernization
- Choose and deploy market-leading retail platforms and integration tools
- Build custom software from scratch to meet your specific needs
- Integrate retail AI, ML, IoT, and data analytics solutions to drive operational efficiency
The result is a modern retail tech stack that will drive business performance while delivering an incredible customer experience.
Conclusion
The retail space has advanced significantly in recent years. Customers now expect real-time personalization and omnichannel shopping experiences. While legacy systems continue to be reliable and cost-effective, they struggle to adapt to changing expectations. To build scalable, integrated, and future-proofed systems, retailers must modernize retail applications.
But transforming retail applications is no easy feat. Without the right expertise and resources, modernization projects can run into all manner of issues. This is why it pays to work with an external technology expert like Intellias.
If you’re looking to update your retail tech stack to deliver greater operational efficiency, scalability, and customer satisfaction, we can help. Get in touch today to book a free consultation.
