Five key barriers to enterprise modernization

In the past, an organization might have cycled through modernization projects every few years — and that intermittent effort would suffice.

Fast forward to today: modernization is a constant hum. The majority of organizations now wholly depend on digital technology to operate. In fact, many businesses aren’t just dependent on modern technology, but defined by it.

As new technologies reshape the digital landscape at an ever-increasing clip, enterprises must practice constant vigilance, modernizing at pace to reap the benefits of increasingly efficient, cost-effective, and flexible solutions. But with tech stacks getting more complex, and IT budgets standing still (or even shrinking), IT leaders are under pressure to show demonstrable ROI on tech, and prove its contribution to business objectives.

Keep reading as we unpack the five biggest barriers to successful enterprise modernization and share our insights on how to overcome them.

What's motivating modernization projects?

Once just a “nice-to-have”, successful adoption of emerging technologies has now become integral to staying competitive. The data shows IT pros are all too conscious of this: In the IT Edition of our 2025 Process Optimization Report, 44% of IT leaders ranked leveraging AI and automation as the top way to generate value in the next two years.

Similarly, in a survey of 70 CIOs about their goals for 2025 and beyond, two key themes emerged:

1. CIOs expressed the need to generate (and accelerate) business value through innovation.
2. They flagged the importance of reducing technical debt by boosting the ROI of technologies across the whole stack.

These two objectives don’t need to be competing priorities. Effective enterprise modernization should enable businesses to progress towards both of these overarching goals at pace.

• Want to find out more about these dual benefits of modernizing the IT stack? Download a free copy of The Insider’s Guide to Intelligent Enterprise Modernization.

What's holding organizations back from successful enterprise modernization?

Despite the appetite for progress, IT leaders attest that existing modernization initiatives aren’t delivering the expected results. Here’s a look at a few of the common issues:

1. Keeping up with emerging technologies is a struggle.
   AI and automation are evolving at an unprecedented rate, with new tools entering the market every day. Staying on the cutting edge demands considerable investment and maximum agility, but only 29% of IT leaders claim their organizations are at the forefront of data, analytics, and machine learning.
2. Migrations are long, expensive, and slow to deliver.
   Migrations are central to modernization, but completing them is often hugely disruptive and expensive. 72% of IT leaders say system migration projects take longer than planned, while 75% of cloud migrations run over budget. With such prolonged and complex migration processes, the anticipated ROI can be elusive.
3. AI implementation is proving harder than expected.
   The advent of mainstream AI has caused 93% of organizations to reevaluate their digital systems. But only 25% of employees say AI is actually improving efficiency, indicating that it’s not a straight line from implementation to improvement. On top of that, over a quarter of IT leaders are concerned about data availability and quality.
4. There are disconnects between what IT knows and what the business knows.
   Effective modernization can only happen through effective collaboration between the business and its IT department. But more often than not, there are silos and knowledge gaps on both sides. Knowledge silos exist in 83% of companies, and 97% of workers say silos harm their business. This is certainly the case for many modernization initiatives. IT teams have siloed knowledge within their function, while business teams have siloed knowledge within their function, making it hard to work together well.
   This incomplete picture leads to unforeseen issues and missed opportunities during modernization.
5. Modernizations are shaped by vendor decrees, rather than by business needs.
   Many enterprises fall into the trap of flexing their modernization approach in line with the limitations or demands of their system and application vendors, instead of prioritizing their own organizational needs. This results in an ill-fitting approach that doesn’t effectively scale or adapt as your business grows and evolves.
   Composability — that is, the ability to flex, add to, retool, and rearrange IT infrastructure to fit with evolving business needs — is a huge priority for modern CIOs, and rigid vendor rules clash with it. This rigidity may even be holding companies back from revenue gains: per Gartner, high-composability enterprises can expect greater revenue increases than low-composability enterprises.

Why isn't migration enough on its own?

Some decision-makers think modernization is synonymous with system migration — and little wonder, with SAP S4/HANA and Oracle Fusion migrations currently top of mind.

But the modernization journey should be a far more holistic process. Celonis has worked with enterprises around the world on modernization projects, and in our 15+ years of experience, successful enterprise modernization strategy incorporates three key pillars:

1. Process optimization Modernization doesn’t have to mean completely transforming your business operations, particularly those systems that are working well already. You can drive considerable value by connecting existing systems to increase visibility, streamlining processes, and automating certain workflows. As a bonus, this sort of change is minimally disruptive.
2. Application modernization When modernizing applications, start with a comprehensive audit of your application portfolio. In assessing the efficiency, scalability, and security of your current collection of software applications, you can build a roadmap of how you’ll update legacy applications to ensure they align with business goals.
3. System migration Whether you’re switching to cloud-based solutions or simply changing vendors, migrating your outdated systems to more modern platforms empowers you to leverage new technologies, access greater flexibility, enjoy greater cost efficiency, and reap the rewards of scalability.

To learn more about the pillars of successful modernization and how to implement them in your organization, including Celonis’ unique ADAPT modernization methodology, download our latest guide.

How does Celonis enable intelligent enterprise modernization?

Intelligent modernization closes the gap between IT and the wider business. This modernization strategy ensures every system and process used by IT is taken into account, along with every system and process used by the business as a whole. With a 360-degree view, intelligent modernization anticipates the actual (and hypothetical) impact of any changes made.

The Celonis Process Intelligence Platform takes this type of modernization even further. In combining process mining, AI and business context unique to your organization, we deliver real-time insights on both your IT systems and wider business processes. The Celonis Platform creates a digital process twin, pulling back the curtain on how things actually work (or fail to work) within your organization.

With end-to-end visibility of processes across systems, departments, and applications, you can see where they intersect, and plan your optimization or digital transformation efforts to deliver maximum value, in a short period of time, with minimal disruption.