If you are a regular reader of our blog, you may have noticed our recent focus on Legacy Systems and their ubiquitous need for updates. These core systems are running mission-critical workloads but struggle to adapt to evolving business demands, scalability requirements, and cloud-native ecosystems. This is a global problem, eating up 80% of IT budgets annually and contributing to developer burnout and innovation drag.

But there is good news! Containerization and orchestration have emerged as a powerful strategy to bridge the gap between traditional infrastructure and modern software deployment, offering a path towards cost-effective, scalable, and maintainable modernization.

What Is Containerization?

Containerization is the process of packaging an application along with its dependencies, configurations, and runtime environment into a single, lightweight executable unit, a container. These portable containers can run consistently across development, testing, and production environments. Making them a convenient method to kick start legacy modernization.

Popular container technologies:

• Docker – The most widely adopted, open-source container platform for developers and DevOps teams.
• Podman – A Linux based daemon-less container engine often used in security-conscious environments.
• LXC/LXD – Unique Linux implementation of containers that are lightweight virtualization solutions for system-level containerization.

Key Characteristics:

• Isolation: Each container runs independently, preventing dependency conflicts.
• Portability: Containers run the same way on laptops, on-prem servers, or cloud clusters.
• Efficiency: Containers share the host OS kernel, making them lighter than full VMs.
• Scalability: Easy to spin up additional instances to meet demand.

What Is Orchestration?

While containerization solves the “packaging” problem, large-scale deployments require automated management. Container orchestration is the process of automating the deployment, scaling, networking, and lifecycle management of containers.

Popular orchestration platforms:

• Kubernetes – Also known as K8s, the opensource, de facto industry standard for orchestrating containerized workloads.
• OpenShift – RedHat’s enterprise Kubernetes distribution option with additional security and developer tooling.
• Docker Swarm – A simpler orchestration option for Docker environments.

Core Orchestration Functions:

1. Automated Deployment & Rollbacks – Ensuring consistent rollouts and quick reversions if needed.
2. Scaling & Load Balancing – Dynamic addition or removal of container instances.
3. Self-Healing – Restarts failed containers and replaces unhealthy nodes.
4. Service Discovery & Networking – Connects services without manual IP management.
5. Resource Optimization – CPU, memory, and storage allocated efficiently.

How They Work Together

• Containers handle the application packaging and consistency.
• Orchestration ensures those containers run reliably at scale, across multiple nodes.

Example of the symbiotic relationship in action:

A legacy inventory system is refactored into containerized microservices.

• Kubernetes manages deployment, scaling, and monitoring of these services in production.
• Developers push updates to a container registry, and orchestration automates their rollout.
• New development is integrated into the Kubernetes cluster or can be run independently while relying on the legacy services.

Role in Legacy System Modernization

In many businesses legacy systems are monolithic (a single codebase with all features tightly coupled) which makes scaling, updating, and integrating innovative technologies challenging if not impossible.

By containerizing parts of the system, organizations can:

• Run modern components alongside legacy ones in a hybrid environment, creating a path to modernize.
• Move workloads incrementally to the cloud without a full rewrite, ensuring budget optimization.
• Standardize environments for faster development cycles ensuring teams remain agile.

Potential Modernization Pathways:

1. Assessment – Identify services in the legacy system that can be isolated, such as Master Data Management or Address Normalization systems.
2. Containerization – Wrap these services in containers with minimal code changes.
3. Orchestration – Use Kubernetes to manage deployments and integrate with existing infrastructure.
4. Gradual Migration – Over time, refactor more services into containerized components, to align with corresponding digitization goals.

This approach aligns well with patterns like the Strangler Fig strategy; gradually replacing legacy parts without disrupting business operations.

Budget Considerations

Cost Savings Potential

• Infrastructure Efficiency: Containers require fewer resources than VMs, reducing hardware and cloud costs.
• Operational Efficiency: Orchestration automates scaling and recovery, lowering downtime and manual intervention costs.
• Faster Deployment Cycles: Reduces developer idle time and accelerates feature delivery, freeing up resources to work on modernization efforts.

Upfront Investment

• Recruiting & Training Costs: Teams need skills in Docker, Kubernetes, and DevOps workflows. If these skills are absent on your existing team hiring additional developers may be required.
• Tooling & Licensing: While core platforms like Docker and Kubernetes are open-source, enterprise features, monitoring tools, and security add-ons may carry licensing fees.
• Migration Costs: Refactoring and testing legacy applications can be resource-intensive and usually involve senior resources which can divert their focus from other projects, potentially impacting other timelines.

Rule of Thumb: The ROI typically appears within 12–24 months for mid-to-large enterprises thanks to improved agility, reduced downtime, and infrastructure savings. Companies can realize 31% operational cost reduction, and 45% lower infrastructure costs in digital transformation contexts.

Risks

Containerization and orchestration may seem like a magic wand for legacy modernization challenges but there are risks that should be considered:

• Complexity: Orchestration platforms like Kubernetes have steep learning curves which could lead to system instability without through review and oversite.
• Security Concerns: Containers share a host OS; poor configuration can lead to vulnerabilities and potential compliance issues.
• Operational Overhead: Mismanaged orchestration can lead to overprovisioning and utilization leading to cost spikes.
• Partial Modernization Gaps: Running hybrid systems can complicate networking and data synchronization.
• Tech Debt: every business has technical debt, but not tackling it strategically can limit innovation and throttle innovation.

Are Third-Party Vendors a Financial Win?

Implementing containerization and orchestration for legacy modernization can be challenging for teams without deep DevOps and cloud-native experience. The budgetary strain associated with recruiting these highly sought after senior players is enough to consider a third party.

Advantages of Third-Party Implementation

• Expertise: Access to specialists in both modernization and container orchestration.
• Accelerated Timelines: These teams can scale quickly and can often get started in days not weeks meaning you avoid the steep learning curve to train internal teams.
• Best Practices: Vendors bring proven migration playbooks and security hardening approaches.
• Cost Predictability: Fixed-scope engagements or staff augmentation pricing models reduce financial uncertainty and offer the opportunity to work within budget thresholds.
• Vendor Tooling Access: Some vendors provide proprietary monitoring, CI/CD, or migration tools.

Potential Scenarios Suited for Outsourcing:

• Containerization blueprints for legacy workloads.
• Kubernetes cluster setup with CI/CD pipelines.
• Security configuration and policy enforcement.
• Knowledge transfer sessions for internal teams including documentation.
• Software Audit and development of modernization strategies.

STEP Client Example

A Fintech firm with a significant risk management code base, needed to move from legacy tools to a new software stack. To improve agility without replacing the system outright the STEP Legacy Software Division did the following:

1. Containerized core services such as address normalization and regional data access.
2. Used Kubernetes to deploy these services in a hybrid on-prem/cloud model.
3. Built automation pipelines.
4. Used the Strangler Fig pattern to implement new services and leverage the legacy code.

Project Results:

• Achieved TTS in 4 weeks.
• Reduced deployment time from 2 weeks to under 2 hours.
• Cut infrastructure costs by 30%.
• Enabled gradual migration of core logic without service interruptions.

Final Thoughts

Containerization and orchestration are not just tools—they are enablers of incremental, low-risk modernization for legacy systems.

When used strategically, they:

• Reduce infrastructure costs.
• Improve system scalability and reliability.
• Allow modernization without wholesale rewrites.

However, the technical complexity and migration risks mean many organizations benefit from partnering with experienced third-party vendors to guide the process. The right implementation can turn aging legacy systems into agile, cloud-ready assets—preserving past investments while unlocking future potential and optimizing IT budgets.