The real state of COBOL modernization: What CIOs need to know before starting a migration

Touching COBOL-based mainframe applications feels risky for any CIO. Your revenue, core business services, and reputation hinge on these solutions. But the inability to maintain or enhance COBOL applications can stifle innovation, delay new product or service launches, and undermine competitive advantage. 

However, a complete overhaul of the COBOL systems is rarely feasible. Two out of three organizations choose to modernize their COBOL software instead of selecting the radical path of “rip and replace”, which is more costly and more resource-intensive. This way, they can achieve the stability of core processes while gradually updating their legacy and start benefiting from modern technologies. And the decision to modernize mainframe applications is increasingly paying off, with ROI ranging from 288% to 362%.  

What many CIOs lack is not the willingness to modernize but a structured, evidence-based roadmap. Understanding where to start and which approaches deliver the most impact makes all the difference.

This article provides a clear-eyed assessment of the real state of COBOL modernization, offering a strategic blueprint for CIOs. We will move beyond generic advice to explore:

• the deep complexities of legacy environments
• the most efficient COBOL modernization approaches 
• the risk assessment checklist
• real-life case studies to distill the recipe for success with incremental COBOL modernization

COBOL modernization challenges: What makes legacy systems difficult to migrate

COBOL modernization carries significant risk because these systems underpin the most stable and sensitive business processes. Their central role means that a single misstep, whether in code, data migration, or integration, can cascade into service failures, customer dissatisfaction, or financial loss.

Before starting a modernization initiative, CIOs should understand the full spectrum of challenges beneath the surface.

The tightly coupled COBOL mainframe ecosystem

A typical legacy environment involves more than just COBOL programs. COBOL-based systems run on highly specialized platforms like the IBM Z mainframe. It includes transaction managers, such as the customer information control system (CICS), which handle thousands of user requests per second, and data storage systems, such as virtual storage access method (VSAM), which are non-relational and fundamentally different from modern SQL databases. 

Orchestration is managed by Job Control Language (JCL), a scripting language that defines batch processing sequences and resource allocation. Many organizations also have critical modules written in other legacy languages, such as the programming language one (PL/1). 

A significant technical hurdle is the data itself, often encoded in extended binary-coded decimal interchange code (EBCDIC), which must be carefully transformed into the American Standard Code for Information Interchange (ASCII) standard used by most modern systems. 

Before COBOL migration, CIOs should realize that modernizing a single COBOL application means untangling this web of dependencies, a task far more complex than a simple code translation.

Why COBOL and mainframe systems require a hybrid modernization model

Many organizations are realizing that a wholesale migration of all mainframe workloads to the cloud is neither feasible nor desirable. The reality for the foreseeable future is a hybrid system.

A mainframe–cloud hybrid setup allows an organization to use the best of both worlds: the unmatched security and transactional processing power of the mainframe for core systems of record, and the agility and scalability of the cloud for new, customer-facing applications. In this model, legacy COBOL applications are often exposed via APIs, allowing them to communicate with cloud-native services. 

This pragmatic approach acknowledges the immense value and stability of the mainframe environment while enabling gradual, lower-risk IT modernization. CIOs must shift their mindset from “mainframe replacement” to “mainframe integration,” planning for a hybrid future where legacy and modern systems coexist and collaborate.

Business alignment in COBOL modernization: Stakeholder engagement and executive buy-in

Gaining enterprise-wide support from the outset is non-negotiable. The CIOs have to champion the project at the executive level, clearly articulating the business case beyond technical debt reduction. This involves framing the modernization in terms of business outcomes: increased business agility, faster time-to-market for new products, and improved customer experience. 

A steering committee comprising both IT and business leaders should be established to ensure continuous alignment and transparent communication throughout the project’s lifecycle.

Managing mainframe talent during COBOL modernization

92% of COBOL developers will retire by 2027. That’s why implementing strategic talent management strategies is crucial. For instance, reskilling involves training Java or Python developers on modern mainframe environments and tools, enabling them to work on COBOL modernization projects. 

Upskilling focuses on empowering veteran mainframe developers with new skills in DevOps, cloud architecture, and modern languages, allowing them to bridge the gap between old and new. 

For highly specialized tasks such as business logic extraction or complex refactoring, partnering with external experts can bring critical expertise and accelerate the IT modernization timeline.

How to prepare for COBOL modernization and migration

The pre-migration discovery phase is just as critical as the migration itself because it reveals whether the organization has the right people, skills, and internal processes to support modernization.

Perform a legacy infrastructure audit

At this initial stage, you need to thoroughly assess your current legacy stack, which means defining not only which applications contain COBOL code but also the operating systems, databases, and integration systems on which these applications depend. 

The audit should produce the following deliverables:

• Application inventory. Create a complete catalog of the COBOL estate, including all programs, modules, copybooks, CICS screens, batch jobs, JCL scripts, utilities, and supporting components. 
• Dependency mapping. Document every interaction your COBOL applications have, both internally and externally. Identify which modules call or trigger others, which downstream systems consume COBOL-produced files or messages, and which upstream systems supply data, transactions, or events.
• Infrastructure overview. Capture the whole technical environment supporting the COBOL applications: mainframe hardware configuration, storage consumption, job schedulers, security mechanisms (RACF/Top Secret/ACF2), middleware (CICS, IMS, MQ), and license dependencies tied to specific runtimes or tools. 
• Performance patterns. Analyze operational behavior, including peak processing windows, nightly batch durations, throughput requirements, latency constraints, and seasonal spikes.
• Operational hotspots. Highlight areas of the system that produce recurring incidents, break during month- or year-end cycles, or show signs of technical debt such as slow response times or memory leaks.

A detailed legacy infrastructure audit helps businesses see the whole picture and identify blind spots. For instance, organizations may discover hidden COBOL modules powering critical workflows they assumed were retired, such as an old billing adjustment routine still triggered once a month by a downstream system or a claims calculation module quietly feeding values into a modern CRM.

Create thorough documentation

The next step in legacy modernization is to extract the business logic from the COBOL code of the legacy system you’ve selected for improvement. This involves using specialized deep static code analysis tools, AI-assisted solutions, and domain experts to scan the code, identify core business rules, and document them in a clear, modern format. 

By documenting this logic, an organization de-risks the migration and creates a clear blueprint for developers to build the new system, ensuring that no essential functions are lost during code translation.

Assess and prioritize risks

Classify COBOL-based systems into migrate-first, migrate-later, and preserve-as-is categories. As a result, you’ll get a phased modernization roadmap that aligns risk levels with business priorities and internal team capacity.

Below is a thorough risk assessment framework to help you define your approach to COBOL modernization by risk area.

Risk assessment checklist

Once documentation, audit insights, and risk evaluation are complete, the organization is equipped to select a modernization approach that reflects both operational realities and strategic objectives.

Key approaches to the incremental COBOL modernization

Below are proven COBOL modernization techniques that our engineers have successfully validated on dozens of migration projects. There is no one-size-fits-all approach to modernizing large business-critical applications, and each organization should develop a unique modernization roadmap that aligns with the current IT capacity, budget, and timelines.

API wrapping (non-invasive modernization)

Instead of fully or partially rewriting COBOL applications, you can integrate them with third-party or cloud-based services via custom-built APIs. With API management services like IBM z/OS Connect, an engineering team can build end-to-end APIs that integrate with your internal infrastructure, enabling modernization and improved system performance, without compromising security.

It’s also possible to add a middleware layer to the system architecture to ensure more control between legacy and modern technologies and enable secure data exchange between them.

Here’s an example of how a COBOL application can integrate with external services via APIs. A design-time tool reads the API’s Swagger specification and automatically generates the COBOL interface, so the mainframe program “understands” the API. At runtime, a lightweight engine converts COBOL requests into REST calls and translates responses back into COBOL structures.

In practice, this lets your COBOL applications integrate quickly and safely with cloud services, modern platforms, and external partners, without a disruptive code overhaul.

When to choose this approach

If your application’s performance is sufficient for current business operations, but you need it to quickly exchange data with external services, such as mobile applications or modern cloud-based SaaS solutions. This way, you can increase application flexibility and make it a part of your digital transformation strategy.

Replatforming (move COBOL workloads to cloud/hybrid environments)

Under this approach, businesses migrate their COBOL-based systems to cloud, multi-cloud, or hybrid environments. This way, they reduce hardware and software maintenance costs and achieve improved system performance and flexibility.

To effectively replatform the COBOL system, you need to start the migration process with less critical business modules to test the waters and improve in future iterations. Plus, replatforming often requires data modernization, such as updating data storage from VSAM files to modern SQL databases.

Cloud migration tools, such as AI-powered AWS Transform, can help orchestrate and partially automate the entire replatforming process. This AWS service is a recent upgrade from their previous AWS Mainframe Modernization Service and is extremely powerful.

When to choose this approach

With replatforming, you preserve business logic while modernizing the execution environment. It’s most valuable when COBOL applications still function correctly, but the underlying infrastructure is costly, rigid, or limited in its ability to integrate with other systems or third-party services.

For many organizations, replatforming can become the foundation for deeper modernization (refactoring, API enablement), once workloads are already running in a flexible, cloud-ready environment.

Refactoring/rewriting (code-level modernization)

When systems require more than infrastructure updates, refactoring and rewriting come into play. Refactoring converts COBOL code into modern languages like Java or C#, using automated tooling, preserving business logic while making the code more maintainable and cloud-ready. Rewriting goes further by rebuilding selected application modules from scratch, ideal for components where business rules have evolved or become too convoluted.

AI-augmented COBOL code rewriting

By 2028, organizations expect to achieve $12.7 billion in cost savings and $19.5 billion in increased revenue by using AI in their mainframe environments. 

AI produces cleaner, more accurate, and more future-ready code at a fraction of the time, making it ideal for large COBOL codebases, projects with strict timelines, and teams with limited SME availability.

Recent research, where 8,400 COBOL files were modernized into Java, shows that:

• Manual rewriting took six months and reached 75% accuracy
• Rule-based tools completed the job in one hour with 82% accuracy. 
• AI delivered the strongest results: 93% accuracy in just 12 hours, 

AI also achieved the largest improvements in maintainability, cutting code complexity by 35% and coupling by 33%, compared to 15–22% for manual and rule-based methods.

When to choose this approach

Refactoring accelerates delivery, reduces technical debt, and improves maintainability. Rewriting provides a clean architectural slate and enables new business capabilities. The decision between the two usually comes down to whether the existing logic is still accurate or needs a fundamental redesign.

4 real-life case studies of COBOL modernization

Real-world modernization programs show that COBOL migration is rarely a simple code rewrite. The successful projects below demonstrate that meaningful outcomes come from combining code modernization with data redesign, domain understanding, architectural changes, and phased delivery.

#1. A Finnish pension provider migrating 22 million lines of COBOL to Google Cloud

Business challenge

Arek, a major provider of pension calculation services in Finland, set an ambitious goal to migrate 22 million lines of COBOL code to Google Cloud’s application management platform, Anthos, by 2028. 

The company struggled to manage an overblown, monolithic architecture that included over 7,000 COBOL-written modules. The system’s performance began to slow significantly, resulting in delays in customer service. That’s why the Arek team considered replatforming this massive application into the cloud.

Solution

To achieve this, they opted for a phased, parallel modernization approach so that the pension calculation system could continue to operate during the transition period. To ensure effective migration, the company decided to refactor the code from COBOL to Java. They managed this with automated tools, continuous testing, and code reviews. 

Results

As a result of these initial modernization stages, Arek increased the system’s capacity for simultaneous traffic, enabling it to process up to 100,000 calculation calls per day, compared to 20,000–30,000 under the previously considered normal load. After moving the heaviest system modules into the cloud, the company also achieved a staggering 50% reduction in mainframe management expenses.

For businesses only planning COBOL modernization, the company’s Technology Manager, Aleksi Anttila, recommends devoting enough time to the preparation stage:

First, you need to think about what can and should be moved to the cloud with this type of transition architecture solution. It is essential to recognize that the system is large and critical enough to achieve the necessary savings. It is also important to understand the system’s dependencies. The more dependencies there are, the more difficult the transfer will be.

#2. Verisk translates obsolete COBOL code to Java and C#

Business challenge

A leading data analytics company for the insurance industry, Verisk, modernized their IBM Z mainframe application by translating COBOL code to Java and C#. They needed a scalable, modern alternative to their legacy software to improve the customer experience and increase data processing speed.

Solution

40% of application modules were translated to C#, and the remaining 60% to Java. On the database layer, the company modernized the DB2 database to PostgreSQL (for Java components to enable flexibility) and Microsoft SQL Server (for C# components to optimize performance).

After modernizing the code and data layers, the company deployed the application on Apache Tomcat servers and hosted it on AWS. 

Results

This dual-phased approach to code refactoring and data storage modernization helped the Verisk team ensure an efficient end-to-end application modernization that went beyond the code level. 

The primary outcome is that the organization not only escaped IBM Z-Series lock-in but gained a cloud-native system with higher performance, enhanced scalability, and significantly improved system maintainability.

#3. Meliá Hotels International migrates COBOL-based reservation system to AWS

Business challenge

Meliá’s central reservation system (CRS) was running on COBOL. The hotel chain manages over 380 hotels on four continents. To cover such a large area of potential customers, they needed a more scalable, modern solution to improve customer service and provide quick, frictionless room reservations. Maintenance of their COBOL-based application resulted in 4 hours of downtime, disrupting business operations.

Solution

Using a wide range of AWS services, such as the AWS Migration Acceleration Program and the AWS Database Migration Service, Meliá managed to migrate the system in two years instead of the four years they initially planned. Their CRS contained over 7TB of data and required a phased migration process. They split their monolithic application into smaller parts to work on them separately and ensure decoupling, so that the disruption of one service wouldn’t affect the entire system.

Results

As a result, the company achieved a 60% reduction in computing costs and significantly improved customer experience and business competitiveness, as their system’s response time decreased from 234 to 160 milliseconds. Plus, the CRS can now handle over 50 million hotel availability requests, compared with 26 million for the mainframe application.

#4. FMCG brand modernizes 16 COBOL apps into the cloud with the help of AI

Business challenge

A large FMCG company has successfully migrated 16 COBOL-based legacy applications into the cloud. Their legacy stack was more than 20 years old and contained 5TB of data. Maintaining a legacy solution was costly and inefficient, which affected their competitive edge.

Solution

To ensure an efficient migration process, the company has spent six months on planning and preparation, and another six months on the actual migration. The extended planning period was necessary to accurately document the business logic embedded in the applications. The company achieved this by:

• conducting interviews with subject matter experts (SMEs)
• involving AI assistants, such as Amazon Q and Claude, to analyze every COBOL, PL/I, and JCL file to create a unified asset inventory

As part of the migration phase, they developed an event-driven microservices architecture on Java, Python, and Node.js with the help of AI-powered GitHub Copilot. An engineering team of more than 20 professionals worked on each microservice in parallel to not disrupt business operations.

Results

As a result of the year-long project, the company fully migrated the legacy application set to the cloud architecture. They achieved 35% in cost savings by eliminating mainframe licensing fees and reducing operational expenses, and ensured a 50% increase in the development speed, primarily thanks to AI tools. 

These examples prove the core statement of this article that COBOL modernization is rarely about quick code rewriting. Instead, it often involves changing data management practices and updating business operations. These are significant investments, but the outcome is worth it. Almost every company on our list has reported improvements in customer service and an increase in the competitive edge.

One successful modernization project can spur the whole chain of business improvements, making digital transformation a vibrant reality rather than an abstract vision in the dusty Excel spreadsheets.

Final takeaway

The most critical takeaway for CIOs considering COBOL modernization is the importance of strategic planning and setting realistic expectations. A successful modernization project begins with a deep assessment of legacy systems, clear documentation of invaluable business logic, and enterprise-wide stakeholder buy-in.

It’s crucial to understand that there are no silver bullets. Every modernization approach, from refactoring to API wrapping, comes with its own set of risks and rewards. Success hinges on choosing the approach that best aligns with specific business goals, risk appetite, and resource availability.

Our engineers understand that modernization is a long-term transformation that must respect the business processes your COBOL systems support today. We help enterprises evaluate modernization options objectively, build phased roadmaps, and execute migrations with the level of precision these mission-critical systems demand.