As technology has evolved over the last few decades, many businesses have continued to build their IT infrastructure one layer of mission critical software and hardware at a time. But despite this technology’s importance to daily operations it inevitably becomes outdated, resulting in what’s come to be known as “legacy systems.” Gartner defines legacy systems as, “an information system that may be based on outdated technologies, but is critical to day-to-day operations.”
Since these systems are not routinely updated, an organization might be relying on technology that’s several years out of date and while crucial to maintaining daily operations, isn’t helping drive digital transformation or create true business value. This results in a common, self-imposed limitation that can have long-lasting ramifications for companies that need to innovate to stay competitive in the digital economy, but can’t because they’re being held back by their technology. As Gartner goes on to say in their definition, “Replacing legacy applications and systems with systems based on new and different technologies is one of the information systems (IS) professional’s most significant challenges.”
Legacy systems are increasingly acting as obstacles to digital business and the application modernization on which it depends. Here are just five of the ways outdated legacy systems could be costing your business:
- Institutional Knowledge Erosion – Having been built over years, decades, or longer, legacy systems often depend on a great deal of institutional knowledge and skills. Old managers or programmers may retire, costing the company knowledge that it must pass on to another employee, a process that can be difficult to maintain over time because of labor costs or time spent training.
In addition, many workers may simply not be equipped to operate the legacy system’s components. As Business Law Today points out, “COBOL, a programming language used in many legacy mainframe systems including that of the banking industry, is used only to maintain existing applications and is not commonly taught anymore.” Beyond their lack of familiarity, young hires may be discouraged from working with legacy systems and take their skills elsewhere, costing your business valuable future-focused skills and knowledge. By modernizing IT infrastructure you’ll be better positioned to attract talent that’s more interested in working with modern systems and technology.
- Data Security Vulnerabilities – The more complex and inscrutable a system is, the more difficult it is to keep track of and protect its components. By being assembled over years from various IT infrastructure hardware and software, patchwork systems may naturally have numerous hidden vulnerabilities that are easily exploited by attackers. From the 2015 American Office of Personnel Management hack to the 2013 Royal Bank of Scotland hack , recent years have seen multiple high profile data breaches that were ultimately blamed on outdated system security failures.
On top of this, older systems may cause companies to fall out of compliance with newer data protection regulations and modern businesses cannot afford breaches. System recovery and redundancy are additional risks; if something goes wrong within the confines of a legacy system it’s unlikely anyone without institutional knowledge will be able to recover what’s lost.
- Innovation Hindrances – Because legacy systems are core to the business but made fragile by age, they can become an overwhelming competitive disadvantage. Your business may spend so much time trying to force new technologies to conform to a legacy system that time and resources are not spent innovating your product or customer experience.
Organizations more willing to jettison the systems of the past will succeed where others fail because they embrace the opportunity to try something new and potentially beneficial. Older systems’ incompatibility with new technology means it’s more difficult to integrate new applications, services, or components.
- Business Obstacles – Productivity can be lost while knowledgeable workers who could be generating value are tasked with ensuring a legacy system is up and running. Because legacy systems are likely not to be optimized to accommodate modern customer expectations of speed and functionality, they may also fail to deliver true value.
For example, if a customer expects your business to provide a mobile application or to access your website in seconds, but your legacy system is not up to the task, they may very well take their business elsewhere. The legacy system may be performing the core functions for which it was designed, but it may not be meeting the needs of your customers and business.
- Support & Upkeep Costs – The cumulative effects of the risks mentioned above can result in constant maintenance and upkeep costs that are out-pacing the benefits and value of the legacy system. Legacy systems’ software and hardware tend to be at increased risk of failure and as a result maintenance is made a priority at the cost of funds that could be put toward more valuable initiatives. For example, the U.S. Federal Government was forced in 2018 to spend nearly 80% of its IT budget on maintenance of outdated legacy systems.
In addition, once an organization has lost the institutional knowledge or IT components it needs to maintain the system, specialists and vendors need to be recruited to fill the gap. If a critical device or piece of software is no longer manufactured or supported, fixing or replacing it is costly.
Even years after its introduction, the concept of “digital transformation” garners a lot of headlines, but the unspoken foundation for that process is IT infrastructure modernization. The hard truth of the modern economy is that for a business to thrive it must embrace new technology. Keeping legacy systems in place may benefit the company in the short term by providing continuity and familiarity, but there are high costs of time and money in focusing resources on systems that won’t benefit the organization in the long term.
Can your legacy system deliver the customer experiences you need to differentiate from competitors? Is the system equipped to collect and analyze the data you need to make better decisions and deliver more value? Is your technology attractive to the prospective new employees who will propel your business into the future?
An IT modernization project can have a profound impact on a wide array of departments and business functions across the whole of your company. We recommend you recruit team members to assist in understanding and explaining the potential financial impact and importance of this investment, as a transition away from legacy systems can be a difficult adjustment. But with the right plan and partners, IT infrastructure modernization can pay long-term dividends by upgrading to the newest technologies and preparing for the integration of those that are yet to be seen.
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