There’s nothing quite like the nostalgia of using old, clunky legacy software. Its glitches and slowness may drive you up the wall at times, but like the first beat-up car your dad gave you, there’s something endearing about it. Maybe you want to hold onto it a little longer.
It’s one thing to be sentimental, but what if your legacy system is costing you? What if it’s ruining productivity, failing to do its job, and causing more problems than it’s solving?
This isn’t just pessimistic speculation.
One study by Gartner Research shows that over 80 percent of an organization’s IT budget is used to maintain their legacy systems.
For whatever reason — and there are a lot of potential reasons — many large organizations continue to use old or obsolete software.
How big of a problem is this?
Well, consider the biggest industries on the planet — insurance, manufacturing, and banking.
These massive global forces are notorious for clinging to aging, proprietary, and piecemeal software, cobbled together over decades of IT mismanagement.
McKinsey & Company, an influential management consultant firm, reports “aging proprietary IT systems” in banking and insurance are costing time and money.
Some insurance companies can’t make up their minds about what to do with their legacy systems. Such systems are vast and complex, and used by thousands of employees. All of these employees face serious shortcomings in their work and performance due to the dated software.
A study conducted by the Economist Intelligence Unit for BT Global Services shows that:
- 37% of insurance companies plan to upgrade their existing legacy systems
- 42% plan on adopting entirely new software
Banking systems, too, are aging and decrepit. Computer Weekly opined, “Big banks’ legacy IT systems could kill them.” McKinsey, again, draws back the curtain on how bad it really is for these banks: “Core banking systems dating from the 1970s are compromising bank performance.”
Banking was an early adopter of computing technology, and the 1970s produced those weird-looking letters (still at the bottom of checks) and SWIFT codes for wire transfers.
To be fair, computers did get smaller and faster during the 1970s.
But we’re not sure that the Commodore PET is cutting edge anymore.
The point we’re trying to make is this: Legacy software used by the banking system is being dragged down by a colossal technological carcass that has been rotting for more than forty years.
Sorry, but the whole situation is pretty much a mess.
Fintech, free of the shackles of legacy software, is skyrocketing as a global force. It’s hard to argue against the fact that advanced software is fueling fintech’s rise.
Clearly, organizations are not stupid, and many of them are certainly aware of the drawbacks of clinging on to legacy systems.
But legacy IT infrastructure also creates a Catch-22.
Organizations know modern software offers benefits, but they also know there are risks in migrating to newer systems:
- Newer systems cost money.
- Newer systems upset the IT infrastructure.
- Newer systems create workflow disruptions.
- Newer systems require a steep learning curve.
Aberdeen’s research on “why wouldn’t you upgrade” produces a spate of understandable concerns:
This 2012 survey on upgrading ERP systems found that 46 percent of ERP decision-makers stick with their old software because they’re afraid an upgrade will disrupt the business.
And there are several other reasons why agencies would rather play it safe, even with the clear benefits of modernizing their software systems.
Regardless of your industry — finance, manufacturing, marketing, insurance, or anything, really — you may have faced the question before:
Should I upgrade my legacy software or keep on using it?
It’s an important question. Depending on the size and scale of your business, it could be a million-dollar question, literally.
It’s worth asking. And it’s worth answering.
We’re custom software developers. Clearly, we have a vested interest in nudging you toward upgrading your legacy systems.
But we also know that there are exceptions. You might just want to hang onto your legacy software.
Let’s consider why.
1. If it Ain’t Broke, Why Fix It?
Sure, your legacy system is stuck in time, but when you think about, is there anything fundamentally wrong about this?
Here are 3 questions you should ask yourself when mulling an upgrade:
- Is your legacy system serving your business?
- Do your people have the skills to use the system?
- Are your customers/users able to work with the system?
If you answered ‘yes’ to all 3 questions, upgrading your system probably should not be a top priority — at least not yet.
Terms like “cloud compatible” and “mobile friendly” sound exciting and all, but for decision-makers, they’re hardly as important as making sure the enterprise stays running and turns a profit, even with obvious flaws in the IT infrastructure.
2. Your Legacy Systems Plays a Role In Your Success
The fact that you got to where you are now, aging legacy system and all, probably means you’re doing something right, or that your old software is actually giving you a competitive advantage.
At many companies, IT executives believe shelving legacy systems will only hurt their business.
That’s a valid concern.
If your company’s custom software is more than a few years old, but was built specifically for the needs of your organization and industry, switching to a generic packaged system could actually cause more problems than it solves.
If there’s a clear need to upgrade but there aren’t any viable pre-built systems available, you’ll need to look for custom software development services to obtain the best possible results.
3. Replacing Existing Software is a Logistically Painful Process
For large organizations, upgrading from large-scale legacy software can be a huge logistical nightmare, disrupting productivity and hurting your bottom line.
Upgrades put organizations in a difficult situation. They require the attention of senior management and significant training time for employees. And those costs come before you actually write the check for a new system.
On one hand, a legacy system may be old and slow, but on the other hand, moving to a system that’s ‘faster and better’ might not be worth the pain that comes with the upgrade.
While it’s important to stay current, it’s also imperative that you’re able to recognize when an upgrade crosses the point of diminishing returns.
4. Upgrading Legacy Software is Slow
There’s no denying that the larger the organization, the more time it usually takes to implement a new system.
If Wells Fargo, for example, were to upgrade its entire core banking system, it could take a little while.
Even after it’s launched, a new system needs to be monitored constantly, and support staff will need to be trained in order to use the system effectively.
And for really large enterprises, every hour that a new and unfamiliar system disrupts operations can translate to tens of thousands in lost revenue.
5. Upgrading Legacy Software is Expensive
Cost will always be a critical factor in software upgrades, particularly large-scale upgrades involving ERP systems.
Besides the actual cost of new software (which isn’t cheap, especially for custom solutions), you also need to consider the cost of the following:
- Disrupting operations to implement the new system
- Training support staff to use the system, and identify and troubleshoot bugs
- Problems in implementation, which may lead to longer downtime and lost revenue
- Buying new hardware to run the new infrastructure, which can be more expensive depending on what industry you’re in
6. Your Organization Hates Change, and So Do Your Customers
For many organizations, change represents risk.
For many people, change is unpleasant.
When you try to replace legacy software, you can expect to meet some resistance. And why wouldn’t it, when it asks a lot from the people working in the organization?
Change, even good change, produces issues. What kind of issues?
- Need for additional support (i.e. testing, identifying and fixing glitches)
- It changes job descriptions and can potentially make some jobs redundant
- Glitches may cause downtime and additional resources to resolve
It’s no surprise then that a software upgrade can be an unsavory undertaking for some team members.
7. Too Many ‘What Ifs’
This is the uncertainty factor.
Most business people we’re familiar with are not big fans of uncertainty.
- What if the new software doesn’t work?
- What if the customers don’t like the upgrade?
- What if members of the organization demand for the old software back?
In short, the number of risks involved in a software upgrade may be more disconcerting than the system’s known problems.
Of course, there are a number of ways to mitigate this problem.
For starters, new software can be beta tested extensively before launch. Likewise, any software upgrade should undergo proper consultation with the groups affected by the change.
8. Waiting a Little Longer Might Pay Off in the End
Have you ever tried buying a new phone or laptop, only to regret your decision because a newer model came out just a few weeks later?
Some organizations feel that if they hold out just a little longer, they can upgrade to a better, more modern system, thereby letting them get the most out of their money.
Of course, this raises another question: how long should you wait?
9. Your Legacy System Needs to be Constantly Available
Some organizations have mission-critical legacy systems that require near-constant uptime, which is perhaps the biggest reason they continue to be in use.
The importance of these systems means it’s next to impossible to take them out without incurring significant losses or severe customer dissatisfaction.
This is usually the case with systems used by banks to handle customer accounts, reservation systems, energy distribution systems, military defense systems, and systems for air traffic control, among others.
But as many banks are learning, their core legacy systems are ill-equipped for the digital age, incapable of adapting to the trend of everyday services moving online.
With services seemingly stuck in time, a new industry called fintech, which combines tech and financial services, has emerged to answer customer needs.
If banks are to keep up with the services offered by fintech companies, they need to be nimbler at meeting customer demands by using modern custom software for financial services.
10. Out of Sight, Out of Mind
Customer-facing software usually gets the lion’s share of upgrades because their user experience shapes their perceptions of your business.
With back-office systems, however, like core financial software, there’s usually less incentive to upgrade, even if these systems play a crucial role in running daily operations.
In other words, it’s usually a tough sell to upgrade less-visible systems. As I said earlier, if they work and don’t create problems, CIOs won’t feel compelled to upgrade them.
11. New Systems Could Pose a Security Problem (Or Do They?)
Security is a big deal, no question about that.
But how secure is secure? And are old systems more secure than new ones?
From the perspective of conservative business leaders, new systems — cloud-based and globally available— seem insecure.
A survey by B2B research firm Clutch, involving IT executives in medium and large enterprises, shows that only a slim majority (64 percent) of respondents see cloud infrastructure as more secure than legacy systems.
- 26% say the cloud is ‘much more’ secure
- 38% say it’s only ‘somewhat more’ secure
Some legacy systems, especially those running on analog infrastructure, can be made more secure than new systems relying on cloud and remote access.
Sometimes, the older a system, the more secure it is, because it’s not accessible virtually.
The U.S. Navy, for example, still uses analogy technology from the ‘80s and ‘90s, and part of the reason for that is due to security concerns.
Obviously, the fact that such important organizations still use old infrastructure is a cause for concern, but it also highlights why some agencies feel the same way about modernization.
12. You’re Not Keen on Moving to the Cloud
It’s no secret that the migration to cloud IT infrastructure is one of the biggest things killing legacy systems, with the market share for cloud systems predicted to grow well until 2020.
And because the acquisition costs for the cloud are so cheap, IT professionals are finding it increasingly harder to justify using legacy systems.
But what if you don’t like the cloud?
More importantly, how are you supposed to take your in-house legacy software and convert it into a complete cloud solution?
It’s not exactly a simple undertaking. For starters, you’re going to have to replace your legacy application, often custom-made and patched with in-house tweaks done over several years.
Is it even possible to find a direct replacement written with modern code?
13. There’s Probably a Workaround to a Legacy System’s Shortcomings
If you don’t have the resources or support to shift to a modern software there are ways to mitigate some of the disadvantages of legacy systems.
A Washington State report highlights a number of measures steps to reduce the risks of legacy systems, which include:
- Improving documentation, capturing system information from departing staff, and incrementally rewriting or improving system code when possible
- Provide agency code developers with tools and training to identify potentially high-risk systems and revise or develop new code
- Prevent current systems from becoming legacy by staying up-to-date on software versions
- Build sound business cases for modernization efforts, when modernization is appropriate, to improve the likelihood of receiving funding
- Use pace-layering to identify different types of systems and appropriate modernization strategies.
How Do You Know It’s Time for Your Legacy System to Finally Kick the Bucket?
By now, you already have a better appreciation of just how difficult is it to modernize a legacy system. The longer your organization has relied on an aging system, the more roadblocks to upgrading there will be.
But is there a tipping point? Are there any signs to watch out for that tell you, “Hey, it’s time for a change.”
We think there is. So, with all due respect to the preceding thirteen reasons to maintain the status quo, here’s some motivation for upsetting the apple cart.
Operating and Maintaining Your Legacy System is Becoming Too Expensive
Take a good look at your numbers. How much money are you spending on maintaining your legacy system?
Once you have a reliable estimate, compare this with the long-term cost of modernizing your system. If your current costs exceed the expenditures associated with new software, it’s probably time for an update.
Of course, it’s also important to understand that most system upgrades generally have higher initial costs, but try to think long-term.
Though it may be more expensive at the outset, you’ll find that the overall benefits lower expenses as you move forward. When your system functions with greater efficiency, higher revenue is possible and maintenance is much less extensive.
You’re Getting Complaints from Users
For many organizations, user complaints are the red flag signaling that it’s time to update a legacy system.
- What problems are your users having?
- Is your software unintuitive?
- Is it slow?
- Does it look dated?
Experience is what users care most about, and when you have a legacy system—or any software for that matter—with a poor UX and UI, productivity ultimately suffers. That’s one of the hidden costs of legacy software.
Your Business’s Needs are No Longer Aligned with the Legacy System
Organizations change. A system that worked several years ago may no longer be ideal for your business environment today.
Such changes, whether they’re related with organizational process, users, or workflow, mean your software isn’t doing its job as effectively as it once did.
It’s important to step back and evaluate whether your software is still an asset, or has turned into a liability.
If it’s the latter, then obviously an update is needed.
Your Software Isn’t Mobile
In today’s mobile world, mobility is important for any software user. Mobile access is critical for competitiveness, something a legacy system’s old design may prohibit.
Of course, mobility may not be high on your list of priorities. But if it is, consider looking for a more mobile solution, or at the very least, adding mobile features to your current system .
Transitioning from a legacy system can be challenging, not to mention expensive.
For conservative organizations, migrating to a new system is seen as being too disruptive, and so they settle for what works, until it no longer does.
But when that happens, it’s often a massive headache.
It’s unfortunate, given how a timely upgrade could’ve prevented this problem.
What I would suggest is to have a proactive attitude about your legacy software, but at the same time, taking extra care when finally deciding to upgrade.
Modern software is obviously faster, more efficient, and packed with more features. But the question is, what modern software package do you need exactly?
That’s what you’ll need to give serious consideration to. Chances are, you’ll need custom software development services for the job. In fact, most of the reasons mentioned in this list that prevent organizations from switching to new software, can actually be solved with custom software.
A custom approach is especially important, because your organization may be better off retooling certain parts of your legacy infrastructure instead of replacing it altogether. Worthwhile has seen this return significant benefits for clients like CUI and Athene Annuity.
It’s crucial to find a software development partner who can take the time to understand your organization, how it works with the legacy system, and what areas can benefit from new software.