Legacy System Modernization – Why Is It Essential for Modern Businesses?

Jerzy Zawadzki - Chief Technology Officer
7 minutes read

Last year, Intoware found that 74% of manufacturing and engineering companies still rely on legacy applications for their work. They might have been state of the art when first released, but now they have become slightly outdated – especially since they no longer get official updates.


They still get the work done, though, right? Well, not exactly.


Keeping obsolete systems around at times when speed, flexibility, and data security are everything for businesses simply doesn’t make sense. And to prove our point, we’ll show what you are risking by sticking with older applications, as well as what you could gain with modernization.

What Is a Legacy System, and Why Do Companies Often Insist on Keeping One?

A legacy system is any outdated technology that is still used at a given company for its day-to-day operations. While the solution still works, it can barely keep up with the business requirements and isn’t supported by the company or developers anymore. Unfortunately, that means you can’t count on getting new features, security updates, or help in case something goes wrong with the tool. This often directly affects your company’s performance and business growth.

As an example, let’s say your company uses a CRM that the creators no longer support. While the application worked well a few years back, now you notice that it doesn’t have the features or integrations that your growing business needs, forcing you to keep finding workarounds to make it useful. So instead of saving time with the CRM tool as before, you are actually spending far longer adjusting the program to your needs. You might also have to use a few other applications together with the CRM just to cover the missing features. That’s definitely neither efficient nor convenient.

So why are companies still using outdated systems that no longer meet requirements? Well, there are several possible reasons:

  • Decision makers or employees might be resistant to change.
  • Implementing a new platform, migrating the data, and training the staff to use it properly will take time.
  • System modernization, besides the costs of the main platform or hardware, can come with additional expenses, such as having to replace parts of their infrastructure to handle the new tool.
  • The company doesn’t have enough experienced employees to manage the migration themselves.
  • The obsolete system is used for handling core business operations at the company, which makes it very difficult to replace.

There’s one more excuse often given here: “If it ain’t broke, don’t fix it.” If the software or hardware still works the way it should and everyone is used to it, why should they replace it with a new program? Sure, managing the obsolete platform might take a bit more effort, but it still gets the job done.

Does the legacy solution help you meet your business goals and maintain a competitive advantage, though? If not, then it might be the time for a replacement – especially as the longer you use a legacy system, the more potential issues you might have to solve.

What Are You Risking by Not Modernizing Your Systems?

When looking at the main reasons why companies are hesitant to make the switch to newer platforms, you can see there are two main motivators.

Namely, hoping they can save their time and budget by staying with the obsolete software or hardware for longer. What happens instead, however, is that they just keep losing time, money, and opportunities for growth – and that’s barely the start of the problems with outdated systems.

What other issues are there?

Security risks

Despite the numerous benefits that digital transformation has brought for businesses, it has unfortunately also caused a massive growth in cyberattacks.

According to estimates from Cybersecurity Ventures, a new Ransomware attack hits a business approximately every 11 seconds. What’s more, the average data breach cost is now roughly $4.35M globally, while in the US, the cost is as high as $9.44M. Scary, isn’t it. What should be even more worrying is that obsolete platforms often make easy targets for cyberattacks, since they are much easier to breach.

As they were developed years ago, legacy tools typically have much weaker security standards. Moreover, because they are no longer supported by the manufacturers, they don’t receive regular bug fixes or security patches either.

This essentially makes them “open doors” for hackers to access business networks and data. In Seclore research, 87% of CIOs of their organizations said that they think legacy systems are more vulnerable to data breaches precisely because they don’t receive the latest security upgrades or support modern authentication methods.

Performance issues

If you asked your employees for the first word they would use to describe the legacy systems, there’s a good chance they would say “slow”.

Although the tools may have worked just fine years ago, they might now be struggling with managing large amounts of data, more complicated business processes, or simply increased workloads. As a result, they can work much slower than usual, freeze or hang up more often, or fail to complete a given task.

To put the performance issues into numbers, an apteryx-commissioned IDC report found that around 62 billion data and analytic work hours are lost annually worldwide because of inefficient analytical systems. And the wasted time directly leads to…

Lost business opportunities

Using an outdated legacy system also comes with the risk that you might be letting business opportunities slip away.

The first problem is that those programs often lack the necessary features and integrations required to keep pace with modern business goals, for example, advanced analytics. Without those, you might not be able to spot growth opportunities that are in front of you or notice issues that are turning away customers from your business.

But more importantly, you can’t also provide your customers with the level of customer service they expect from you when working on an outdated system. Today, customers expect to be able to find relevant content or reach out to the company anytime, anywhere, and in a way that is convenient for them.

Can a legacy program meet those expectations? Usually not, which leads to a poor user experience and equally low customer satisfaction. And for 76% of customers asked in ShipAid research, even one bad experience is enough to leave a brand, which is yet another argument for modernizing your current system.

Growing management and operational costs

When a company considers replacing its software or hardware with a new one, how high their modernization costs will be is actually one of the biggest worries. Implementing the new platform or hardware, updating their infrastructure, training employees, plus migrating data and business processes will all cost.

Wouldn’t staying with the existing stack be much cheaper?

This might be surprising to read, but using obsolete systems can actually be far more costly for an organization in the long run, especially when taking technical debt into account.

First, the maintenance and support costs for outdated hardware and software can be quite high. Since these tools are no longer supported by manufacturers, organizations often have to maintain and patch the systems themselves. For example, according to the Government Accountability Office, maintaining ten of the federal legacy systems costs around $337 million of taxpayer money every year.

And, as many developers can tell you, managing legacy code structures only gets more time-consuming and expensive with time.

Add to those other hidden costs such as:

  • Buying additional tools to make up for the missing features of legacy technologies or platforms
  • Lower staff productivity and higher operating costs
  • Downtime costs caused by critical issues (e.g., a corrupted database)
  • Missed business opportunities or unmet objectives
  • Growing costs of ownership
  • Eventual losses connected to security breaches and data loss (legal fees for compliance violations and reputational damage to the organization)

It often turns out that the migration costs can actually be lower outright than the price of working on legacy systems.

Integration and compatibility issues

The last issue we want to mention here is compatibility; the older your legacy solution is, the more likely it is you will encounter this problem.

Let’s say that you want to start using a new business tool to automate a few tasks, for example, enterprise resources planning (ERP). However, as you are checking the platform requirements, you find out that it doesn’t support your current legacy system and so you can’t integrate the two.

This can lead to situations such as forcing users to manually enter and move the data from one tool to another, or to figure out several workarounds just to get the main features working. What’s more, it might be that the legacy software and the new platform use different data formats, making data sharing between them even more complicated. This can be especially problematic for organizations that rely on real-time data analytics for decision making.

Benefits of Legacy System Modernization

Clearly, legacy systems have more drawbacks than advantages. The biggest is that any company using one misses out on the latest features and capabilities that new programs can provide. Instead, such businesses have to spend their precious time making the outdated tools work as needed.

But there are far more reasons why you should think about the switch, and some of them are below.

Boosted security and compliance

Modern applications are made with security and compliance in mind. To protect the data stored within, virtually all business systems nowadays come with advanced security features like multi-factor authentication, encryption, and fine-grained access controls, making it easier for businesses to protect their assets. Automated backups and secure storage also facilitate keeping up-to-date copies of the most important data, so it can be quickly restored if lost or corrupted.

What’s equally important is that the latest software is also made to be fully compliant with data privacy laws such as GDPR or any industry regulatory requirements. As such, you and your staff don’t have to spend as much time ensuring that the data you collect and use meets compliance requirements.

Greater efficiency and productivity

There are a wide variety of cutting-edge features that can boost your company's productivity provided by modern solutions.

For example, modern CRM software can help businesses track customer interactions, streamline sales processes, and provide real-time insights into customer behavior thanks to the various included automation and analytics tools. But those features also make employees' jobs easier. As they can automate some of the more mundane tasks, like creating backups or updating data, employees have more time for other tasks and their productivity naturally increases.

After modernization, your IT department, which used to focus mainly on keeping the legacy system stable and patching the issues inside it, will also have much less work on their shoulders. That enables them to concentrate on tasks that add real value to your business, such as boosting your user experience.

Increased ROI

Modern software can also be a game-changer in improving a business’s return on investment (ROI). By streamlining processes and automating routine tasks, employees have additional time to take care of customers or handle more complex tasks. Through real-time insights and customized analytics dashboards, meanwhile, managers can have all the data they need to make better decisions. All of this leads to better work efficiency and hence greater revenue.

Cost savings

While the modernization process may seem like a huge investment, it will help you to save a good chunk of your budget in the long run. As mentioned in the section above, outdated software requires a significant budget to keep it stable and usable because it no longer receives updates from the developers. With newer systems, on the other hand, updates are provided automatically.

But there’s one more place where modern technology can save you money, and that’s the on-premises infrastructure. Most legacy solutions are typically hosted in local data centers, so you must also spend money on managing, maintaining, and troubleshooting the in-house facilities.

Newer solutions, contrastingly, run from cloud infrastructures, and as such they don’t need dedicated in-house servers or other hardware. This, of course, produces significant savings. In an Office 365 study, for instance, IT experts reported 20% overall cost savings after leaving the on-premises practice.

So, while modernization costs might seem to be relatively high at the start, the investment will soon pay off and even eventually lead to increased revenue.

Improved employee experience

In a Freshworks survey, 91% of employees said they are frustrated with the solutions and technology used at their company, most of which complaints related to legacy software as well.

Let’s be honest here, those systems aren’t the most convenient to use. With outdated software constraints, missing features, and forcing users to handle some tasks manually, employees might have to spend far more time getting the tools to work than doing actual work.

Features included with newer systems such as task automation, communication tools, shared databases, and data visualization can make their work far smoother. Cloud platforms also make it easy for employees to work from any place or device, as long as they have a stable internet connection.

As their list of tedious tasks is reduced, they can focus on more creative tasks, which will boost their productivity and work satisfaction too.

Better customer experience

Considering how many businesses customers can choose from nowadays, it shouldn’t be surprising that they have gotten pretty demanding. Legacy platforms, unfortunately, can’t keep up with growing customer expectations.

Elevating customer satisfaction with modern tools is far easier, though. With them, businesses can gather detailed information about customer interactions and gain insights into customer behavior, preferences, and history. Then, this data can be used to personalize marketing and sales efforts, making clients happier and more loyal. Looking at McKinsey’s report, companies that excel at personalization generate 40% more revenue than the average. Moreover, 78% of customers also said personalized content made them more likely to repurchase.

How Can Polcode Help You Migrate From a Legacy to a Modern System?

Migrating from outdated to newer software can be a tough process, especially if the system you want to upgrade or replace entirely is tied to your essential business operations.

Analyzing the legacy source code for issues to fix or converting and migrating the data from one place to another, while ensuring that parts of the data don’t get corrupted or lost on the way, can be especially challenging.

In order for everything to go smoothly, how about our developers at Polcode lend you a hand? Having worked with many clients who wanted to move away from legacy systems, we can confidently say we have plenty of experience in this area.

Whether you want to upgrade your current business applications to work more efficiently or rather migrate to an entirely new platform, we’ll know just how to make the modernization process as straightforward as possible.

After our work is done, you’ll be able to take full advantage of the benefits associated with the latest technology. So, if you are thinking about updating your aging system, get in touch and we’ll schedule a meeting to discuss what modernization options would best suit your business.

Conclusion

A legacy system might have been meeting all of your business needs in the past, but now it’s probably only having a negative impact and hampering your future growth.

It’s slow, inefficient, lacks functionality, and forces employees to adjust their tasks according to the platform’s constraints. If you want to free your business from performance and scalability issues by incorporating the latest technologies, it’s high time for modernization.

Are you ready to take the next step toward modernizing your legacy apps? Then reach out to us and we’ll decide together about the best way to make your system fit the modern era.

On-demand webinar: Moving Forward From Legacy Systems

We’ll walk you through how to think about an upgrade, refactor, or migration project to your codebase. By the end of this webinar, you’ll have a step-by-step plan to move away from the legacy system.

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