Legacy systems: The risks of running outdated software

Are legacy systems (outdated software) truly a risk to your business? There is a saying that nowadays every company is a technology company. That’s because every business, regardless of their industry, requires strong software support to function. Before, you could use IT to support your business and processes, but today IT is not only there to support, but also drive your business forward and help you grow. 

IT has shifted from business serving to business changing level.

That’s why an adequate IT system is the core and backbone of every company. That also means that having an outdated legacy system or inadequate software system has direct consequences and risks on business operations and growth. 

Success in the digital age — Why proper software is a requirement

Let’s first look at what is usually the case on the market.

There are a few common situations companies face as they grow, and you might be experiencing them if:

• Your speed of business growth is faster than the growth and development of your IT infrastructure.
• When you were creating or choosing the right software solution for your business, you were more focused on your current needs than future needs.
• You found a simple and fast solution which ended up making your IT system extremely complex and slow
• You are used to running and using your old software. Your employees like what’s familiar and resist or delay change even if it’s for the better
• Your current system, even though it’s outdated, has a lot of trapped value – valuable data which is crucial for everyday business
• You don’t know how to upgrade your system or how to create a new one.
• You’re afraid it’ll take a lot of time to migrate from legacy to new system and it’ll be difficult to integrate. 

If you’ve been running an outdated software system you’ve accumulated a digital debt that’s causing harm to your company, hindering your business growth and it’s costing you money, time and opportunity. 

If you think that you’re saving money because you’re deferring the software system upgrade, think again. Ask yourself – where is your money better spent: on maintenance of your outdated system or on creating and driving new business value and opportunities?

Your company can grow as much as your IT system can follow.

Other than people, a strong, agile, scalable, reliable, and future-proof IT system is the main requirement for business growth and long-term success.

The costs of running outdated legacy systems

You’re not just losing money — you’re losing productivity, opportunities and putting your reputation at risk. Here’s why:

Operating and maintenance costs

That’s the money you’re paying for different licenses, people, and the time they have to invest for the current system to work. These costs can be extremely high, and research indicates that  80% of the IT budget is used for operating and maintaining legacy systems (“keeping the lights on”) and only 20% is being invested in developing new ones (innovation).

Why is that the case and what can be done for outdated software so that more money is being invested in innovation is explained in the article “How to balance maintenance and IT innovation.”

Accenture’s analysis of Appmarq data from CAST, a leading provider of software intelligence solutions, shows that it is 2.5 times more expensive to manage legacy applications that are ten years or older compared with new applications.

Workaround costs

These costs arise when you need to invest additional resources to resolve an issue because your current legacy system can’t support it. These additional resources can be money, people, different part-time solutions etc. 

Reputational risk

Security and liability are the key issues with legacy systems. New systems are more reliable and secure as they use advanced technology, compared to outdated software.

Indirect costs of legacy systems

Opportunity costs of running outdated software

The main reason for missing a business opportunities is lack of speed and the inability to make “smart decisions”. Smart decisions are based on data and analytics. Using outdated software or legacy systems makes it extremely hard to use and effectively manage “locked” data that’s trapped there.

As we’re experiencing a “big data revolution”, being able to store and manage huge amounts of data is crucial to your business results. Without data and its proper management, you’re unable to provide personalized and spotless customer experience and introduce new products which will satisfy your audience’s needs — all because your software is outdated.

Legacy systems are slow, and they inhibit your business growth. They often result in poor customer experience, low employee productivity, and are unable to support business growth and development. If your competition has a modern and strong IT system, you’re in danger. You risk losing your market share and position.

58% of agencies revealed their agency had 2-3 major disruptions in the past decade. This means that legacy systems are putting agencies in danger. 

Legacy systems and outdated software: The solution

80% of companies are aware that they should upgrade their legacy software system. It’s not that they’re not aware, but they don’t know how to change, and are asking themselves "How do we update legacy systems?".

Existing legacy systems can be modernized iteratively. This is called digital decoupling. Separating legacy from new solutions and gradually reducing your technical debt. Changing one by one the parts of your old system and replacing them with new ones. That will allow you to develop new systems while your business is working uninterruptedly on old ones until you can completely switch to new ones. That’s like changing piano keys one by one, and after a while you’ll have a completely new piano keyboard without the need to completely stop playing. 

The new system must be future proof. That means that it should be built not only to satisfy your current needs, but also to predict your future needs, be scalable and adaptable to support your business in the next decades, not just today. 

This is not easy. If the solution was easy, everyone would have done it. But it’s complex and it requires knowledge, skill, and capacity to engineer a tailored transformation roadmap for each specific company. 

First, it requires someone to decide whether to upgrade or completely change the existing system, in which order, and to engineer the way to do it so that it doesn’t harm the current daily business operations while keeping the costs within the budget. 

Also, it is crucial that your IT partner understands your industry and your business completely, so that they can engineer the solution that will encompass each business operation you need. 

Each company is like an organism – every department is connected to all the others. That means that the IT solution must be well connected so that every part of the IT system communicates with all the others. Developing these solutions is challenging because an error in one part of the system means that the entire system might not be working properly. 

Your IT partner must know and understand your business, have adequate engineering knowledge and skills, and know the technology stack needed to help you solve your problems. They also must be your consultant, not just developer, to be able to advise and suggest the best future proof solution for your business.

A good engineer will give you what you ask for and help you solve your current issue, but a great engineer will understand your business in depth, predict your future needs and design the solution that will support your growth not just today, but in the years to come. 

Should you modernize your legacy system or develop a new one?

The exact answer to this question naturally depends on the specifics of each project. But as a general rule, the decision boils down to two key factors:

• The value of data “trapped” in the legacy system
• The level at which the system requirements are known

The higher the value of data locked in the legacy system, the more we are inclined towards modernization. Modernization's added effort is more than justified by the potential for innovation and business growth that big data provides.

On the other hand, the better the system requirements (and the client's use cases) are understood, the easier it is to build a new solution. 

Good SMEs, business analysts and software architects need to have a truly holistic perspective when deciding on a solution to be implemented in each specific case. 

Let’s work together on updating your legacy system

We leverage our deep understanding of modern technologies, applications, infrastructure, security, operations, industry domains and human-centric design to mitigate transformation risks and help you drive your business forward. 

In addition, we envision and deploy tailor made solutions within agreed budget and time—all to help you be able to upgrade your current operations and be future ready. 

As an example, we created a new software system for our client Eurofins.

Eurofins offers a portfolio of over 200,000 analytical methods for evaluating the safety, identity, composition, authenticity, origin, and purity of biological substances and products. They also offer innovative clinical diagnostics. However, the systems they were using for performing lab tests were becoming obsolete. Blome, the system they used for doing lab analysis, was complex to manage and the process of testing the substances was slow. 

Since Eurofins is a large company with over 900 laboratories around the world, it is extremely hard to integrate every lab site into the same central testing system. A lot of the time, Eurofins is using small local laboratories as its subsidiaries and provides them with the support they need for operations. 

Because of this, some of the local lab sites are still operating on their individual testing systems. This is making communication between the center and local lab sites overly complicated and slow.

Read this case study to learn how we solved this problem.

Over 80% of companies are aware they should upgrade their legacy software systems. The problem isn't that they're not aware, but that they don’t know how to change.Vuk Stanivukovic, Marketing Manager and Business Analyst at Enlight IT, reflects on the core modernization imperative, how to overcome the roadblocks to it and what to expect in the future.