13 Signs Your Legacy Systems Need Modernization
Owning a retro car is considered a luxury. Owning old software? Well, not so much. In business, it’s all about efficiency and profitability. If you fail to set up streamlined, high-performance internal processes, you will be elbowed out of the market by your competitors.
While software modernization is an extremely time-consuming and costly undertaking, the cost of running your vital business processes on outdated software might be even higher. By relying on legacy systems, you put the very existence of your business at risk. But how do you know if your software needs modernization?
First, let’s define “legacy software”.
Identifying Legacy Software
While in some instances such as a work of art or a multi-billion-dollar business, legacy conveys wealth and status. But when it comes to software, the term usually has a negative connotation. And the reason for this is simple: Most software systems, unlike fine wines, don’t get better with age.
There is no unique definition of a legacy application. Gartner aptly describing such software says “that [it] may be based on outdated technologies, but is critical to day-to-day operations.” According to BusinessDictionary.com, the legacy system is an “obsolete computer system that may still be in use because its data cannot be changed to newer or standard formats, or its application programs cannot be upgraded.”
Indeed, descriptors such as “outdated” and “obsolete” seem to be the most accurate, though there are typically more aspects that define legacy besides age. These include performance and efficiency, compliance with modern business requirements, compatibility and integrability, security and maintenance cost.
To ferret out legacy issues lurking in your business systems, conduct a complex assessment, with an eye to the following aspects.
How do you know when it’s time to modernize your legacy software?
1. It is slow and cumbersome; it crashes and fails to perform as expected
If your system lacks speed, has multiple glitches, and takes ages to perform standard tasks, there are two possible reasons why. The software is either outdated or simply of poor quality.
While the latter usually can be improved in the process of software quality management and testing, outdated systems typically require modernization or complete reengineering to improve performance and efficiency.
Waiting several minutes for a report to load might not seem like a big deal, but what if 100 of your employees lose these 3 minutes every day for a year? Then waiting for a file to load amounts to over 50 workdays wasted annually.
2. It is no longer supported by the vendor
If your business runs on third-party software, like it or not, you depend on the vendor for updates and maintenance. When something happens to the provider company, like acquisition or bankruptcy, the chances are, you will need to reconsider your software solution soon.
So, when the vendor terminates support for the product you are using, it is a clear sign that your business processes should be transferred to another system. If you decide to stick with the old solution that is no longer provider-supported, you won’t be receiving updates nor will you be getting assistance fixing any issues.
For example, if your business operations still run on Windows XP, you won’t be able to use the latest versions of other Microsoft products, and you’ll be tied to the outdated software. And you cannot blame this on Microsoft. Because the OS is officially no longer supported, you must either update your system to the latest Windows version, or upgrade your hardware if it doesn’t support the updates.
Another drawback of using outdated, unsupported software is that you won’t be able to use your warranty in case of system failure or data loss.
3. The system has no mobile capabilities and is device-dependent
Last year, it became clear that mobile capabilities are a must for every business. From client-facing apps to internal business process management tools, 89 percent of organizations surveyed by Red Hat have already at least partially implemented mobile app strategy.
If your software cannot be accessed from any device other than your office computers, you may already be lagging behind your competition in terms of performance and revenue. In this regard, cloud-based SaaS products outperform any on-premise system.
This flexibility might be especially important for companies that require working in the field, such as construction, warehouse control, oil and gas production, or logistics. Your workers will significantly improve their performance if they use mobile devices instead of pen and paper for inventory management.
If you are not ready for a complete system modernization, it is possible to at least partially introduce your enterprise mobility strategy. Your legacy software can be complemented by mobile tools, which augment some features and provide additional benefits. Yet, you must consider possible integration issues: Old systems often require a significant amount of custom code and workarounds to be able to run with the new tools.
4. Incompatibility with modern software systems
Talking about compatibility, it is important that your software, no matter how old, integrates well with the other tools and applications you require to efficiently run your business processes. Be it a new CRM or live chat add-on for your website, you cannot afford to ignore the compatibility issues within your business systems.
If you fail to implement a virtual customer support system, for example, on-site self-service, live chat, or email support because you are hog-tied by your old systems, most of your customers would rather find another provider than request assistance by phone. Plus, any of these customer support channels is significantly less expensive and more efficient than a traditional call center.
If you are tethered to your old systems and tools, unable to utilize all the advanced capabilities that modern technology offers, we have bad news for you. Chances are your competitors have already integrated those new tools and resources, taking advantage of their benefits. That means you will continue to lose your customers and revenue, putting your business’s existence at risk.
5. Excessive hardware use
If you still need to host your business software on-premises, the chances are it is already outdated. The cost of ownership of such systems is high due to administrative expenses involved. With Amazon Web Services, Microsoft Azure and Google Cloud Platform, you don’t even need to own a server to efficiently run your processes.
A handy tool, Azure TCO Calculator, can provide insight about the possible cost savings of cloud vs on-premises hardware. On average, cloud solutions allow you to save about 65 percent of your IT infrastructure costs over the first 3 years. And the more servers your systems require, the bigger your cloud benefit.
According to Forrester, even “enterprises with big budgets, data centers, and complex applications are now looking at cloud as a viable place to run core business applications.” Besides, when you run your applications in the cloud, your provider bears full responsibility for keeping your systems up at all times. If you choose a trusted provider, you won’t have to worry about outage possibilities at all.
6. Your software requires extensive training and/or special skills to be used
Built back in the nineties, way before any modern UI standards were introduced, legacy software typically lacks the clarity and simplicity, rendering it extremely hard to use. Becoming an expert with such a system might take years. So, hiring and training new employees to replace the old is always more challenging and less efficient. Moreover, with the average cost-per-hire equaling $4,129, spending even more on employee training would be simply unreasonable.
Except for making the staffing process harder and more expensive, outdated software with unoptimized, clumsy interfaces can significantly slow down your operations. If your employees struggle to use your system efficiently, simple training might not be enough to speed up operations.
7. The underlying technology is obsolete
No matter how young your software is, if it runs on outdated technologies it should be completely reengineered. We are not talking about programming languages or tools that are considered old. Some of them will outlast most of the new and trendy frameworks.
The real danger lies within the tools that have officially reached their end of life. A great example of such technology is Adobe Flash, which was a really popular web development tool. Yet, most browsers have already phased out support for Flash or plan to do so soon. Similarly, Microsoft Silverlight is considered a dying technology, since the company has given up Silverlight support for the new Edge browser.
8. Software no longer solves your problems
Back in the day when you onboarded your current software system, it might have been the perfect solution to all your business problems. Since nothing remains the same, by now it might have gone from legacy to liability. So why compromise your business efficiency and revenue, just because your software cannot keep up with the new challenges?
Typewriters are nice; they have their special charm and manage to get work done. At least a part of it. But how can you make a hundred copies of a book and send them to the publisher using a typewriter? Most importantly, why use a typewriter, a copy machine, and a postal service, when your MacBook can solve all three problems at once in no time?
9. It lacks flexibility and cannot keep up with your business growth
As stated above, your business is constantly evolving, or it should be. If your business model, processes, or simply the scale of operations change, your software must be able to keep up. If your systems lack the ability to accommodate your needs, you might end up adapting your business to your software and that will set you back.
If you started out as a small, local store and invested in a custom POS system, chances are, it won’t be able to serve your needs when your store becomes a chain. With increased scale, you will require better throughput capacity and a completely new multi-tenant architecture to manage all your operations.
Can your software support increased production capacity and expand with your company? Will it be able to scale and change correspondingly in the future? If you answered no, it’s time to change your software or build a new system.
10. It’s hard or impossible to add new functions to your system
Speaking of flexibility and adaptability, legacy systems can be hard or even impossible to change or expand togreater capabilities. This may be due to the outdated technology stack or overcomplicated inner architecture. As a result, it becomes increasingly difficult to build new features on top of the existing functionality.
If your team needs to write large amounts of custom code to implement a simple feature on top of your system, then it is time you consider modernization.
11. Security threats
BDNA’s State of the Enterprise Report found that “old IT assets are a major and often overlooked source of enterprise cyber-security vulnerabilities. Without processes in place to identify and remediate these “end-of-life” (EOL) assets, organizations expose themselves to cyber-criminals eager to exploit these unprotected flaws.”
Indeed, old systems are usually more vulnerable to malware and breaches. What seemed secure 10 years ago may no longer be reliable today. Take for example passwords: While the methods for generating and storing passwords have changed dramatically over the past 20 years, most of the older systems still accept the same weak combinations instead of forcing users to set up more complicated passwords, as many modern systems do.
With older encryption algorithms having long ago been hacked, obsolete software no longer receives security patches, exposing your data to multiple risks.
12. Operating costs are high
Aspects of legacy software such as excessive hardware, staff training, inefficiency or outages make the operating costs of those systems increasingly high. Furthermore, there are many hidden costs not stated in any budget, including employee satisfaction, brand image, and customer loyalty. Consider this: Over 90 percent of consumers would rather switch providers than work with a company that uses outdated technology.
Additionally, there is a lost opportunity cost usually involved with legacy applications. If you fail to improve your business systems, every dollar earned by your competitor using better tools and modern software can be considered a dollar you lose due to your inability to innovate. Taking that into account, it is almost impossible to calculate the true cost of operating a legacy system.
Microsoft has calculated that it costs a business $780 per year to operate a PC running on Windows XP, while for Windows 10 the cost is $168. That said, if you think that you cannot afford the modernization, better think again as you might be already losing more than it takes to revamp your systems.
13. Support and maintenance costs are even higher
Aside from operating your software, you need to keep it up and running at all times. On average, organizations spend from 60 to 85 percent of their IT budgets maintaining cumbersome legacy applications that fail to meet the changing competitive needs of the business.
Yet, the lack of maintenance can lead to frequent outages and even bigger waste. On average, every minute of downtime costs a business $366,363 per year. Thus, you must invest in support and maintenance to be able to address the arising problems as fast as possible.
For customer-facing systems, client support should be one of the highest priorities. Legacy systems typically cause more problems for the end-users. So, plan to invest heavily in 24/7 customer service to be able to speedily solve unavoidable, costly issues.
Despite the risks related to running a legacy system, you shouldn’t jump on the modernization bandwagon as soon as you notice a minor disruption in your business system. Software modernization is an important part of the digital transformation initiative, requiring a solid implementation strategy, thorough planning, and a reliable technology partner to help you mitigate the related risks and make the best of this undertaking.
We at AltexSoft apply a proven legacy system assessment framework to analyze the state of your software on many levels, from architecture, code quality, and performance to capacity for future growth. Based on this assessment, we can offer three avenues of approach to custom legacy modernization:
- Migration and enhancements: usually requires re-hosting, and some minor improvements, including UI/UX updates, performance optimization, and database migration.
- Correction and growth: involves substantial improvements, such as architecture optimization, code refactoring, UX optimization or performance audit, that however don’t affect product business logic and allow for future growth.
- Complete software reengineering: comprises features extraction, reprioritization and their further implementation from scratch, using modern technologies and software development best practices, with a long-term growth outlook.
So, if you would like a free, individual consultation on how to improve your legacy software, contact us now.
To learn more about legacy system modernization and the benefits of digital transformation, take a closer look at our latest whitepaper – Legacy System Modernization: How to Transform the Enterprise for Digital Future.