Legacy Systems In Digital Transformation: Risks and Challenges
What is a Legacy System?
Legacy systems have been a hurdle to digital transformation efforts for several years now, but what is a legacy system?
Legacy systems are software programs that has remained in use in an organization, often for a number of years. These systems are often outdated and not integrated with other solutions that the business uses. Because of this, they can be a barrier to a more efficient process of operations, particularly if data sets and other information aren’t being leveraged to the extent modern cloud systems can allow.
Related Post: The State of Data Analytics Adoption
With SMBs clamoring to implement their digital strategies in the wake of the pandemic, it’s not a great surprise that worldwide spending on DX was estimated to be around $1.18 trillion in 2019.
Unfortunately, despite the large amount of investment from SMBs, success can often be elusive—70% of businesses fail to see through their digital transformation plans to a satisfactory conclusion.
One of the reasons transformation can be difficult is the upgrading of legacy systems. They can be cumbersome, unruly, and challenging to update. That’s not to mention pushback from end users who are comfortable with the existing system and reluctant to move to another platform.
A legacy system is a computer system, software solution, or similar technology that is outdated and difficult to manage, yet vital to workflow processes within an organization.
Common examples of legacy systems include:
- Operating systems
- Network infrastructure
Today, we’ll be taking a look at why decision makers are getting rid of their legacy systems and what obstacles should be expected with a transformation like this.
Issues with Legacy Systems
The most obvious challenge that legacy systems pose is keeping them maintained. Updates might be sparse, or not forthcoming at all.
Because these systems often contain large amounts of data and documentation, it can be a hugely daunting consideration to migrate to a new platform.
Legacy hardware is a difficult issue to handle. Outdated infrastructure can struggle to keep up with the demands of modern solutions, creating a bottleneck for your processes and operating capacity
This is not even to mention the staff who have to use these systems. Workers who are used to existing systems may not be willing or see the immediate value in learning a new system.
Conversely, you may be dealing with a system that is problematic when onboarding new staff, due to unfamiliarity with an old system.
Of course, new systems require onboarding too, but their modernity means there will be more support from vendors in getting everybody up to speed.
If you’re relying on a select few people in your organization to onboard new recruits for your systems, sooner or later you’ll run into issues if they decide to move on and take their knowledge with them.
Integrating old legacy systems and modern solutions can be a huge hassle for SMBs seeking to improve their work processes.
Those who are comfortable with, for example, their current legacy ERP, may want to keep their system and integrate it with more modern solutions.
The problem is that many modern cloud and other SaaS solutions can be incompatible with older legacy systems. This means that in order for you incorporate new tools and programs, extensive custom code is required to make it work.
This is a time-consuming and expensive exercise, particularly for SMBs looking to cut costs.
(96%) of enterprises utilize at least one cloud service for their organization; it makes sense to start planning for more solutions for the future that have APIs which can be easily integrated
A typical result of this lack of integration is the emergence of data silos, whereby different departments across a company cannot freely access the data they need.
Using a modern ERP helps eliminate data silos and allows businesses to use utilize their data in an actionable ways they’ve never had before. For example, integrating your supply chain data
Data-driven organizations are 23 times more likely to acquire customers, six times as likely to retain customers, and 19 times as likely to be profitable as a result
Where cybersecurity is concerned, outdated systems are a prime target for cybercriminals.
Malicious actors seek out exploits and weak points in solutions in order to gain access. Organizations that neglect their security expose themselves to attack.
Developers work tirelessly to shut down these loopholes and prevent cybercriminals from taking advantage.
Of course, when it comes to legacy systems, there may well not be anyone keeping it up to date at all, leading to a system that is practically asking to be breached.
As we have learned this year, cyberattacks are on the rise and extremely costly to businesses, particularly SMBs.
The average ransomware attack costs a business $5 million
For many, it’s not a question of “If”, but “When”.
If sticking with a legacy system, decision makers should take extra care that they have taken the appropriate measures to ensure they stand the best possible chance against an attack.
Moving to the cloud has become an attractive option for organizations in recent years because of their strong security capabilities—stronger than most on-premise systems.
One of the most damning implications of continuing to use a legacy system is the stifled ability to modernize and improve.
Improving efficiencies and capabilities in order to remain competitive is a central goal in digital transformation strategy.
Legacy systems are notoriously inflexible, an obstacle for the majority of businesses operating in today’s digital environment.
Customers expect organizations to be digitized, and executives see digital transformation as a means to be competitive.
By not investing in new technology and sticking with a legacy system, you’re hampering your own ability to compete and giving ground to your competitors.
Preparing for the Future
5 Reasons Modernizing a Legacy System is Important
We’ve gone through some of the obstacles that are presented by maintaining a legacy system. Now, let’s look at some of the advantages of modernizing your systems and making the leap to the cloud.
- Competitive advantage: Modernizing a legacy system, whether it’s an ERP, CRM, or your data center, can bring a plethora of advantages to your business. This allows you to become more capable, agile, and give you an upper hand over your competitors.
- More content employees: User interfaces have evolved significantly over time, and most employees will be accustomed to the UIs that they are familiar with on their phones or laptops at home. Giving them a modern UI at work can improve satisfaction and performance over an older-style system that’s not as user-friendly.
- Opportunities for growth: Modernizing your legacy system gives you much more room for growth in the future. If you’re investing in an established cloud service like Microsoft Azure for your business, you can be confident that you won’t be left behind. Keeping pace with the latest tech and software developments gives you a competitive edge. It also puts you in a great position to further expand the services you use should you choose to do so.
- Make use of big data: A major issue posed by legacy systems that digital transformation attempts to remediate is the silos that emerge from disparate systems within an organization. DX seeks to remove these barriers and allow users to make use of the vast amounts of data (big data) that SMBs possess to help support your business decisions.
- Security and performance: Upgrading from an on-premise solution to a cloud solution has long been an area of concern for decision makers, primarily because of the perceived risks of hosting company data on cloud servers. Advances in cloud services has led to a far higher level of security in 2019 than in previous years. Tier IV data centers, for example, offer more security than on-premise servers, meaning your data is most secured when it’s hosted on the cloud.
Challenges of Upgrading
As with any digital transformation effort, modernizing your legacy systems will require time and patience.
Many executives begin implementing strategies for digital transformation without fully understanding that these processes often take years to fully realize.
DX can be a costly exercise and it’s important not to get wrapped up in a mindset of qualifying success with an immediate ROI.
The most important initial aspect is to get on track with bringing your organization up to speed and competitive, while having a plan for the future for profiting from your investment.
A DX strategy for transition should always come from the top and be fully endorsed and envisioned by key executives and decision makers in the organization.
It’s one of the reasons we at Impact place such an emphasis on ensuring a smooth shift by using a comprehensive change management system.
Best Practices for Upgrading a Legacy System
Don’t Get Ahead of Yourself
It’s easy for a business to fall into the trap of wanting to digitize everything at once in an effort to modernize.
We recommend not to do this, and instead start by focusing on aspects of your organization that can be upgraded to give you the most bang for your buck.
For example, migrating your email server to a cloud-hosted solution is a common initial strategy that provides a quick return and is relatively painless.
Should Strengthen, Not Weaken, Your Processes
No solution introduced for the purposes of DX should ever weaken a work process.
If you find that your investments are not conducive to improving productivity or efficiency, then it either wasn’t an appropriate solution for you or wasn’t implemented as well as it should have been.
When pursuing a DX strategy, make sure you’re targeting processes that need transformation, rather than digitizing for the sake of it.
Have a Strategy to Implement Your Solutions
Many businesses, in their eagerness to modernize, enact strategies for digital transformation which are not suitable and undeliverable.
This often means installing too many systems, too quickly, and without a plan to implement them thoroughly.
It’s one of the reasons a concerning amount of DX plans are considered failures—not because the idea was bad, but because the strategy backing it up was poor.
This is why so many SMBs partner with a seasoned MSP to build their plans for digital transformation.
Subscribe to our blog to receive monthly insights into business technology and stay up to date with marketing, cybersecurity, and other tech news and trends.