Every organisation that’s older than a decade will have faced the same decision: to stick with its legacy systems or embrace modern solutions. This choice is about weighting up the gains in efficiency, security, and competitiveness with the costs of transitioning. At some point the cost bares too great, but how do we know when the tipping point is?
Legacy Systems vs. Modern Solutions
Legacy systems are outdated technologies that, while still functional, will hinder an organisation’s growth and ability to adapt. These systems typically run on older hardware and software, making them difficult to maintain and integrate with newer technologies. Customer relationship management (CRM) software and enterprise resource planning (ERP) systems are generally the culprits of legacy systems.
Cloud-based platforms, which are often (but not always) central to an upgrade, provide scalability, improved security, but are generally easier to integrate with other innovative tools. They often feature user-friendly interfaces – something that can bear a deceptively high cost in operational efficiency – and real-time data analytics, which can be used for future optimisations.
However, transitioning from legacy systems to modern solutions isn’t straightforward. Organisations must consider factors like data migration and training staff members in how to use the new software – both of which can be done via an implementation company or in-house. There may also be unforeseen disruptions to business operations. The key is to weigh the long-term benefits against the short-term challenges of upgrading.
The Role of Digital Transformation Consulting
Digital transformation is such a huge problem to tackle that consulting becomes a key component. Companies like Making Sense – Digital Transformation specialise in custom software development and digital product design, helping businesses tailor solutions to their specific needs. After all, bespoke solutions are unavoidable when transitioning. Accenture is another transformation company, offering services in cloud acceleration and automation. Meanwhile, Boston Consulting Group focuses on identifying and delivering measurable business outcomes through digital transformation.
Assessing the Need for an Upgrade
When evaluating the need for an upgrade, organisations should consider:
- Performance metrics: Is the current system causing delays or inefficiencies? By what metrics can it be improved upon?
- Security vulnerabilities: Are there potential risks due to outdated security measures?
- Compatibility issues: Does the legacy system struggle to integrate with newer technologies? What further efficiency gains can the newer technologies provide?
- Cost analysis: How do maintenance costs compare to the investment required for an upgrade? What will the costs be over X number of years.
Recent studies show that over 60% of businesses still rely on legacy systems for core operations, including customer-facing applications. It shows how widespread the problem is, but it also highlights that these problems are also the problems of the customer, who may have a worse user experience – not just the employees.
One of the best examples of legacy systems being a cause of uncompetitiveness is the pace at which neobanks arose and stole market share away from large banks, who seemingly held all the cards and had economies of scale. Neobanks, which were fintech startups, were blessed with starting with fresh systems that were more malleable, lower-cost and user-friendly.
Final Word – ROI
Upgrading from legacy systems to modern solutions is ultimately a matter of cost-benefit analysis. At some point, given enough time, there typically will be a positive return on investment. The difficulty is figuring out exactly how much benefit it will yield (some benefits are unmeasurable), and when this will pay for itself.