Is it time to modernize your legacy systems? Let’s start by defining what a legacy system is. A legacy system is any piece of technology (including both software and hardware) that lacks modern features that would be available if you were to update that piece of technology. This doesn’t mean the system isn’t functional, as legacy technology often continues to function as it was originally intended.
Legacy systems still serve some purpose, but their functionality has probably changed over time. As a result, the programming language used to create them may be outdated and difficult to work with in the event that changes or bug fixes need to be made. If your legacy systems create failures or performance issues, do not provide business value or possess modern functionality, or leave your expectations unfulfilled, it might be time to upgrade.
Seven options for modernization
Instead of a “rip and replace” digital transformation that you may be imagining, Gartner1 suggests seven options that organizations may have when it comes to a modernization approach. These options are:
- Encapsulate. Leverage and extend an application’s features by encapsulating its data and functions, making them available as services via an API. This is a viable option for organizations where auditing is a concern, and when data can be accessed via a Data Lake, for example.
- Rehost. Redeploy an application component to other infrastructure (physical, virtual, or cloud) without modifying its code, features, or functions.
- Replatform. Migrate to a new runtime platform, making minimal changes to the code, but not the code structure, features, or functions.
- Refactor. Restructure and optimize existing code (although not its external behavior) to remove technical debt and improve nonfunctional attributes.
- Rearchitect. Materially alter code to shift it to a new application architecture to exploit new and better capabilities.
- Rebuild. Redesign or rewrite the application component from scratch, while preserving its scope and specifications.
- Replace. Eliminate the former application component altogether and replace it, considering new requirements and needs at the same time.
Pros for legacy systems modernization
Let’s start with the pros of modernization. Using any of the seven methods outlined above, there are many pros to consider when updating legacy systems. The following are some of the positive outcomes that our clients have experienced.
Pro: improve user access
With a remote or hybrid work environment, it’s an advantage for users to be able to access data from anywhere, at any time, and on any device. Instead of being limited by a terminal, cloud-based flexibility gives users access to up-to-the-minute information. Modern applications give users the ability to better collaborate on documents or projects, saving updates even on the go.
Pro: improve security
Aging systems are more vulnerable to security threats. Outdated ERP systems have gaps that allow deeper access to the software’s network. Additionally, as the software is no longer supported or becomes obsolete, you will no longer receive updated security patches from the developer. Furthermore, disaster recovery and backups are major challenges for legacy systems. This can result in more security vulnerabilities from malicious hackers who can use old SSL and Java exploits to break through your network.
Modernizing legacy software allows businesses to improve functionality and strengthen security features. Newer technology applications are built with advanced security measures such as multi-factor authentication (MFA), biometrics, machine learning, and artificial intelligence (AI) to help identify and prevent cybercrimes. Furthermore, with regular security patches and cutting-edge SSL encryption that comes with modern technology, you can reduce the risks of cybersecurity threats.
Security is one of the areas companies cannot afford to cut; it might save money in the near term, but the costs to repair damage from security incidents will far outweigh any investments made in protecting your business.
Pro: simplify and save money
Financially speaking, maintaining legacy systems can be a costly burden, with an average of 60-80% of IT budgets2 allocated to keeping them running. It is estimated 90% of businesses are held back in terms of growth and enhanced efficiency due to old technology. Legacy systems were initially built to meet business needs and functions that have become obsolete. Maintaining these archaic systems requires significant investment because the technology and processes have advanced rapidly since their development. It is also expensive to buy and maintain on-site hardware that can be eliminated by modernizing to the Cloud.
Additionally, it becomes difficult to find IT professionals who are well-versed in creating and maintaining outdated systems. In recent years, many Baby Boomers have retired, creating a shortage of workers familiar with outdated languages such as COBOL or FORTRAN. As a result, many companies are forced to outsource dedicated IT support and to pay exorbitant costs for personnel to efficiently maintain the legacy software. Therefore, to reduce costs and complexities, businesses should consider modernizing legacy software, rather than spending huge dollars on maintaining it.
Pro: improve business agility and competitiveness
As your company grows, can your legacy applications support its expanding business operations? Sticking with a legacy system built on outdated technology inhibits your capacity to leverage the latest advancements and is incapable of meeting your changing needs. If your software is unable to keep up with your fast-evolving requirements, it will impede your growth.
Modernizing legacy software will enable you to leverage an advanced IT architecture that can manage your growing needs and operations expansion, providing you with enhanced throughput capacity to manage increased scale and growth. With modernized systems, you can tune your environment to react faster to seasonal fluctuations, to leverage data across the organization, to integrate systems to optimize processes, to adapt to business conditions, or to quickly jump on the next innovation opportunity to beat your competitors to the marketplace. Legacy code inhibits your ability to meet customer demands and achieve business growth. Therefore, with a legacy modernization project, your business will gain a competitive edge over competitors still operating on a legacy system.
Pro: stay compliant
For most businesses, international compliance standards like SOX, PCI, or HIPAA require that technology is up-to-date and supported. However, if you still own an outdated technology that fails to comply with strict regulatory compliance requirements, the cost can be significant. In case of security holes or data breaches, non-compliance can set your business up for huge penalties and fees. With a modernized system, you can automate all compliance tasks and save a lot of time and money.
Pro: eliminate data silos
Data silos are a byproduct of legacy systems. Older systems weren’t designed to integrate with each other in the first place, and many legacy software solutions are built on frameworks that can’t integrate with newer systems. That means that each legacy system is its own data silo. Many organizations try to fill in gaps with more and more third-party solutions, creating a mismatched monster of siloed solutions.
In addition to siloing the data they contain, legacy systems keep the departments that use them out of data integration happening in the rest of the organization. If one team maintains a legacy system, while the rest of the company upgrades, that one team will find themselves isolated from business intelligence and insights being created by the integrated systems.
Cons of legacy systems modernization
We’ve covered the top pros for modernizing your systems. Now, let’s talk about some cons, or potential pitfalls.
Con: time and cost
Legacy systems upgrades are expensive and take up a lot of time. It can sometimes take years for organizations to see a return on investment, and your project champions must continue to do their jobs in addition to any implementation. Typically, however, you don’t need to do a complete legacy system refresh. The trick lies in estimating the core operations and processes, and then focusing on them first, rather than undertaking a full-scale disruptive modernization.
Many companies use legacy applications for core business operations, including high-volume data processing or conducting day-to-day operations that are essential for the functionality of the organization. Making changes to some elements of these systems is a risky step that can bring the whole business to a halt.
Weigh the possible business disruption, as well as any associated impacts to business processes and organizational culture, against the desired outcomes of your legacy systems modernization project. Also consider the risk of keeping a legacy system as-is, including maintenance for out-of-support systems or those with limited support staff resources.
Unless you go for a full and simultaneous hardware and software refresh, which few companies can afford, you are most likely to integrate new applications and technologies with some legacy system elements. Ensuring a seamless integration of these elements is often a challenge, as is maintaining core system functionality during the integration process. When doing so, carefully select a system integrator with a history of integrating legacy solutions with modern solutions.
Con: performance disruption or data loss
Ensuring non-disruptive performance is a challenge with legacy systems modernization. Many enterprises, particularly those running industrial production lines, can afford zero downtime. For those enterprises, disruptions amount to revenue losses, so they must do whatever it takes to ensure that the transition is as smooth and seamless as possible.
Likewise, data loss is a frequent cause of concern during legacy system upgrades. The loss of important data may result in revenue and reputational hazards, so enterprises must invest time and effort into crafting an actionable data migration plan before undergoing a legacy system upgrade.
Con: user acceptance
Let’s face it, a modern solution is useless if nobody uses it. Employees often resist change to the “way they’ve always done it.” In general, people are comfortable with legacy processes and environments; they may also find the necessity of learning new skills to be unsettling. Legacy system upgrades typically start with a management initiative. To ensure the best results, such initiatives should include a communication plan that enhances the user experience and helps employees embrace new technologies.
As complex and multifaceted as legacy system modernization may appear, it should not be perceived as a one-time initiative. Many organizations opt for a phased approach to restructure and optimize their systems.
Alithya is here to help guide you through the options for your legacy systems. Reach out to one of our experts by clicking here.
1. Gartner, "7 Options to Modernize Legacy Systems"
2. Audacia, "The cost of legacy IT"