Scaling Digital Transformation and Replacing Legacy Systems

Updated on by Hayley Brown

In the modern world technology advances at a rapid pace. For instance, new software products are frequently released with the latest cloud-based solutions and data integration functionality. These apps, are often easily maintained with updates or support packages. 

There are however many organisations dealing with problems caused by their legacy systems. These systems keep an organisation stagnant.

What are legacy systems?

A legacy system or legacy software is an old or outdated system, technology or application. They tend to be used in larger and older enterprise organisations. They are continually used because they still fulfil the functions it was intended to but do not allow growth. Gartner defined legacy systems as, “an information system that may be based on outdated technologies, but is critical to day-to-day operations.”

Legacy systems are still used across a variety of industries and organisations. For example, hardware and software in manufacturing industries, the public sector or outdated financial systems. AltexSoft mentions the use of legacy applications “running on an obsolete mainframe for core business operations such as high-volume data processing. Fine-tuned over the years, these systems are adapted to deliver specific functionality.”

Why replace legacy systems?

Legacy systems as mentioned before tend to keep an organisation stagnant. They do what they are intended to do for an organisation and nothing more. If the software does what it is intended to do, why replace it? 

Maintenance and Support Costs

A legacy system is expensive in maintenance and support costs. According to AltexSoft “legacy systems depend on antiquated programming languages like COBOL, have hardware or software support issues and operate with security vulnerabilities.” The software may meet the needs of the organisation but it is somewhat difficult and perhaps impossible to maintain, support, improve or integrate with new and evolving systems because of its architecture and design.

As the organisation grows and changes their needs adapt as a result the legacy software can no longer fulfil its intended purpose. It starts to become a significant barrier to digital transformation. As well as a significant cost in time and money. Rather than shifting focus to innovative technology and strategies. 

For instance, some US public sectors spend 80% of their IT budget on legacy system maintenance and 20% on development, modernisation and enhancement.

Integration and Compliance

A legacy system cannot integrate with modern applications, or it would at least take a long time and custom code to build integration functionality. As well as be very costly. This results in data silos. 

A major appeal of modern applications is that they are integration ready by default with third-party APIs. These allow modern apps to access additional information such geolocation, data sharing and user authentication. 

For example, Uber relies on data provided through the Google Maps API for its core functionality. As well as online retailers who rely on Stripe’s API to provide a gateway for various payment solutions. Many modern applications have an API library and demonstrate how they can be integrated into an ecosystem. 

As well as struggling to integrate, legacy systems can also struggle to be compliant. With new data policies and regulations coming into force, such as GDPR making sure the system is compliant is again costly in both time and money. As the organisation need to maintain well-governed customer data records which is harder and somewhat impossible in outdated and often siloed systems.

Security

Legacy systems are more vulnerable to security breaches and hackers. AltexSoft notes that “outdated software might no longer be supported by the vendor… no one keeps the system compliant with the latest security requirements.” Therefore the risk of breaches only increases. 

The legacy system may come to resemble a leaky bucket. When one hole has been patched another may appear. Vijay Samtani, Chief Information Security Officer at Cambridge University notes, “supporting a legacy operating system in your enterprise is as much about risk management as it is about traditional IT service management.”

Lack of Innovation

Legacy software leaves less room for innovation. If an organisation is tied to an outdated system their business model and technology is less adaptable. Therefore, new business opportunities pass can pass them by. 

As a result your competitors can jump on these opportunities, outperform you and increase their market share.

Organisational Agility and Efficiency

Legacy systems become slower over time and are unable to respond to market changes quickly. Organisations who are using legacy systems lack agility and adaptability to future challenges. Holding onto legacy systems can have a massive effect on an organisations productivity and efficiency. As well as hold back innovation. 

The pandemic is the best example of an unforeseen market challenge. It forced organisations adapt and implement new technologies and strategies to stay competitive and afloat. For example, initiating modernisation focusing on continuous delivery and integrating product development with IT operations. In other words, a DevOps approach.

Benefits of Replacing Legacy Systems

Benefits of replacing legacy systems

Source: Legacy System Modernisation: How to Transform the Enterprise for Digital Future

Migrate your Data and Scale your Digital Transformation

There are numerous ways to replace your legacy system and scale your digital transformation. Many have noted that the best approach is directly linked to the problem you are trying to solve. Then how modernisation can help the issues. 

The most popular approach is migration and enhancements as it has the ability to ensure the product keeps serving your organisations needs well into the future. AltexSoft notes that it typically involves re-hosting using cloud solutions, UX/UI updates, performance optimisation and database migration. 

It does however come with limitations, primarily the core business logic and architecture remaining the same. 

Other approaches include correction and growth, and complete software reengineering. 

Once you’ve migrated over to your new modern system it is important to understand your roadmap and follow it to ensure you scale your digital transformation. 

Bain and Company have created the Transformation Framework and Sample Questions. A framework to follow to reinvent an organisation for its digital future. It is to be used as a structure to follow during the complex process.

Legacy system transformation framework

Source: Scaling your Digital Transformation

Regardless of how you choose to replace your legacy system it has to be mentioned that no matter what method or approach you use it will be complex. It is a costly and big upfront invesment in both time and money as well as a risky process. 

However, as long as there is a roadmap to follow, budget allowance, the right tools for your problem and empowered employees that big upfront investment will become a long term future proof benefit.

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Avatar for Hayley Brown

Hayley Brown

With several years experience in the digital marketing space after graduating from Sussex University, Hayley has gone on to work in the retail and education industries. In 2020 she joined the Cyclr team and is working alongside Daniel in the Marketing Department.

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