Summary: Many businesses still run on legacy applications. Is your business one of them? If so, how much are these legacy applications costing your company? It might be more than you think. Here are 7 ways legacy applications can hurt the bottom line.
Many businesses across the globe still run their operations on legacy systems and applications. Some still run on software created 20-30 years ago.
Why don’t they replace these legacy applications?
It usually boils down to one of two reasons.
1. They’re locked down. These legacy systems run the business. Oftentimes, past customizations have locked the business into a specific software, or version. Replacing these systems comes with considerable cost and risk.
2. If it ain’t broke, don’t fix it. Other businesses take this mentality towards their legacy applications. “We’ve been using this for 20 years, and it’s still working fine.” Why replace something that still works?
In other words, the cost/effort needed to replace these systems outweighs the cost/effort to keep them.
But, is that really true? If your business still uses legacy applications, let me ask you a question: What’s the true cost of those applications?
It goes far beyond licensing costs. When calculating the costs of legacy applications, you must consider all factors, such as:
1. Maintenance costs
Over time, applications and systems become increasingly difficult to maintain. Every customization and change adds another layer of complexity to the system. Over the years, these changes take their toll.
Soon, simple updates turn into time-consuming tasks. A change to one area of the application might break another. You find your team dedicating more and more time to maintenance.
To make matters worse, what happens when you run across a problem you can’t solve? With modern applications, you could find a solution online pretty quickly. But, with legacy applications, troubleshooting becomes far more difficult.
“Less commonly-available information online for legacy platforms means that troubleshooting will require more time dedicated to researching solutions,” says Shaharris, Founder of HackerNest. “Whether it’s you or an employee doing it, it’s inefficient and wastes time.”
2. Talent costs
“More up-to-date software and platforms means more competency and availability in the hiring pool, ergo cheaper talent,” says Shaharris.
It’s a great point. Legacy applications require a legacy skillset, which fewer and fewer people possess. As employees with these legacy skillsets reach retirement age, your available talent pool is dwindling.
What does this mean? With less competition, costs go up. You’re stuck paying more for talent than you would with a modern system.
3. Support costs
What happens when the vendor stops supporting your software version? You can either support it yourself, or upgrade to their latest package.
But, what happens if you can’t (or don’t want to) upgrade? Or, what happens if the vendor goes out of business?
“Many proprietary legacy systems are no longer supported by the vendor,” explains Tabish Naeem, Senior Manager at MI Dynamics. “Unfortunately, external support is usually expensive and inefficient.”
Third-party companies will offer you support for your legacy systems…for a hefty fee. Sure, you don’t want to pay their prices, but…what choice do you have?
It’s a problem you’ll run into time and time again with legacy systems: You lack options. You pay more for talent because your options are limited. You’ll pay more for support for the same reason.
4. Integration costs
Do you like paying for something you could get for free? Neither do I. But, that’s what frequently happens with legacy applications. How?
Let me explain: Suppose you wanted to integrate your application with a common web service. With a modern application, it’s usually a simple job. After all, modern applications are built with integration in mind.
With a legacy application, it’s not so simple. As explained below, these “simple” integrations often require custom-coding (if the job is even possible in the first place).
“Anything uncommon enough to be called legacy is no longer (as) regularly or frequently updated as the alternative,” Shaharris. “Therefore any kind of integrations with other software needs to be custom-done, which means highly specialized money going out of your pocket. Imagine having to pay someone to write code for something to sync with GitHub or SVN!”
5. Compliance costs
Over time, industry regulations and business laws change. Have any regulations or laws changed since you deployed your legacy system? Chances are, they have.
How much time and effort do you spend ensuring that your software remains compliant? If you’re in a heavily-regulated industry, these costs can add up quickly.
“Industry and government requirements change,” explains Shaharris. “For compliance-related software, it can become costly to find workarounds to make software do what you want it to do.”
6. Lost opportunity costs
According to Inc.com, “an opportunity cost is the cost of a missed opportunity. It is the opposite of the benefit that would have been gained had an action, not taken, been taken—the missed opportunity.”
Let me ask you a question: What opportunities have you missed on account of your legacy systems? What features does your business need that your software doesn’t support?
Would you like to provide mobile data access to your salespeople?
Would you like to provide better reporting to your executives?
Would you like to automate manual processes?
I could go on, but the point is this: Legacy systems will keep every business from certain opportunities. What are those worth to your business?
7. Agility costs
How quickly can your company adapt to changing technology? How quickly can you deliver solutions to the business? Months? Weeks?
In most cases, legacy systems lack agility. Delivering a new feature or application to the business is a time-consuming process.
Let me ask you a question: How much does this lost agility cost your company?
Would you be more competitive?
Would you sell more products or services?
While the answer varies by company, agility costs cannot be ignored. Where would your company be if you could provide faster solutions?
So, what do you think? Is there anything you would add to this list? If so, please share your thoughts in the comments.