For traditional businesses, legacy software can be a business’ most important element as well as its biggest risk, so understanding both is key to embracing change, writes David Scott Turner, CTO Imburse of Imburse Payments
No matter how well an existing system has served a company, there comes a time where the break-even point has been reached. The cogs of the existing machine are worn through, and no amount of patches and repairs can change that. A smarter, cleaner, modularised engine is needed – and in that case, it’s perfectly fine not to own the IP of each cog. It is the journey that really makes a company propel forward. Those that fail to recognise this will be left in the proverbial dust of the Cloud.
With all that in mind, it’s worth exploring what a legacy system is, as it’s a term often thrown around without much understanding.
Essentially, a legacy system is a piece of software or hardware that has become outdated, but is still in use. There is no specific timeline as to how old that might be, as it is still functional, but it no longer has the ability to scale and allow a company to push forward and grow. Often, ‘adapters’ are added (hacked) in to retrofit new partners, adding more investment to a dead horse, but ultimately these hacks add to a technical debt that is rarely understood by non-IT executives. This leads to inherent problems that are just a tip of the iceberg and only felt when trying to get speed or change direction.
The true costs of Legacy Systems
- Lack of scalability and single point of failure.
Legacy systems were designed to meet a certain known business problem. Trying to get them to scale into new regions, or to add new components becomes impossible. The half-life has been met and trying to shoehorn solutions becomes poor investment.
- Unpredictability and Inefficiency and talent.
At some point in the past, legacy systems were functionally efficient. However, with the technological advancements driving modern business practices and productivity, legacy systems can hamper productivity and contribute to an inefficient process flow. The business also puts itself at risk by no longer attracting or retaining talent, who would prefer to work with modern businesses.
- Security Risks
Legacy systems often represent huge security risk. That’s because they are inevitably old and often no longer supported by the vendors that created them.
When a system is no longer supported, they no longer receive updates and patches to address security vulnerabilities. This results in a system that is compromised, and ultimately will be hacked – it’s just a question of when.
- Information and Insights
In recent years, data has become the world’s most valuable commodity. Those that don’t have it will soon be overtaken and be unable to retain or attract new customers. Legacy systems often do not have the capability to provide the data to build insights off that will help steer business decisions.
- Why are they still used?
The short answer: Legacy systems are difficult to replace, even more so the system is still powering critical business processes. The importance of legacy systems cannot be understated, without it the company cannot function.
Replacing a legacy system also requires a very large up-front investment. Not only does it require software/hardware modernization, but it also generally requires modernisation of business processes, streamlined business operations all of which requires new structures and training for internal staff – all of which is done in phased approach, often which is never seamless.
The Role of Integration Platforms
Enterprises have considerations they must factor in modernising their legacy systems such as the business’ needs, development/deployment and operational costs, technologies to use. I’d argue that the most critical one centres on whether a business can seamlessly integrate any new technology or provider into its current system. In the coming years, integration is the most critical component an Enterprise will need to modernize their stacks and remain relevant.
Seeing integration as the most critical part of a system will lead to significant improvement to data exchange capabilities, enhanced partnerships, as well as reducing the risk and costs of errors that could occur. With a centralized integration platform that flexibly supports an automated and seamless flow of all data exchanges, companies can take on new systems to support modern business requirements.
Imburse Payments is a leading fintech company providing integration-free access to the global payments ecosystem. To learn more, please visit Imbursepayments.com.