Four Factors to Consider Before Replacing Legacy IT Systems

Four Factors to Consider Before Replacing Legacy IT Systems

Organizations with a long history find themselves struggling with determining the optimal time to upgrade or replace their legacy IT systems as they slowly become obsolete. There’s nothing inherently wrong with keeping legacy systems that continue to perform well and are more cost-effective than building a new one. “Don’t fix what’s not broken” and “don’t replace something less expensive to fix” are both maxims to observe.

As these IT systems continue to age, however, those principles cease to be true. All IT systems will eventually get to the stage where they become unreliable and unmaintainable. The key point is to determine the most appropriate time to upgrade while avoiding unnecessary down time and expenses. The best way to do that is by performing a risk-reward analysis. There are many factors to consider when doing this analysis. Below are four of the most important.

1. Security Issues

Cybersecurity was not a pressing concern when most legacy systems were built. As a result, older business systems can be fundamentally flawed when they are assessed for cybersecurity risks. If an organization lacks the expertise to fix existing bugs or the system’s architecture makes a rewrite too expensive to attempt, security can become the primary reason to replace it. That conclusion is especially true for organizations in regulated industries like government, healthcare, and financial services that have legal obligations to mitigate cybersecurity risks to their customers.

How to assess a legacy system is itself a problematic technical issue as well, and the process to follow depends on many factors too complex to detail in this article. There are excellent resources to help IT departments assess the existing or potential security issues that might exist. At the end of the process, the risks of keeping the legacy system in place need to be weighed against the costs of mitigating them or building a new system from the ground up.

2. Total Cost of Ownership

One of the reasons legacy systems remain in place is that their total cost of ownership (TCO) is less than the projected cost of owning a rebuilt or replacement system. Companies find themselves tolerating the drawbacks of legacy systems because the financial math doesn’t warrant replacing them when they assess the non-intuitive costs of a new system. An expense that’s often overlooked is the ongoing maintenance cost a new technology is likely to have. It may well exceed that of an existing legacy system in the long run.

There are other costs of legacy systems, however. The labor budget of keeping the expertise to support an aging COBOL application may be much higher than building a new C# or Java app. Organizations should look for opportunity costs that are easily missed. Would moving to a cutting-edge system be more likely to help the business overcome its competitors than the legacy system? The price of a legacy system’s weak competitiveness can justify a more expensive replacement.

3. Impacts on Customer Experience

Customers demand new services and technologies over time, which can be another reason a legacy system becomes untenable. If it’s too expensive to build an interface between an antiquated app and a public-facing mobile platform, then a replacement may be the best option as part of a company’s tech transformation.

The costs of replacing a legacy system to a customer’s experience can be counter intuitive. A legacy system running on fast servers may offer better performance than a more sophisticated technology stack like Microsoft .NET running on the same system. That loss of performance may mean tasks require more time to complete, and it might also lead to higher infrastructure costs to achieve parity with a legacy system. Either way, a replacement system will usually require new infrastructure with the latest processors and software.

4. Reliability and Performance

Costs and resources often determine whether it makes financial sense to replace legacy systems, but reliability and performance are also critical metrics. A legacy system that suffers frequent failures or unexplained glitches can become untenable if it’s vital to a business’s core operations. Likewise, a company that has outgrown a legacy system that isn’t scalable can find itself in need of a replacement that will better serve future needs.

Legacy IT Systems Assessment

The best course of action when assessing legacy systems is to not wait until the system has become a crucial weakness. Forecasting the life cycle of systems needs to consider expected business growth, changing customer expectations, and trends in current technology. Disruptions to a business’s operations are avoidable when the legacy system is replaced before it becomes a critical weakness. Until that point is reached, a legacy system is still a valuable part of a company’s business system.

For organizations considering replacing legacy systems, Outsource IT has experienced IT professionals who can help to determine the best course of action. We also offer managed IT services and third-party apps that may serve as replacements for outdated systems. Please contact your account manager today to learn more.

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