Technology has never developed more quickly than now, finding its way into every business sphere, from edtech and e-commerce to energy and healthcare. And every year, the issue of whether to embrace new technology or stick with the legacy systems rises only higher. Most businesses decide in favour of the last one, thinking, “If it’s not broken – don’t fix it,” but in a long shot, it is just an illusion of stability.

You may be hesitant to switch to more progressive applications as they hold unknown risks, the process may seem too cost-consuming, and your existing system is a known evil. You are not alone – for instance, a Deloitte research shows that over 30 % of businesses still use spreadsheets as their main budgeting and forecasting tool. But what is the actual cost of postponing the digital modernisation of your business? Let’s dissect this issue.

Operational Inefficiency: Wasting Time and Resources on Outdated Technology

One of the main drawbacks of legacy systems is that they are extremely slow, especially compared to the most recent and innovative AI-driven solutions. Legacy applications frequently have time-consuming procedures and call for manual data entry. On top of that – their automation potential is somewhat restricted, so you have no choice but to squander time and energy trying to do even simple tasks.

According to Groove Networks research, employees deal with IT problems for an average of three hours a week, or 150 hours a year, due to the inefficiency of outdated systems, resulting in decreased productivity and a rise in production costs.

An excellent example of how legacy systems modernisation can deal with this challenge is Amazon. This global e-commerce leader has automated its warehouse operations using innovative technology like robots and AI, which significantly cut their delivery time and ruled out human error, leaving their competitors far behind.

Maintenance and Support Costs: How Maintenance Drains Financial and Human Resources

Let’s start here with the fact that according to a Deloitte research, IT departments spend more than 55% of their budgets on ongoing legacy system maintenance, with this number growing annually. These costs range from the time and money needed for maintenance and upgrade requirements to the financial risks brought on by antiquated security protocols and false reporting.  

In fact, when CFOs were asked to rank the biggest obstacles to gaining value from the IT function, one of the most significant issues they mentioned was technical debt, which includes the time needed to maintain various legacy systems. Nearly 60% of financial services CTOs surveyed by Forrester say their legacy tech stack is too costly and inadequate for modern applications. 

What is more, legacy application maintenance requires experts with unique sets of skills, but as technology usage declines and these abilities become obsolete, the pool of available talent is getting smaller every year. Companies must continue to employ people with these abilities or upskill both new and current employees to preserve these competencies.

Not only do legacy systems take up internal resources and funds, but these kinds of solutions can also be an expensive barrier to agility and innovation. For example, many processes in healthcare, recruitment, and retail can be more efficient using AI-powered tools or automated applications, but legacy systems act as a brick wall before them.

Security Risks: Hidden Vulnerabilities in Legacy Systems

Legacy systems present serious security vulnerabilities when data breaches are becoming more frequent, and the IBM 2024 Cost of a Data Breach Report shows that the average cost of a data breach is USD 4.88 million and is expected to keep growing. That would result in significant reputational damage and customer trust.

Moreover, outdated systems are often more susceptible to security risks like malware and data leaks, as it’s possible that they weren’t built with contemporary security measures in mind, which makes them vulnerable to assaults or unable to recognise them. For instance, legacy systems might have inappropriate authentication procedures because password security and encryption techniques have evolved over time.

It’s critical to regularly patch and upgrade legacy systems to reduce security threats. Investing in security products and solutions that can add an extra layer of safety is also advisable.

Impact on Innovation and Growth: Legacy Systems as Barriers to Progress

A business may suffer if its technology cannot keep up with the fast-paced digitalisation of the world. Businesses lose out on chances for increased productivity, better customer experiences, and new revenue streams when they continue to use out-of-date technology. A loss of competitive advantage, which stifles innovation and lowers overall market relevance, might result from this resistance to modernise.

What is more, legacy systems can hardly keep up with all the innovations, preventing you from implementing new features and functionalities for your product or internal workflow and becoming a significant obstacle to agility. They frequently lack flexibility and are challenging to adjust to new technology and shifting market demands. This rigidity can stifle creativity and make it challenging to create new goods and services or enhance already-existing ones.

Customer Experience: Losing Competitive Edge

Having accessible and functional systems is critical if offering a positive user experience is the cornerstone of your company. Legacy applications can sometimes have faults that appear to users before business owners even notice them.

The customer experience might be adversely affected by legacy systems. Frustration and dissatisfaction can result from slow and antiquated user interfaces, restricted online functionality, and challenges integrating with contemporary customer support technologies. For example, 47% of customers expect a web page to load in 2 seconds or less, and if you don’t meet this expectation because of your slow, outdated apps – you fall behind. This could lead to clients defecting to rivals that provide a faster, cutting-edge, and intuitive experience.

Conclusion: Is It Time to Modernize?

It takes strategy to navigate the complicated world of information technology. Although legacy systems could provide a feeling of security and comfort, they can burden a company with unstated expenses that deplete funds, impede expansion, and expose the enterprise to new risks. Investing in application modernisation is about more than just staying current; it’s also about taking advantage of possibilities, bolstering security, and guaranteeing sustained economic success. Adopting modernisation can transform corporate procedures and increase productivity, setting up companies for long-term expansion and resilience.

Now is the moment to take action! Businesses can realise their full potential when removing legacy systems by recognising and resolving the hidden expenses associated with them. Accepting innovation is the first step toward a successful digital transformation. But if you need a little push, consult with industry experts or attend BBEA networking events to learn more about digital transformation.