Uncovering the Hidden Costs of Legacy Technology Systems
Investing in new technology for your business, understandably, seems like a costly venture, which is why many businesses choose to use their legacy technology for longer than they should. Although this may appear to be a more cost-effective approach, relying on obsolete technology and a legacy system can cost your business more money in the long run. From the expensive maintenance of legacy systems to reduced productivity and increased security risks, we’re going to explore five ways legacy technology costs your business money and how to avoid paying these unnecessary costs.
What is Legacy Technology?
Legacy technology refers to outdated or obsolete systems, software, hardware and solutions that have been in use well beyond their intended lifespan or are no longer fit for purpose to support modern operations. These legacy systems are typically surpassed by newer, more technologically advanced solutions that are more efficient, secure and easier to maintain.
If your business has been around for a number of years, chances are you are relying on some outdated technology or an entire outdated system. Common types of legacy systems that businesses have not updated include:
- Servers
- Laptops
- Operating Systems
- Network peripheral
- Applications
- Databases
- Phone systems
- Storage systems
Let’s explore a few of these key technologies that can become outdated, if not updated/upgraded, in detail:
Analogue Business Phone Systems
Business phone systems have relied on the Public Switched Telephone Network (PSTN) for generations, but this system and all business phone systems that rely on it will become obsolete in 2025. These systems are stored on-premise and lack the features necessary to support modern communications, such as video calls and messaging and don’t support hybrid and remote working. Therefore, these systems will be phased out in favour of internet-based (VoIP) communications systems, which possess a vast range of communication channels, productivity integrations and are capable of being accessed from any location.
On-premise Servers
In some circumstances, on-premise servers do still serve a purpose. For example, businesses who require complete control over their data and have the resource to create and manage customised IT solutions, could still benefit from on-premise servers. However, for most businesses managing these on-premise solutions isn’t a cost-effective solution and requires a significant amount of your employee’s time to maintain them. They’re also not as flexible and agile as more modern cloud-hosted environments, which are more cost-effective to maintain and data can be securely accessed from any location.
Outdated Operating Systems
Most companies have built their IT infrastructures around the same operating system they’ve had for years, as moving to a new operating system is viewed as costly. This causes issues when companies then introduce newer technologies that the original operating system wasn’t designed to support. Modern technologies are more easily capable than legacy systems of adopting new updates and additional software.
How Do I Know if My Business is Using a Legacy System?
A legacy system can be identified by:
- It’s difficult to integrate with new solutions, processes, applications, and systems.
- There are no options to upgrade the solution without replacing it.
- The cost of maintaining the solution is higher than implementing and maintaining a more modern system.
- The system/solution’s performance has become slower and is more prone to faults.
- It is likely more than 10 years old.
- Parts and support are not readily available, due to the age of the solution.
Regardless of the fact that the legacy systems they are using are out of date, many businesses continue to use the solutions for a variety of reasons, including:
- They feel that they still get the job done (albeit inefficiently).
- They’re not sure what to replace the solution with.
- Fear of costs or the change it may cause for operations.
- Potential risk of costly downtime
However, not replacing out-of-date solutions can have a serious impact on the profitability of your business. So, now we’ve got a clear idea of what legacy technology actually is, let’s lift the lid on how it can cost your business and how this can be avoided.
1) Maintaining Legacy Technology is Expensive
Over time, legacy technology systems become slower and are more likely to encounter issues and faults. As the solutions become more outdated, it can be more difficult to repair, due to parts being unavailable or compatibility issues resulting in higher maintenance costs. Businesses will also need to find and retain skilled technicians who have the capable skills to maintain this technology efficiently. As the technology becomes more and more outdated, technical teams will be more well-versed in current solutions, making it difficult to retain talent to maintain legacy systems.
Outdated software will not usually be updated automatically. This means a business will need to allocate suitable resources to ensure software is regularly updated, to avoid falling victim to security risks. Therefore, a business will either need to pay excessive wages to hire relevant talent or redistribute the time of their existing resource, which could be better invested in the progression and growth of their business.
Through utilising obsolete legacy systems, instead of optimising operations with more up-to-date technology, a business will waste unnecessary money on maintenance, which could be redistributed into investments that provide more value for your business. Modern technology solutions can offer licence-based deployment, which means a third-party provider would oversee the maintenance of your solution, freeing up your IT resource for more important tasks within your business. If something does go wrong, modern solutions are easier to fix, as parts are more readily available and many solutions are hosted within the cloud, which means troubleshooting and maintenance can be carried out remotely, by either your provider or your IT resource.
2) Reduced Efficiency and Productivity with Legacy Systems
Relying on old legacy technology slows down processes and workflows, resulting in reduced productivity and increased frustration for your team. For example, outdated hardware can cause slow system performance due to delays in loading applications and files. Expecting legacy laptops and PCs to manage the number of applications, software and platforms, necessary to support the operations of the modern business, will place far too much pressure on slower, less capable hard drives. This could lead to applications opening too slowly, system crashes and buffering. The result? Reduced employee efficiency and negative employee experiences due to the pressure of having to complete their duty with inadequate hardware and stunted operations.
The Importance of Customer and Employee Experiences
Customer experience is proving to be the key differentiator between businesses that succeed and those who fail. Research from Deloitte and Touche has shown that businesses that prioritise customer experience are 60% more profitable than those who don’t. As customer expectations develop and grow, so do the pressures placed on the shoulders of your employees to meet those expectations. The lack of employee efficiency will naturally have a negative impact on the experience of your customers. It will take more time for employees to find the answers to customer questions, process data and fulfil requests, which will reduce satisfaction with your service. As a result, businesses are likely to experience costly churn and reputational damage that will prevent new customers from investing in your business, causing a significant, negative financial impact.
It isn’t just the experience of your customers that can win or lose revenue. Keeping your team engaged is also an important factor that can be affected by complications caused by relying on inefficient, legacy technology. Research has shown that organisations with highly engaged workforces will outperform competitors by 147%. Constant frustration caused by outdated legacy tech equipment slowing down processes will reduce employee engagement, as no matter how diligent they are within their role, factors outside of their control are reducing their efficiency and productivity. This creates a never-ending cycle of employees feeling unable to provide the service the business and its customers expect from them, dealing with constant customer complaints, leading to increased frustration that eventually causes the employee to leave the company. Once a new employee takes over the role, the cycle will begin again. Constantly having to train up new employees takes time away from activities that provide value to your company, which can also cause a negative financial impact.
Digital transformation is key for every business to meet the demands of the modern customer and increasing engagement from employees. With access to efficient, up-to-date solutions that not only allow your employees to complete their duties, but make their workflows more streamlined and save time that can be reinvested into other tasks, boosts employee engagement and enhances the experience of your customers. Not sure what digital transformation is? Don’t worry, we’re going to revisit this topic a little later on!
3) Increased Cyber Security Risks
One of the biggest financial risks that can be caused by obsolete technology systems is the increased threat of a cyber attack. Legacy systems aren’t equipped with the necessary cyber security protocols that suitably safeguard against the sophisticated attacks launched by modern cybercriminals. Increased security risks make it more difficult for businesses to remain compliant, which can result in serious, costly implications, should a data breach occur. In a government publication that explored the common causes of IT incidents within financial services (a sector where compliance, data management and cyber security plays a vital role), Professional Services firm, PwC, explained that legacy systems can make managing cyber risks particularly difficult:
“One of the challenges with legacy systems is that many mainframe systems were designed before the introduction of the internet. In our experience, it has been problematic for some firms over recent years to ensure that these systems are protected from cyberattacks and that information is secured.”
IT Failures in the Financial Services Sector | Common Causes of IT Incidents | Legacy Systems
Some businesses attempt to integrate newer solutions within legacy systems, which can cause vulnerabilities and security gaps that can be exploited by cybercriminals. Within the same government report, regulators outlined the continuing risk posed by businesses trying to combine digital services within aging, legacy technologies:
“Firms and FMIs have built or procured digital services for their customers, which often set over the top of legacy systems, rather than fully replacing them.”
IT Failures in the Financial Services Sector | Common Causes of IT Incidents | Legacy Systems
This is an issue that isn’t limited to just the financial sector or any particular sector, industry or business type for that matter. Legacy solutions themselves can be targeted, which can be used by businesses across all sectors. Let’s take Microsoft for example. According to Statista, Microsoft Windows is the dominant desktop operating system worldwide. WannaCry is a type of ransomware known as ‘crypto ransomware’ which is used by cyber criminals to extort money from businesses by taking their data hostage in return for a ransom. WannaCry specifically targets Microsoft Windows. In May 2017, WannaCry was utilised in a mass attack through exploiting vulnerabilities in legacy versions of Microsoft Windows. This attack affected over 200,000 computers across 150 countries. Many of these systems were operating on legacy computers that relied on outdated versions of Microsoft Windows. If the businesses in question had moved away from outdated software and their Microsoft Windows had been upgraded to the latest version, the financial and reputational damage could have been avoided.
4) Incompatibility with Modern Technology
When businesses try to integrate legacy technology with modern solutions, they are likely to run into issues brought about by incompatibilities between the old and the new. Systems that were developed years ago would have been designed to run technology of its time and are not built to function with modern applications and platforms with larger storage and faster processing needs. To bridge the gap between old and new technology costly adaptations, investments in middleware (the software that lies between an operating system and the applications running on it) and the hiring of skilled professionals is required. When it comes to managing and maintaining the integrated old-new solutions, you’re likely to encounter increased costs due to the complexity of managing a hybrid environment.
In addition, even if the initial integration between the new technology and legacy systems is successful, you are likely to run into compatibility issues later down the line. Although the legacy system may be running the new applications and platforms, the increased pressure its advanced features place on your hardware will result in the applications encountering difficulties, such as slow processing and crashes, rendering them unusable. As a result, employees will have to figure out workarounds for inefficient systems to complete their tasks, which isn’t a productive use of their time and causes workflows to slow down.
In short, if you’re looking to integrate new technology within your business, it is far more cost-effective and less time-consuming to audit your current solutions and look to find replacements, rather than trying to integrate new technology with old systems.
5) Limited Scalability
In general, legacy solutions are past their peak, so they’re not going to facilitate your future operations (they’re likely not supporting your current operations). Generally, scalability with legacy solutions is pretty limited, if not non-existent. Take analogue phone systems for example. When your company grows, you will have to install new physical lines in order to accommodate the new users joining the business, which is really disruptive, expensive and time-consuming. On top of that, the technology that powers an analogue phone system is about to reach end-of-life, so a business trying to scale this solution would waste more money trying to add on extra users before, inevitably, having to upgrade to a new VoIP solution anyway.
If a business manages to scale their legacy solution, they can run into issues brought about by placing extra pressure on the solution. Due to the lack of effortless scalability and flexibility associated with legacy systems, the extra demand placed upon it is likely to overwhelm the system leading to decreased system performance, slower response times and system crashes. This results in costly downtime, lost revenue, damaged customer relationships and employee productivity losses.
In comparison, modern solutions are scalable by design, meaning they can effortlessly grow with your business. Remember the analogue phone system we’ve just talked about. Swapping this outdated system to a, digital, cloud-based, VoIP business phone system provides endless scalability, as it’s hosted in the cloud rather than relying on a physical infrastructure of analogue lines. When a new user joins your business, you simply call your provider and add another user onto your contract and you’re done. Your new user can start using the business phone system, pretty much straight away from any location!
The Importance of Digital Transformation
There’s no way around it, the world is going digital, and if businesses want to stay ahead, replacing legacy systems and solutions with digital alternatives is essential. Not only does investing in digital transformation provide your business with the capabilities to grow and develop, it is more cost-effective than relying on outdated solutions in the long run and provides the features necessary to provide the best customer experiences.
Digitally transforming your business with solutions, such as cloud computing and internet-based communications provides a wealth of benefits for both your current operations and the future of your business, including:
- Optimising operations with quicker processing times and streamlined workflows.
- Scalable, flexible solutions that grow with your business and provide your team with access to the tools they need from any location.
- Improved, feature rich communications that enable you to provide the best experiences for both your employees and customers.
- Improved employee engagement and customer loyalty thanks to solutions that enhance productivity and efficiency.
Leave Legacy Technology Behind with Digital Solutions from Netcentrix
With over 20 years’ experience in the technology industry, we’ve seen how legacy technology has advanced over the years and have helped hundreds of businesses, like yours, to boost profitability and stay ahead of the game with the latest solutions. Whether you need to upgrade your phone system, move your business to the cloud, bolster your security to safeguard against the most sophisticated of cyber attacks or a start a complete technological make over – we’re here to help!
Your business needs are unique, so our accredited, experienced specialists take the time to work with you to identify what those needs are, before sourcing the best solutions for the job. Alongside our specialists you will benefit from the expertise of our engineers, support team and your own dedicated account manager.
Ready to step into the future? Call 0333 035 4111 or contact our specialists today.
