As we move to the next era of the digital age, many companies still use outdated legacy software to run their business. This causes high costs and lost production hours due to maintenance, downtime, and unneeded training to support these systems. By moving your company to custom software, you can save money due to the reduction of these costs. The ROI can be up to 20% by modernizing to a custom software solution.
What is Legacy Software?
Legacy software is any outdated software still in use. These systems paved the way for the modern software we use today. Many of these systems may be 10, 20, or even 50 years old in some companies. You might ask if it isn’t broke, why fix it? There are several reasons that will make you rethink this question from antiquated programming language support to costs of actual revenue and growth opportunities.
Cost of Maintenance and Support
There are several main costs with keeping and maintaining legacy software that companies need to recognize to see the benefit and ROI of upgrading to a new, modern system. These costs can include direct costs, such as cost to maintain the actual system, to indirect costs, such as loss of revenue due to growth and new opportunities.
The cost to maintain legacy software can burn through an IT budget more than any other costs. According to nextgov.com, in 2016 the US government allocated 70% of its IT budget to maintaining legacy systems. This cost is on par with the private company’s allocation of IT budget. Costs for support and maintenance include specialized IT support contracts, training IT staff to handle outdated technologies, outsourcing to have patches and updates built especially for your system, and buying supplemental software to support legacy systems.
Opportunity costs add up keeping legacy software. For instance, growth opportunity could be lost by expanding into new markets. If your software can not handle expansion, you miss on revenue. This also applies to the creation and deployment of new products and services. If your software lacks the ability to support the growth of your offerings, this leads to a loss in revenue due to opportunity cost.
An article in CIO also points out every 5 years a company will spend more money on maintenance than they did on the actual software. Companies also pay for maintenance on legacy systems they will never use. Taking this into consideration, migrating to cloud computing or have custom software developed could save your company money on unneeded legacy costs.
With modern or custom software systems, your ROI is greatly increased. Maintenance cost will decrease based on the system being designed for your company. Updates and patches won’t matter. Systems built on new technology for your needs can be scaled easier and meet new market and demand opportunities and help to increase revenue. Custom software won’t need pre-purchased maintenance saving money on services you won’t use.
Need for A Dedicated IT Staff
Many companies fail to keep current with system technologies. As these systems age, the technology used becomes obsolete. This brings new challenges for companies to face to keep their systems up and running at the minimal.
Outdated legacy software will require IT to have special training to keep your business running. This may require one or more of your IT people to have special training to maintain your system or the need for a software engineer who knows a language not used anymore. This put strain on your team. There’s also the possibility the special skill allows your person to market themselves and the potential for loss due to turn over.
If you have a small team or no team, you might have to hire a contracted IT service who can handle the system. If this isn’t available, you may have to have a special support contract with the vendor if they agree to support the system. This could cost your company a lot. You could end up in the same situation once these options stop support to the software or if they lose the person trained in the technology.
Custom software is created with modern and popular technologies that have been around and are still growing with continued support and various frameworks and libraries to keep them up to date. These systems don’t require special support and very little training for your IT providers. Being new technology, vendors will charge less, if anything, for customer support.
Loss of Workforce Efficiency
Efficiency is close to gold in business. With a smooth workflow and more production hours, revenue increases without more cash flow. The issue is, with legacy software, workforce efficiency can be reduced causing production to reduce.
Downtime due to frozen systems can cause havoc on departments, or the entire company. If you use legacy accounting software and it has downtime due to unforeseen issues, this affects your accounts receivables and your cash flow. Downtime in human resources may affect time cards, time accrued, or personnel files. Downtime in a legacy ERP system could halt an entire factory.
Using legacy software may also lack an adequate reporting system and fail to collect and display analytics to help determine problem areas. This could lead to the inability to track and forecast potential problems in your company. It also fails to meet certain benchmarks for production and profit by having to use guesswork in planning and resource allocation.
Another cause of inefficiency is outdated user interfaces and the lack of customization. One great example of this would be the classic AS/400 interface compared to modern touchscreen, mobile applications to handle inventory. Also having modern systems allow for integration saving time and frustration having to switch between programs and even separate computers.
Modern custom software is built to handle the demands of your business. Downtime will be reduced, or at most extremely minimized. This allows for efficient workflow and increased production hours. With minimal downtime, the chance for loss due to department slowdown is decreased keeping your workforce going. Modern software can be built for your reporting and analytic needs. This allows for forecasting and trending and allows for more precise planning of production and resources. Plus, UI’s are custom built to what you need to keep your resources in one interface with easy access and use.
Lack of Flexibility
Flexibility is a key factor in scaling a business. Systems need to be able and ready to scale when demand requires it. Legacy systems could lack the flexibility to scale as your business needs it and cost you in lost revenues and opportunity.
Companies growth brings change to various areas of the company. New processes need to be created and old processes need to be updated. In production, these new processes require technology that meets the demand of these new processes. More than not, legacy software was designed for 10-year-old processes. Much has changed in production. Lean manufacturing and clean factories alone won’t be supported by legacy software. With automation and cloud-based business solutions, your company will be left behind by your competitors.
The modern business needs to be mobile and able to integrate to survive another 10 years. Customers are mobile. Legacy software won’t meet these needs. With so many API’s and integrations into other software, legacy fails. Either the integration fails, or you spend most of your IT budget to have custom integrations created for minimum usability. It’s important to ensure your systems can integrate with new technology like cloud computing, blockchain, AI and the IoT.
Outdated legacy software may also lack the developers and engineers to patch and update the system to meet the demand for market growth. Expanding into new areas may be limited by your systems ability to be implemented into another factory, office, or warehouse. You may find you can’t purchase new licenses due to the company no longer supporting the product. Some systems may need specialized servers or other hardware that may not be readily available to purchase or use for expansion. This causes a loss in revenue from a missed opportunity.
Custom software can be built mobile first. This makes it easily accessible to your workforce and customers if needed. Custom software is built to scale and with cloud computing, it scales as you need it. You keep your factory moving and our processes up to date. Custom software is built with integration in mind. API’s and other software can easily be integrated giving you full control. With this control, you won’t need supplemental software to keep your business moving in the direction of growth.
The ROI for custom software can far outweigh the monetary and nominal costs of maintaining and supporting your outdated legacy software. Custom software will relax your IT team, the board of directors, and your budget. Modern software is easier to more cost effective and easier to maintain, use, and justify your income statement.
To learn more about custom software and moving from legacy software, email us at firstname.lastname@example.org or call us today at 315-738-6016. We are a software company specializing in custom software and integrations, cloud technologies (AWS Certified), blockchain, and staff augmentation. We work with startups to global corporations in manufacturing, insurance, finance, defense, and cybersecurity. Contact us today for more information on how we can help start, grow, or make your business more efficient through our software solutions.