Legacy Software: What It’s Costing You and How to Upgrade

Editor's Note: Legacy software, based on outdated technology, might be crucial for your core business operations, but some irrelevant functionalities may not fit into the current context. Upgrading your system can address this challenge, as you will be able to transform your tech assets with modern-day technologies. We have put together a detailed piece on the costs of not upgrading your enterprise apps to new technologies and how you should approach them.

With the rise of technology during the 90s and early 2000s, we saw the inception of traditional systems. Yes, we're talking about those clunky systems, their complex installation processes, on-site training programs, and, last but not least, a heavy price tag.

However, the intention of software, aided by the advancement of technology, is to make people’s lives easier by solving a number of underlying issues. Legacy software doesn’t do that at all. In fact, it adds to the list of problems, overhead costs being the most critical of them all.

This is evident as research shows businesses worldwide spend $2.6 trillion each year on legacy systems, with maintenance taking up to 70% of their IT budgets.

This blog will get to the bottom of that challenge – the financial, along with operational and reputational, consequences of not upgrading your enterprise systems to new technologies. Read on!

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A General Overview of Legacy Software Systems

Legacy systems are outdated IT apps and tools based on older technologies. Despite their security risks, restricted functionality, and obsolete infrastructure, legacy systems still hold great significance in day-to-day business operations, as stated by Gartner.

Here's a checklist to determine whether your system is obsolete and needs an upgrade:

• It’s not compatible with modern hardware and software,
• It has multiple patches,
• The vendor does not support it anymore,
• It supports an old operating system,
• It's impossible/hard to scale for its age-old architecture,
• Its original developers have retired or shifted to other technologies,
• It has compliance and integration issues.

The burning need to keep your business apps up to date may stem from their inability to support the current or future requirements of a business. Such systems are hard to maintain securely, affect productivity, offer poor user experience, etc.

These also get a lot more expensive to maintain as governments and corporations have spent a total of $2.5 trillion on replacing legacy IT systems since 2010.

Costs of Maintaining Legacy Applications and How Much You Overpay

Legacy systems are costly burdens for enterprises.

Although it may seem like you're saving money by not spending on digital transformation, it might dig a bigger hole in your pocket in the long run due to a number of reasons – technical debt, inefficient data handling, security loopholes, compliance issues, and whatnot.

Hence, the "Don't fix it if it ain't broken" approach is really irrelevant here as old technology poses unimaginable risks and added expenditure to your organization.

Take a look at the key challenges organizations face when they fail to upgrade crucial business applications:

1. Compromised Security

One of the biggest challenges of outdated software is the scope of security breaches. These systems are easy targets for hackers as they lack modern security features like encryption, two-step authentication, and regular patches.

According to an IBM study, $3.92 billion is the staggering cost of a data breach. Here are a few reasons your legacy application can be vulnerable to security threats:

• Lack of vendor support leads to compliance issues with the latest cybersecurity protocols and reduced resistance to cyberattacks.
• Mending security ‘holes’ is challenging as you cannot update most of the legacy systems.
• The “lean IT” concept doesn’t align with legacy IT strategies.
• The number of developers having expertise in legacy software is decreasing year by year.

2. Dent in Productivity

There's not much to say about the inevitable impact of slow systems on performance and speed. Legacy software might be stable, but its massive, monolithic architecture consists of multiple interconnected components. This means one app will affect other systems, leading to reduced efficiency and hindering organizations from running at the required pace to keep the competition on their toes.

For example, adding new data would require you to enter it manually, as legacy components don't have automatic synchronization. As a result, you need a lot of workforce whose primary task is typing instead of focusing on productive work.

Fortunately, modern technologies like ML-driven automation of business processes can solve this issue by bringing a tenfold improvement in the human resource efficiency of organizations.

3. Employee Dissatisfaction

Legacy apps have a direct negative impact on employee experience as it tends to decelerate performance. Given the tumultuous market situation, this is something businesses can’t afford.

It's a time and resource-consuming process to train your employees on legacy systems. They will also have the impression that your enterprise is not willing to embrace change or adopt a constructive digital initiative. At the end of the day, employees need speed and productivity, and if they can't complete their work without frustration, they will simply move somewhere else.

According to a Forrester report, inefficient software tools are the reason for unhappiness at work for over 50% of employees, and around 25% have stated that they might leave their jobs for the inefficiency.

4. High Cost of Ownership

Hosting legacy systems on-premises results in high administrative expenses and ownership costs. Today, we have cloud computing giants like AWS and Azure that save you from the burden of owning a server and running operations.

Legacy tools come with non-trivial maintenance and refer to highly paid IT practitioners who must spend hours after hours in implementation before the software is even useable. Naturally, such extensive effort is not acceptable anymore when newer approaches just allow you to make changes quickly and effortlessly.

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5. Frequent Downtimes

Downtime is a big deal, especially the financial impact. Recent studies have shown that the average cost of downtime is nearly $9000/minute for large-scale enterprises. And if it’s a high-risk industry like finance or healthcare, the cost can surpass 5 million in just an hour.

Apart from drastically cutting your margins, downtimes result in serious customer churn. Everyone now expects 24*7 access to products and services. With obsolete systems, that can become a difficult task as they get slow and are prone to crashes.

Over time, this adds up quickly, especially when the software goes down multiple times a year. Plus, outdated apps struggle with new security threats and modern-day requirements, which only expedites the problem.

6. Compatibility Issues

Legacy platforms are often incompatible with modern technology because they lack the scalability and flexibility of modern tech. If an enterprise app runs on older programming languages and frameworks, it’ll simply not match today’s standards.

For example, apps now use APIs to communicate with each other. Legacy systems might not support this method and probably use outdated techniques like SOAP when newer systems have shifted to REST or GraphQL. This means the systems can't work together without major, costly modifications. And the more patches you try to apply, the more complex and unstable your infrastructure becomes.

As businesses are now increasingly adopting cloud app development solutions and edge technologies, legacy systems struggle to integrate with these new environments.

7. Legal and Regulatory Concerns

Country and region-specific laws define how businesses handle user data. Government bodies keep changing and updating them as per the latest standards. New technologies, newer regulations – this is how it goes.

So, if your app hasn’t been updated in a while, it’s likely not compliant with the latest legal protocols, such as GDPR or CCPA. An outdated app does not just have the security features to meet modern-day security requirements. In case your app gets breached, and customer data gets exposed, your business could face heavy fines and lawsuits, not to mention the damage to your reputation.

So, How Should You Upgrade Your Outdated Software?

Searching “legacy application modernization” on Google will not help you with any A-Z guide that perfectly fits your organizational strategy. Every modernization project is a one-of-a-kind initiative that depends on what your existing system can do at this point and what you want it to do in the long term.

Let's walk through a few things you should pay attention to and strategies you could utilize to upgrade your outdated systems:

Lift and Shift

This concept is pretty self-explanatory – you basically select the old server and move it to a new cloud server.

However, you can't just pick up your legacy system and host it into the cloud. If your business is running on legacy hardware, it won't allow you to spin up all the older versions. Cloud services like AWS, Azure, or GCP will only support the last few versions of the operating system.

And if you’re using server-side frameworks or third-party products like Ruby on Rails, Java, ColdFusion, or PHP, you won’t have many options except installing newer versions of those products on the cloud.

Although the "Lift and Shift" approach is quite effective, it isn't without drawbacks. For instance, what if you must upgrade the old software database in order to install it? What if a particular feature gets deprecated in the new version of the system?

Go for lift and shift when:

• Maintenance cost is drastically low
• It's the cheapest model in terms of time, money, and effort
• If your primary goal is to update the underlying server
• You can’t modify the system actively with frequent changes

Rewrite from Scratch

While some people despise this approach as a strategic mistake that any IT firm can make, rewriting your legacy system from the ground up is sometimes the best strategy.

The main reason to completely rewrite your software is mostly security. If your business is running on unsecured infrastructure or you can't find anyone to fix it, you should maybe knock it down and start afresh.

Usually, rewriting something ends up taking longer than expected, no matter how simple the process is. Unless you have design documents or a sustained software engineering plan, you won’t find the domain expertise magically available the first time. You end up decoding strange code and figuring out why there are so many bizarre edge cases in the design.

Alternatively, you can leverage low-code or no-code platforms or adopt a cloud strategy but ensure your final product will turn up better than before.

Go for a complete rewrite when:

• The maintenance cost of your legacy system is too high
• The software is so complex that no one knows how to fix it
• There are no developers willing to work on it
• It has a deprecated language or framework

Settle on Refactoring

If you don’t have the time and resources to afford a complete rewrite, you can slowly replace bits and pieces of your legacy application by refactoring.

Let's suppose you release a new feature that integrates Microservices architecture. This will empower you to migrate the software steadily over time in any scenario. Another excellent way to refactor your legacy app is to break it into two pieces.

For example, instead of storing your client data in the existing system as well as in the CRM, try to create a unified platform – a single source that you can integrate with other systems, erase duplicate data, and eliminate synchronization issues.

Hence, refactoring is a great method of legacy system modernization that will help you move your software pieces to various SaaS products and enable seamless integration across teams. You can also save an enormous amount of time as you don't have to assemble everything from square one.

Go for refactoring when:

• You need to fix the system with surety
• You have the time to create the perfect solution
• You're looking for a less expensive method
• There are big projects at once to manage

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Re-Platform to the Cloud

This practice refers to taking your on-premise infrastructure or custom solution and shifting it to the cloud. Hence, different cloud migration strategies will help you to change the application architecture and rewrite the integrations.

To re-platform for the cloud, you have to look over each of the existing processes and figure out ways to improve them. Organizations, especially in the enterprise performance management niche, prefer this approach as it yields significant results down the line.

Before the emergence of the cloud, vendors used to offer only software to integrate into the infrastructure. Hence, moving to the cloud requires rebuilding and re-platforming processes so that they fit into the new SaaS/PaaS platform.

A number of older versions of on-premise systems don't provide a 'modernization' path, but a few vendors do when shifting to the cloud. One classic example is Oracle when they completely rewrote the old software suite and created new cloud services.

Go for re-platforming when:

• You need easier integration with SaaS, PaaS, and IaaS products
• Flexibility is important for future upgrades with limited costs
• There's no need to worry about software or hardware upgrades
• You have to scale up/down the system as per business demands

Examples of Upgrading Legacy Business Apps to New Technologies

We're going to share two of our flagship projects that highlight how modernizing legacy systems can have a transformative impact on an entire business.

1. IT Modernization in a Health Insurance Firm

The client had an old contact center, which was last updated in 2012, and was causing all kinds of problems. Frequent system crashes, downtime, and the inability to integrate with modern communication channels like mobile apps and social media made it hard to keep up with customer service.

To fix this, we helped them move to a cloud-based platform, specifically the Microsoft Digital Contact Centre Platform. It gave them omnichannel support, chatbots, and AI-driven features.

Project benchmarks

• 240+ minutes saved per case
• 33.5% increase in first call resolution
• 2M+ customer interactions per year

2. Redeveloping an Outdated Auditing Tool

The company needed a complete overhaul of its legacy system that couldn’t handle modern auditing techniques, was manual-heavy, and lacked interoperability. We transformed their system into a more adaptable and automated platform by integrating the latest technologies and advanced reporting tools.

Project benchmarks

• 70% of target clients reached
• Compatibility with modern devices
• Improved customer experience

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Modernize Your Legacy System with RadixwebGiven a chance, any obsolete software can be a silent killer. Organizations go haywire in finding why their business is not advancing but forget to take a deeper look at what it is running on. It sure has served you well for decades, but sooner or later, you'll find your business locked in it with barely a scope for growth.Don’t wait for that to happen. You should know when it’s time to upgrade your system before it’s too late.But hang in there! Upgrading legacy systems with cutting-edge tech is a massive undertaking, and you need to make steady progress. If you need a helping hand to drive safely across the modernization path, we're here to tackle this challenge for you.Explore our skills in legacy software modernization solutions or reach out to our experts – we’ll bounce off a credible idea to revamp your system in the best possible way and breathe new life into it!