Handling legacy systems during digital transformation

legacy systems

Elephant in the room

In companies not started as digital natives, the topic of handling legacy systems during digital transformation may be an “elephant in the room” conversation. The young people eagerly focus on improving customer experiences and new products. They may not realize that core legacy systems run on older platforms, were initially programmed decades ago, and have highly inflexible data architectures. The experienced hands that helped build or support these systems want to foster forward thinking. They don’t want to impede things by constantly bringing up the legacy burden.

Definition of legacy

According to Gartner’s IT Glossary, a legacy application or system is “an information system that may be based on outdated technologies, but is critical to day-to-day operations.” In the thousands of companies across all industries founded before Google, Uber and Stitch Fix, legacy systems make up the core of all transaction processing activities and account for billions of revenue dollars. Gartner continues by saying: “replacing legacy applications and systems with systems based on new and different technologies is one of the information systems professional’s most significant challenges.”

No hiding place

Even though discussing the burden of legacy systems is uncomfortable, companies must talk about it. It’s so important that, in Infosys’ recent survey entitled “Barriers and Accelerators for Digital Transformation,” 41% of respondents anticipate legacy systems could be 2019’s most serious barrier. (1)  Then, there’s those pesky digital natives. They proclaim that having no legacy systems is a major competitive advantage.

What’s the burden?

Today, for most pre-digital native companies, legacy systems make up their transactional spine and must deliver reliable performance. Fundamentally, we can’t live without them. However, the legacy burden draws time, people and money away from corporate transformation initiatives and here’s why.

  • Software and hardware maintenance is ongoing for the life of each legacy system and cannot be stopped
  • The software is precious. It holds the multiplicity of business rules governing the company’s transactions. Generally though, it is complex, layered with patches, and incompletely documented.
  • Changing one system usually means modifications to other related systems and extensive testing across all systems before releasing to production.
  • Older systems built with older technologies call for qualified technicians which may be difficult to retain / recruit, especially with 10,000 baby boomers turning 65 each day. (Source: AARP)

So, not only are legacy systems expensive to run, but they draw valuable resources away from creating new systems built for today’s tech savvy customers who have been “Amazon-ized”. They expect fast and easy transactions from their mobile device of choice.

Effectively adapting

According to Altimeter, digital transformation is the process of “modernizing how companies work and compete and helping them effectively adapt and grow in an evolving digital economy.” (2) That’s a mouthful, but the key point for this legacy discussion is to “effectively adapt.” Legacy systems cannot be replaced without the will to invest, careful assessment of their purposes, definition of what will take their place, and a well thought out implementation path. This is costly, complex, challenging and downright difficult. In the meantime, you have another choice.

When looking to extend the modernization benefits throughout the company to all customers and employees, legacy systems can play a valuable role in transition. Instead of rushing to replace them, companies can move forward with their transformation initiatives by deploying digital technologies in parallel with existing systems. Literally, they hold troves of information and are an ideal source of data needed for intelligent automation.

Moving forward together

Consider your company’s most valuable legacy systems. Start with the ones that touch the most customers or log the greatest number of transactions. Imagine how you could use one or more of the following tools to increase the value of those systems to the company.

  • Robotic Process Automation
  • Workflow orchestration
  • Advanced & mobile capture
  • Analytics
  • eSignature

The possibilities are unlimited. It only takes imagination and a willingness to think beyond the current boundaries of any given legacy system. How about improving customer response time? Or reducing manual input by operators? Or automatic handling of specific classes of frequent, rules-based transactions? Or installing early warning compliance monitors? Or automating interfaces between legacy systems?

Increasing legacy system value

We all know that legacy systems are not going away soon. They are too valuable to turn off and too expensive and risky to handle as big-bang replacement projects. But, their value can be increased by enhancing them with intelligent information management tools.

So, when your company is ready to both accelerate its digital transformation and increase the value of a legacy system, take three steps to increase the chances of success.

  • One, focus on the desired business outcome for the external customers, because that’s where value is ultimately created.
  • Two, include legacy system experts on the transformation team, because they hold the key to understanding the business logic embodied in the existing system.
  • Three, contact outside experts in deploying intelligent information management tools, because they can help to vision and implement your legacy-enabled modernization.

Notes:
(1) Infosys Digital Radar Survey, “Barriers and Accelerators for Digital Transformation,” January 2019, page 11.
(2) Altimeter, The State of Digital Transformation, 2018-2019 edition, page 2.