Summary: Many organizations still run their business on legacy applications and systems. They don’t modernize these applications because of the risk and expense associated with modernization. But, could ignoring modernization be an even riskier choice? In this article, you’ll learn 6 major risks your business takes by postponing or ignoring legacy modernization.

Legacy applications are a tricky problem. Talk to any business still running on legacy software, and they’ll tell you the same thing: They would love to have modern applications. They would love to use systems that won’t hold them back. They would love to keep pace with modern technology.

But…when you dig deeper, you hear why they “just can’t modernize.” Our whole business runs on that software. Nobody knows how it works. Modernizing those applications would be a risky and expensive job.

Besides…they’re dependable. Those applications just work, and they’re critical to the business. Modernizing them would be too risky.

If modernizing your legacy applications feels like a big risk, I have a question: Is it actually riskier to ignore modernization? What are the business implications of that decision?

Today, let’s focus on that question. Here are a 6 risks your business faces if you choose to postpone or ignore modernization:

1. You risk losing customers (or users)

What happens when you give your customers an outdated solution that doesn’t meet their needs? Chances are, they’ll find a new solution. But, what happens if your clients have no better options? As explained below, you’ll create frustrated clients.

“Working in the tax field I see this issue all too often,” says Crystal Stranger, EA, President of 1st Tax. “While I appreciate that many complex legacy programs are challenging and costly to update, none of the products on the market for tax solutions fully fit my needs. And owning a business who spends in the tens of thousands a year in software, this is very frustrating. Tax software tends to either be comprehensive and clunky, or overly simplified without the ability to adjust certain facets. I work predominately with expat and international tax issues and have certain common situations that are unworkable on any software platform and must use manual overrides. The user interface, client portals and printing functions also seem to have not been updated since Y2k. Very clunky and not what I, or my tech savvy clients, would expect.”

This is an all-too-common problem. When a company’s users or customers have no better options, there’s no pressure to modernize the solution.

But, there’s a problem: A new option will inevitably emerge. It always does. When that happens, your frustrated users will leave in droves. Entire industries are going through shakeups right now as a result.

This applies to both software vendors and IT departments. If an IT department delivers outdated solutions, their users will begrudgingly use them. But, as soon as they find a better solution to meet their needs, they’ll use it in a heartbeat. This is the problem fueling the “Shadow IT” trend–a growing issue in the business world.

2. You risk wasting money on maintenance

A survey from a few years back found that the federal government spends over $35 billion every year maintaining legacy applications. $35 billion! This just highlights the high costs of legacy maintenance–another big risk of ignoring modernization.

“The top reason businesses cannot afford to ignore legacy modernization is that maintenance costs can be very high for legacy systems since decades-old systems are not well-documented or user-friendly, and can be made obsolete from regulatory requirements,” says Alex Castro, CEO of M Corp.

Why is legacy maintenance so expensive? Here are a few reasons.

First, legacy software often requires antiquated hardware. Keeping this hardware up and running is far more expensive than modern hardware.

Second, it’s more time-consuming. Legacy applications were often built without modularity, meaning they couldn’t reuse or share parts of application logic. For example, if your product pricing algorithm changes, every application containing the old pricing algorithm must be changed. Comparatively, modern applications rely on code sharing. When a change is needed, only one block of code needs to be altered.

Finally, as your software ages, the talent pool shrinks. Legacy applications require a skillset which fewer and fewer people possess. What does this mean? With less competition, the costs go up. You’re stuck paying more for talent than you would for a modern system.

3. Your risk losing vendor support

Going one step further, the big problems begin when your vendor stops supporting the software. What happens when something goes wrong, and the vendor won’t help? Or–even worse–what happens when the employees who understand your legacy systems leave the company, AND your vendor cuts off support?

When this happens, simple problems can turn into disasters because no one knows how to fix it. As explained below, problems like this can sink a company.

“The real risk with modernization for established businesses isn’t that they’ll be left behind by their customers, it is that they’ll get left behind by their vendors,” says John Brewer, COO of Deep Core Data, LLC. “We buy information technology to solve problems in our business, with the understanding that if something goes wrong, we can get help from the company that made the product. Some companies, like Microsoft and Oracle, are very explicit about when they won’t provide that support anymore, while others, like Apple, tend to have much fuzzier end-of-life processes. The situation is analogous to having a car that the manufacturer doesn’t make spare parts for anymore: as long as it keeps working, you can use it as long as you want. Once it breaks, however, you’re on your own to find a solution. Needless to say, running these systems past their end-of-support dates puts enormous risk on the user, risk that their boss, their executives, or their investors might not tolerate. Of course, there’s always the disaster scenario: that something mission-critical fails, nobody in the company knows how to fix it, and external help is either unavailable or prohibitively expensive. Businesses have been killed by lesser problems.”

4. You risk application instability

Stability is one of the big reasons companies still use legacy applications. The applications “just work” (even if nobody knows how).

The problem is, legacy applications become increasingly convoluted over time. As businesses attempt to keep their systems running, they add features to the front-end, without always updating the backend. They often employ workarounds to get the features running on their outdated systems.

Just imagine the cumulative effect that 10-20 years of updates, fixes, workarounds, and patches has on your systems. After a while, no one is quite sure how everything ties together. A change to one area of the system might break something else. While the system still runs, it’s like a ticking time bomb. One wrong move, and it could go down.

“As we saw recently when NYSE, United Airlines and wsj.com all went down in the same day, legacy systems can cause serious issues,” says Drew Thomas, CCO and Co-Founder of Brolik. “Companies typically don’t have the time or money (or both) to rebuild entire technology systems as technology gets better and new tools become available.

Upgrading backend systems and “behind the scenes” tech is expensive without any visible benefits to the end user. Because of that, the largest companies with the most advanced technologies may be building on top of systems that are outdated, broken or insecure.

This is dangerous because technology isn’t just changing… it’s changing because it’s getting more efficient, more powerful, and more secure. These new technologies, for obvious reasons, aren’t always compatible with old technologies.

This results in “hacking” functionality into places it doesn’t belong, which makes maintenance a challenge, creates an unstable base for future updates, and means that testing is far more complex than it should be.”

5. You risk creating data silos

Over time, programming methods and languages have evolved. We’ve seen the rise of open standards that allow simple integration across different platforms.

The problem: Legacy systems don’t have these open standards. They won’t integrate easily with other software (if at all). As your business adopts different software products, you create data silos within your organizations. How does that harm your business? As explained below, they limit your capabilities and slow down your business.

“While legacy platforms are renowned for their stability and robustness they are also notoriously hard to integrate,” says Zeev Avidan, VP of Product Management at OpenLegacy. “Ignoring legacy systems essentially locks-in the data stored in them and makes it inaccessible to other parts of the organization. In today’s IT world this represents a major problem. As industries are disrupted by small and agile startups, established enterprises need to innovate and move quickly just to keep up. Legacy systems do not allow for such a quick pace of innovation as they tend to make IT projects more complex and protracted. In addition scaling legacy systems and integrating them into cloud solutions, which are becoming more and more popular as a cost-effective mass delivery platforms, is difficult and may render the entire effort unfeasible. For these reasons, enterprises striving to stay relevant and competitive must consider legacy modernization now more than ever.”

6. You risk creating a bad company image

Suppose you deliver outdated solutions that don’t keep up with technology, or adapt to changing customer needs. What sort of message does that send to your customers, prospects, and employees?

It makes your company appear behind the times. Or, as explained below, it makes your customers think that you just don’t care.

“I think the answer lies in the type of relationship a business wants to have with its customers,” says Avi Goldberg, CEO of Dispatch. “Modernization has set a very high bar relative to “customer service.” Consumers growing expectations require businesses to address these demands quickly and through technology. Consumers want more information, a thirst for transparency and need for communication. Accessibility to smart phones enables any business a portal and multiple channels to communicate effectively. A business owner that adapts to the demands of their customers, demonstrates a desire to forge a long term relationship with them. Ignoring a customers voicemail, turning a blind eye to technology, scoffing at emails or text messages just alienates customers and sends a clear message that you are not interested in investing in the relationship.”

Summary

Now, these are just a few risks ignoring modernization, but the list could go on. If you would like to add anything to this list, I’d love to hear it. Feel free to share in the comments.