How Legacy Systems Can Hinder Business Growth and Innovation

As an IT company with 15 years of practical experience helping organizations move into the modern age, we’ve seen just how crippling legacy systems can be to enterprise adaptability and growth. So, through the years, not only developing but modernizing software solutions for our clients, we have found ways to tackle challenges that arose. And we can say – these ways worked. In this post, we examine how legacy tech can slam the brakes on your company's growth and what you can do to get back in the race.

The business world is much like a Formula 1 race. When there is no advance in thinking and approach, it is easy to get left behind. But what happens when your company's engine is a clunky, outdated legacy system? It is like trying to win a race on a car fitted with square wheels. According to studies, almost two-thirds of organizations spend over $2 million to maintain and upgrade outdated systems. That's money that could be spent on new technologies, better customer experiences, and game-changing innovations.

The Impact of Legacy Systems on Business Growth

Here are five key ways legacy systems can hinder your business.

1. Slower Business Processes

Legacy systems are often built on outdated technologies. Thus, they struggle to keep up with the demands of modern business. They may be large, slow, and subject to high frequencies of crashing or other malfunctions. Unfortunately, this causes unwelcome interruptions, time, and effort mismanagement, and low output. Competitors with more agile systems can react to the market changes and the customers’ demands much quicker. So, slower processes mean missed opportunities.

2. Increased Maintenance Costs

As legacy systems age, the costs to keep them running skyrocket. Vendors may stop providing updates or support. Older hardware becomes more prone to failure. They require frequent and expensive repairs. As a result, you will be depending on a few remaining resources for support. This leads to higher labor costs. In the end, a larger portion of the IT budget is consumed by maintenance rather than innovation.

According to a report by the United States Government Accountability Office, agencies allocate 80% of their IT budgets towards the upkeep of outdated systems. By investing in modern technologies, businesses can minimize maintenance expenses. They can focus on development and gaining a competitive edge over rivals.

3. Scalability Issues

Is your organization undergoing rapid growth? If that is the case, your old systems might not be able to cope. In fact, old technology often has its limitations in terms of transaction volumes, the number of users or additional features. This rigidity in systems can be detrimental in a business environment where market and consumer dynamics keep changing. This can put a serious damper on your ability to grow and seize new opportunities. At Stfalcon, we have helped clients resolve such issues by offering them scalable, cloud-based solutions that can grow with their businesses.

4. Security Risks

Older systems are easy sources of cyber threats. Software obsolete often contains flanks in security. Cybercriminals invade them to gain access to networks and acquire sensitive information. The costs of a major data breach - from remediation to reputational damage - can be devastating for a business. In fact, the average cost of a data breach in 2024 rose up to $4.88 million. Therefore, there is a critical need to update systems and design security measures to protect sensitive data and maintain customer trust.

5. Skill Shortage

As technology evolves, fewer professionals have the expertise to manage legacy systems. Younger IT talent is often trained on the latest tools and platforms, not outdated technologies. This growing skill shortage makes it difficult and expensive to find qualified staff to keep outdated technology running. Moving to more modern, widely-used systems makes it easier to recruit skilled IT professionals.

The bottom line? While legacy systems may have served your business well for a long time, they could now be holding you back in a major way.

Ivanna

Client Manager

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Signs It’s Time to Modernize

In this section, we'll explore some clear signs that indicate it's time to upgrade your old systems and take advantage of newer technologies.

Declining System Performance

Firstly, let us discuss the most obvious factor. This is the decrease in the efficiency of the system itself. As your business grows and evolves, the demands placed on your IT infrastructure increase. Legacy software was designed for a different era and smaller-scale operations. Thus, they often struggle to cope with increased load. These systems can become bottlenecks. As data volume increases, processing takes longer. Slow systems mean slow decision-making.

This can lead to lost opportunities and reduced competitiveness. Moreover, there might be integration issues. Outdated software may not integrate well with newer technologies. This lack of compatibility can hinder business processes. It becomes increasingly difficult to implement new tools that could drive growth.

Increasing Downtime

Another red flag that indicates the need for modernization is increasing system downtime. As legacy technologies age, they become more prone to failures and outages. They can hinder the smooth flow of business processes and can lead to great revenue loss. To illustrate, imagine a situation where system sales or customer service is the busiest, and a main system breaks down. The longer the downtime, the more damage it does to a company’s reputation. Seamless service is the norm that customers expect. And frequent interruptions can drive them to competitors.

Rising Costs

Operating outdated systems can be expensive. Maintenance costs tend to increase as systems age. They require more and more resources to keep them running. We agree that the initial cost of modernizing legacy systems may seem daunting. Yet, the long-term costs of maintaining outdated technology can be far more substantial.

Outdated systems require more manual intervention. This increases labor costs and diverts talent from more strategic tasks. Automation opportunities are limited, reducing overall productivity. Finding experts to fix old technology can be challenging and costly. This can strain IT budgets.

Additionally, the cost of repairs and patches for legacy systems can be high. Companies often find themselves spending more on maintenance than on innovation. This is a clear indication that modernization is necessary. Moreover, there is often a need to maintain separate systems. This is due to the lack of compatibility with newer technologies. This can lead to data silos and inefficient processes. Such systems not only raise operating expenditures but also slow down creativity and flexibility.

Strategies for Overcoming Legacy System Challenges

At Stfalcon, we have extensive experience helping clients navigate the complexities of legacy software modernization. Some of our tackles will be described below.

Step-by-step approach to replacing legacy systems

Replacing a legacy software can seem overwhelming. However, if you have a plan to follow, it is within the bounds of possibility. We advise you to inventory and evaluate your existing systems before everything else. Identify what works well and what doesn't. Think of pain points, vulnerabilities, and components nearing end-of-life. This helps you set clear goals for your new system. Prioritize upgrades based on business impact. Create a detailed roadmap for the replacement process. Break it down into smaller, manageable tasks. This reduces the risk of disruption. Make sure to plan for adequate testing at each step.

Pilot testing is another crucial step. Start with a small group of users to test the new system. This helps identify any issues early on. Once the pilot phase is successful, you can roll out the new system company-wide.

This incremental approach reduces risk and spreads out costs over time. It also allows your teams to gradually adapt to working with new technologies. You steadily make progress without overwhelming the organization with too much change at once. We've used this method to help clients successfully sunset even the most entrenched legacy systems.

Cloud Migration

Moving legacy workloads and data to the cloud is often a smart move. Making a move towards AWS, Azure or Google Cloud has big advantages. You gain agility, scalability, and access to cutting-edge technologies without needing to refresh your in-house infrastructure.

First, you need to choose the right cloud provider. Consider factors like cost, security, and support. At Stfalcon, we help businesses evaluate their options and select the best provider for their needs. Based on our work with clients across industries, we've found the lift-and-shift approach effective for many legacy workloads. Identify legacy apps and datasets that can be moved as-is or with minimal changes. Then gradually transition them to the cloud. Start with lower-risk workloads. This allows you to take advantage of cloud benefits sooner while buying time to rearchitect more complex legacy systems if needed.

The key is being strategic in planning your cloud migration. Assess each app for cloud compatibility and map out target architectures. Automate as much of the migration as possible using tools provided by the cloud platforms. Make sure to implement robust security and governance from day one.

Outsourcing and Third-Party Solutions

Leaning on outside help and ready-made solutions can accelerate legacy modernization. Experienced modernization partners can bring deep technical knowledge, proven methodologies, and extra capacity to upgrade your legacy stack. This is especially valuable if your in-house team lacks experience with newer technologies.

Outsourcing allows businesses to focus on their core activities. It also provides access to the latest technologies without the need for significant internal investment. When choosing a vendor, look for one with a proven track record and experience in the field. At Stfalcon, we offer a wide range of outsourcing services. We work closely with our clients to understand their specific needs and provide tailored solutions.

Embracing New Technologies

To overcome outdated system challenges, it's crucial to embrace new technologies. Start by exploring technologies that align with your business goals. The goal isn't adopting new tech for its own sake, but selectively leveraging it to eliminate legacy constraints and enable new capabilities. For example, containerizing legacy apps to make them more portable and scalable. Or wrapping machine learning APIs around legacy datasets to surface new insights.

Another key aspect is training. Employees need to be comfortable with new technologies to use them effectively. Invest in training programs to help them understand and leverage these tools.

Those are some of the key strategies we recommend based on our deep experience helping clients overcome legacy system challenges. The right combination of approaches is unique to each organization. But in general, we advise being proactive and strategic in modernizing your legacy footprint through an incremental, ongoing process. If you would like to discuss how Stfalcon can support your unique legacy modernization journey, please get in touch.

Choose the right modernization partner like Stfalcon

When it comes to software obsolete modernization, having a resilient trustworthy vendor can be advantageous. At Stfalcon, we are proud to say that we are that vendor for our clients. Our team has deep expertise across the full spectrum of legacy modernization approaches; be it just a small update or up to full conversion into cloud management.

Yet, we don't just execute modernization initiatives. We focus on empowering our clients throughout the process. We work hand-in-hand with client teams to upskill them on new technologies. We set up knowledge transfer sessions and documentation to ensure they can confidently take ownership of the new environment. Our goal is not only being a vendor for modernization services, but rather becoming a genuine partner in the preservation and growth of the clients’ business.

If you seek a partner you can trust with your legacy modernization journey, we'd love to learn more about your challenges and discuss how we can help. Reach out to us today for a complimentary consultation.

Conclusion

Legacy systems are one of the most significant anchors in your business that slows down growth, agility, and competitiveness. However, with the right approach and partner you can liberate yourself from legacy technologies and practices to deliver new possibilities. Modernizing your legacy systems is a journey, not a destination. It requires careful planning, skillful execution, and ongoing optimization to achieve the best results.

The time to act is now. Don't let legacy systems hold your business back any longer. Welcome the changes and everything that comes with it. If you're ready to discuss your legacy challenges and explore modernization solutions, reach out to the experts at Stfalcon. We can provide the strategy for a new, more agile future.