04 Mar How Much is Your Legacy System Costing You?

Is your company using outdated software in its daily operations? If so, you’re probably losing more money than you realize. Legacy systems are a major hidden cost—something you aren’t writing checks to cover but is nonetheless costing your company money. Hidden costs are typically identified as activities that cause waste or a delay in the business process. When it comes to running a smooth business, it is critical to ensure that your technology is up to date. Otherwise, you won’t be able to accomplish specific goals or acquire skills that will prove to be valuable assets in the future.

If you are relying on outdated technology, you are most likely going to run into several obstacles such as the following, outlined below.

1. Legacy systems can have a direct impact on the performance or job satisfaction of your employees.

A new hire who has experience with another company, is more likely to have been using modern business solutions. Transitioning to an older system can prove extremely frustrating, and the application limitations can even hinder their work.

Similarly, it is much more difficult to secure training for employees when using a legacy system. Without formal training, employees tend to learn through tribal knowledge and trial and error. As products evolve and upgrade, legacy products get left in the dust. Training programs become more scarce, and the options for education become increasingly limited. This results in employees who lack confidence in the systems they are trying to use, which in turn leads to weaker performance, and can threaten staff retention. In many cases, frustrated users would rather go somewhere with proper technology and training rather than rely on tribal knowledge and trial and error that inhibits their performance.

2. When you don’t evaluate the new functions that coincide with upgraded software, new options are never deployed.

The lack of knowledge on how a legacy system works leads to not only unnecessary external solutions but also the capabilities of business software not being used to it’s full extent. External applications such as Word, Excel, and Access often become the go-to solutions. In addition, these can become a way of life as staff tends to rely heavily on  manual and informal processes. Banking on these informal processes typically leads to data being stored in the wrong places—in this case, storing your data outside the ERP rather than inside of it. This restricts the software accessibility and, by extent, your company’s knowledge of said data. In addition, this can complicate the way data is stored, hampering the ability to locate personnel to manage these manual processes.

3. The inability to leverage new business processes.

As new concepts in business emerge and become recognized, deploying them within your business is difficult if the legacy software can’t support them. The application of new vertical solutions also becomes more limited. In addition, the advances that are represented by new vertical solutions may be more costly—if not impossible—to implement if the legacy product has neither the ability to integrate, nor the openness to operate without extensive development effort and costs.

4. Many businesses suffer due to their reliance on old, outdated systems and technologies.

The use of such legacy systems leads to many setbacks, and it can cost your company greatly. It’s important to take a look at your company’s current state and make sure that there aren’t any hidden costs that could be eating away at performance—and if you find that there are, to find the right team to help bring you out of the dark.