How Much Are Legacy Systems Costing Your Small Business?

Wondering whether your old computers or software can see you through another year or whether you should upgrade? Use these tips to modernize your legacy systems intelligently, based on a detailed analysis of risks and benefits.

English is such a funny language. In one context, the word “legacy” can mean something positive and uplifting, and in another it can mean something burdensome that drags you down.

When your great aunt leaves you a legacy, that inheritance is something to celebrate. And when you think of the legacy you want your business to create for your family or your community, that’s something to get inspired about. But when your business relies on legacy systems, that’s a reason for concern.

Legacy systems are outdated business processes and the software applications used to run them. Legacy systems often feel comfortable and familiar, but they could be holding your business back in multiple ways and negatively impacting your bottom line.

Hidden Costs of Staying in the Comfort Zone

Small businesses often cling to legacy systems long past their expiry date, the point at which they promote productivity and deliver true value. That’s because the thought of switching to a new system can seem overwhelming. From the perspective of the status quo, trying a new approach can feel threatening. It’s easy to list the risks of making a change, such as costs required to:

  • Analyze existing processes and software applications
  • Research and evaluate alternatives
  • Install the new system
  • Train employees
  • Accommodate downtime for troubleshooting

This fear of moving forward can, however, create more damaging costs to your business, especially when you consider the long game.

When you persist in using outdated systems, you’re turning a blind eye to hidden risks that could affect the long-term viability of your business. These include:

  • Decline in productivity
  • Unnecessary product waste
  • Duplication of effort
  • Employee frustration
  • Downtime due to system breakdowns
  • High maintenance costs
  • Lack of vendor support
  • Security issues
  • Issues communicating with suppliers
  • Inability to leverage newer software
  • Expensive, time-consuming workarounds to accommodate changes to the business
  • Slow response time to customers
  • Loss of your competitive edge

Yes, upgrading your processes and the software that supports them involves some degree of pain. But to quote that old adage, “no pain, no gain.” If you don’t push yourself beyond your comfort zone and modernize your systems, you’ll be left behind your competitors, comfy but irrelevant.

What are some signs it may be time to modernize?

Legacy systems show their age in different ways, depending on the business function they support. As you think about the systems holding up your business, consider how internal and external users interact with the systems. What is their experience like? What risks do “glitches” in their experience entail?

For instance, consider the process of recruiting employees. Let’s say you have a legacy system in place that requires job candidates to visit the Careers page of your website and fill out a series of forms there, attaching their resume as a separate document. Because you set up this system before LinkedIn’s current recruitment tools were developed, candidates can’t apply directly from LinkedIn or from other job search platforms where you post job openings.

In this case, your internal users on your HR team find the current system frustrating because it requires them to manually download resumes and content from the website forms. They’re also concerned that they’re missing out on potential candidates because the application process requires “too many clicks.|”

As for the external users, job candidates, they also find the application process outdated and clunky. This gives them the impression that your company culture is not employee-centric or forward-looking. Before they’ve spoken with anyone from the company, they’ve already started to associate your brand with skeptical thoughts.

As we can see from this example, when a business process is creating some kind of “friction,” either internally or externally, that could be a signal it needs to be revamped.

Here are some specific warning signs that could be telling you it’s time to modernize a legacy system:

  • You receive customer complaints or requests for help using the system.
  • Employees grumble about inefficiencies, especially duplication of work.
  • Technical support from the software vendor has expired or is about to expire.
  • Upgrades require significant effort.
  • Your system is not mobile-friendly.
  • The system crashes at peak times or when it processes a large volume of tasks.
  • Your system lags a generation behind systems being used by your competitors.

How to calculate the benefits of modernization

Done properly, modernizing your legacy systems can increase efficiency, improve the customer experience, and increase employee satisfaction. Done improperly, however, it can introduce chaos, confuse customers, and irritate employees.

The key is to approach systems modernization strategically. As with any aspect of digital transformation, strategy is what separates successful digital initiatives from digital flops.

A simple risk-benefit analysis will enable you to decide when and how to modernize your legacy systems. To calculate the benefits of modernizing a particular process, add up all the costs required to install and implement the system, including training time for employees. Then weigh those against your answers to these questions:

  • How many different areas of the business will the modernization impact?
  • How many different kinds of efficiency will we gain?
  • How much time and money will we save?
  • How will the employee experience improve?
  • How will the customer experience improve?

Of course, you’ll also want to consider how long it will take to reap a return on your digital investment. To make that time as short as possible, you might want to take a phased approach, modernizing one part of a system at a time.

At the end of the day, the critical question to ask is this: how do the risks of taking action compare with the risks of inaction?

How to get started

Upgrading your legacy systems is a journey, and like any journey, it’s easiest and safest to travel in the company of a trustworthy guide.

Once you decide to modernize a legacy system, your next step should be to find a reliable digital solutions provider. They can help you analyze your current business processes, pinpoint issues, and identify the technology upgrades that will keep your business relevant and competitive for years to come.



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