The real costs of legacy applications

The chances are that your organisation’s IT infrastructure includes a few (or more than a few) legacy applications. It is a natural consequence of organic growth, after all. And surely it can’t be causing your organisation too many problems?

Think again. For a start, legacy system could be swallowing a much more substantial part of your overall IT budget than you give them credit for. A 2016 studyby the American Council for Technology (ACT) and Industry Advisory Council (IAC) found that federal agencies’ legacy systems consumed around three quarters of their operations and maintenance funding. In some agencies, the figure was as high as 90%. The previous year, the FT reportedvery similar figures within the banking industry.

And the real cost of legacy applications goes beyond financials, too. Out-of-date applications could even introduce nasty risks in terms of cybersecurity and regulatory compliance, with huge potential knock-on costs in both revenue and reputation.

Let’s take a closer look at how.

Growing complexity

The longer a particular software application is used by your organisation, the more like it is that it will be modified and customised in order to suit your precise needs. This isn’t necessarily a bad thing in itself; in fact, such modifications can be powerful tools in enabling software to work better for your business.

However, more modifications also mean more complexity, unless you work hard to avoid this. And more complexity means a greater management burden day-to-day, and more difficulties when it comes to integrating that legacy software with newer applications.

Integration and interoperability

In fact, integration with other applications is a standalone consideration when it comes to assessing the true cost of legacy software. As more and more organisations migrate workloads to the cloud or deploy Internet of Things (IoT) ecosystems which drastically increase the number of cloud-connected devices transmitting data back to said organisation, so there is a pressure on legacy applications to connect seamlessly to the cloud. And this is not always easy. If interoperability cannot be achieved then legacy applications can even act as a brake on digital transformation projects, with enormous knock-on costs.

Security and compliance

Once software is no longer supported by the original vendor, it is no longer patched and upgraded in line with identified faults or wider regulatory frameworks. And this can introduce significant risks to your business. What happens if malicious actors identify a vulnerability in an application you are deploying, and the vendor is no longer patching that application? You could be a standing target for cybercrime, and the costs for that can be truly severe.

Skills shortages

As staff with skills in looking after legacy applications retire or reskill, so the knowledge pool for managing the oldest applications in your infrastructure gets smaller. Skills shortages translate to higher staff costs, as IT managers are forced to rely on expensive contractors or very experienced hires.  

Customer experience

Overcomplicated legacy applications or those which have not been upgraded and patched are more likely then newer software to cause operational problems and outages. In turn, this can translate to a poor customer experience and either reputational damage or lost sales.

Ultimately, then, the true costs incurred by legacy applications can be far greater than the simple licensing and running costs associated with that software. If your organisation is running overcomplicated or unsupported applications or planning digital transformation projects which will incorporate some integrations between older and newer applications, it is well worth analysing your legacy systems and considering whether a rationalisation process is in order.