Why Maintaining Legacy Systems Is Costing Your Business More Than You Think

In today’s fast-paced business environment, staying still isn’t an option. Yet, many companies continue to cling to outdated processes and legacy systems instead of embracing change and exploring new opportunities.

For businesses with custom-built applications, change management can be a significant challenge. Many organizations believe that sticking with familiar legacy systems saves time and money. Similarly, fear of perceived complexities often leads companies to reject updates and continue relying on outdated systems. However, the reality is that this approach can incur substantial long-term costs.

This article delves into the immediate and hidden costs of maintaining legacy systems and explores the benefits of transitioning to modern solutions.

The Hidden Costs of Running Legacy Systems

Legacy systems are outdated computer systems, software applications, and technologies that were designed to perform specific tasks in a specific way. These systems often rely on obsolete programming languages and hardware components, making them difficult to maintain, scale, and update. Here are some of the hidden costs associated with maintaining legacy systems:

Limited Functionality

One of the major drawbacks of legacy systems is their limited functionality compared to newer systems. This limitation can hinder an enterprise's ability to explore new business opportunities. As technology advances and new features become available, older systems may not be able to take advantage of them, preventing organizations from improving processes, reducing costs, and staying competitive.

Legacy systems can also restrict production and management capabilities, such as real-time inventory tracking, accurate reporting, and system integration. For example, the recent Southwest Airlines crisis on December 27, 2022, where the airline delayed 680 flights and canceled nearly 2,600, was largely due to outdated systems. Flight attendants struggled to communicate with schedulers, leaving thousands of passengers stranded across the country.

Similarly, outdated Customer Relationship Management (CRM) systems may lack modern features like personalized marketing, social media integration, or data analytics tools, making it difficult to manage customer relationships effectively and make informed business decisions.

Increasing Maintenance Costs

While maintaining a legacy system might seem cost-effective in the short term, the long-term maintenance costs can be significant. These costs can be categorized as either fixed or non-fixed. Fixed costs, such as license fees, software development expenses, and support subscriptions, may seem stable but can increase over time as fewer companies use the specific legacy system. Non-fixed costs, including downtime maintenance, training new employees on outdated systems, and security issue research, are more unpredictable and can rise unexpectedly.

As legacy systems age, they require more frequent repairs and updates, which can be costly—especially for systems that are 20 years or older. Additionally, as the pool of skilled professionals capable of working on legacy systems dwindles, finding specialists to address issues can become more difficult and expensive.

Security Vulnerabilities

Legacy systems are often more vulnerable to cyberattacks due to outdated software and hardware lacking modern security features. As technology evolves and new cybersecurity measures become available, the gap between cutting-edge technology and legacy systems widens, making it increasingly expensive to protect against the latest threats.

Maintaining security patches for legacy systems is a costly endeavor, combining both immediate and future potential costs. As these systems age, the expenses related to creating and implementing security patches increase. Additionally, ensuring that end-users install security updates can be challenging, further complicating efforts to protect against data breaches and other security risks.

Flexibility Limitations

Legacy systems are typically incompatible with new technologies and updates, limiting an organization’s ability to pivot or adapt to new opportunities. This lack of flexibility can be a significant drawback, as integrating changes into an outdated system architecture becomes increasingly difficult.

Just as legacy code can hinder agility, legacy systems can stifle business growth and flexibility. When your IT team is constantly tied up with system maintenance, they have less time to focus on developing new ideas or products that could benefit your business. In a world where tech innovations are emerging at an ever-faster pace, it’s tough to keep up—even if your competitors are also using legacy systems.

Legacy Transformation: A Cost-Effective Solution

Transitioning from legacy systems to modern solutions can be a complex process, often involving upfront costs and some disruption. However, the benefits of modernizing systems and leveraging new technologies far outweigh the short-term challenges. The financial burden of legacy systems—from license fees and software development costs to the time and resources needed for maintenance—can become overwhelming.

Deciding to undertake a legacy transformation depends on your business needs and goals. It’s important to carefully consider all relevant factors, including the costs and benefits of upgrading, the impact on current processes and employees, and the potential for long-term growth and competitiveness.

If your organization is struggling with the costs and challenges of maintaining legacy systems, it’s time to consider upgrading to newer technologies. At Similize, we specialize in helping businesses transition to modern systems that are more flexible, scalable, and cost-effective. Contact us to learn how we can help your business achieve its goals and stay ahead of the competition.