The Opportunity Cost of Legacy Application Maintenance

Marlon Davids Thursday, March 3, 2016

We refer to old technology — dated mainframe computer systems and ancient applications — as legacy systems. The term “legacy” implies that the system is out of date or in need of replacement.

Essentially, the problem facing legacy systems is that the systems outlive their original mandates, but continue to remain in operation long after. To keep up with evolving technology, the systems are modified extensively to the point where they are completely different from their original form, making it hard for an IT administrator to decipher. The current reality is that many organisations are still being held prisoner by their legacy applications and systems.

In a recent study, a third of surveyed businesses stated that they run major applications that are more than 10 years old and one fifth of businesses admitted to having at least one major application that’s remained unchanged for 15 years or more. Legacy application maintenance is also extremely expensive. In fact, according to Gartner, 60 to 80 percent of IT budgets are spent on maintaining legacy applications. So why don’t organisations just pull the plug?

Why Do Companies Keep Legacy Systems?

Unfortunately for many, it’s a case of the “if it’s not broken, don’t fix it” mentality. This is especially true for companies that have relied on certain applications for a long period of time – they are more reluctant to make changes.

When it comes to considering legacy application modernization and moving to the Cloud, fear of the unknown or concerns that critical business operations may be interrupted during the migration process often cause companies to hang on to existing on-premise applications. These concerns are valid enough, but in the end, the cost of migrating legacy apps is really what keeps CIOs up at night.

What Are the Options Available for Companies with Legacy Systems?

If an organisation is faced with an aging legacy system, what are the available options?

• Migrate to a new technology – i.e. the Cloud
• Redesign or redevelop your existing technology
• Replace or outsource your system

If your legacy application can’t support your business, it must evolve, or go. We have clients that come to us who are simply maintaining their legacy systems and finding it very difficult to keep up with technology to better service their customers’ and employees’ needs. More often than not, the issue is that the IT department doesn’t know enough about the system and how it works, to properly maintain it. This is where the problems begin.

Problems with Legacy Application Maintenance

So if it isn’t broken, why would a company “fix” or migrate its legacy systems?

There are a number of reasons that companies should consider migrating their legacy systems to the Cloud. For instance, if the company has been “band-aiding” its current systems with other solutions to keep up with technology, it quickly becomes extremely expensive to modify existing systems. Finding and procuring staff with adequate technical expertise to maintain legacy systems is also costly.

In addition, the boomers who maintained legacy systems are retiring, so it is becoming more difficult to find workers with the knowledge base to maintain those systems. In the end, the cost of legacy application maintenance will eventually exceed the cost of migrating or replacing them.

The simple fact is that companies that aren’t planning on moving legacy apps to the Cloud will inevitably become prisoners of their own on-premise IT.

The Top Issues with Legacy Application Maintenance

If an organisation decides to maintain its legacy apps rather than migrate them to the Cloud, it will undoubtedly face issues with dated systems. However, there is also the opportunity cost of not innovating and growing with customer demand in today’s cloudy, mobile world. A company’s inability to innovate can be detrimental to the success of the business. Let’s explore the issues companies face during legacy application maintenance.

• Security Implications: Older systems and applications are vulnerable to breaches because of the lack of regular security patches and updates
• Integration: Legacy systems don’t always integrate well with newer systems and can prevent a company from innovating
• Support: Lack of support for legacy systems – the original System architects have moved on, leaving a team without the required skill set to work with outdated technology
• Band-Aid Solution: When multiple IT administrators have tweaked the application over the years, it becomes more difficult to understand the application’s nuances

Defining the Opportunity Cost of Not Moving Legacy Apps

According to Gartner, by 2020, half of all applications that were running in data centres as of 2010 will be retired. Companies that choose to maintain, rather than migrate legacy apps, must be aware of the opportunity cost. According to Oxford: A Dictionary of Economics, opportunity cost is defined as “the cost of something in terms of an opportunity forgone“, or that they may face as a result. The following are the opportunity costs of not moving your legacy app to the Cloud:

• Increased costs associated with hiring more IT resources to manage aging systems
• Increased wages due to the niche skillset required to support legacy systems
• Lack of cost-savings measures and increased inefficiencies
• Increased reliance on a vendor
• Loss of productivity due to legacy system limitations in a mobile environment
• Risk of downtime due to system failure
• Increased recruiting and training costs
• Increased integration costs and time to integrate legacy system with new systems
• Lack of innovation to keep up with mobile and Cloud technology, and customer demand
• Increased time and effort to ensure security and compliance mandates are met

Many decision makers feel as though they are in a predicament and fear that moving their legacy systems or applications to the Cloud will threaten the integrity of their business.

If your company is dependent on legacy applications, you should speak to a Cloud provider who specializes in legacy application virtualization and migration.

Don’t become a prisoner to your legacy applications. Join the other organisations that are reaping the benefits of moving to the Cloud. At Umbee, our team of engineers have extensive expertise in moving legacy applications to the Cloud. Contact the Cloud experts at Umbee today.