Most global 2000 companies have a somewhat distorted view of the applications in their portfolios. As shown below, Gartner’s report, “Decommissioning Applications: The Emerging Role of the Application Undertaker,” notes that the distorted application portfolio contains many applications that should have been decommissioned. These risk-averse companies downplay the products in a senile or zombie state. Rather than live in denial, take time to understand the legacy system issues and the corresponding risks influencing modernization efforts.
Like a fresh bowl of fruit, software rots the longer it sits dormant. Technical debt (e.g., inflexible, proprietary, buggy, unsupported, closed systems) left ignored causes products to decay. Many organizations fumble along with incompatible hardware, operating systems, or integrations. Consequently, the company’s operations experience a loss in productivity. This instability rips through the enterprise forcing many to pay a premium for adequate support to fix escalating and compounding issues.
High maintenance costs
Maintenance, manual testing, environment management, and deployments eat away a large part of IT spend. Legacy software becomes more of a cost center vs. a revenue generator. Some companies allocate ample IT funds to merely keeping the system viable, rather than investing in modernizing to meet the evolving business needs. This approach to funding affects business performance and revenue adversely.
In the typical agency, between seventy-five percent and eighty percent of the IT budget was spent on operations and maintenance of legacy systems that are rapidly becoming obsolete.
Slow speed to market
Quarterly features/releases are no longer the industry standard. Companies slower to respond and repair inadequate products are especially vulnerable to competitors. Older software lacking modern amenities with poor usability and user experience further jeopardize enterprise operations and customer retention. Businesses need to remain nimble to respond to market pressures, and ever-changing high customer demands fast.
Coupling too tightly
Pre-cloud, legacy systems were built as a large, tightly coupled, self-contained, monolithic applications. Today, modern tech uses a service-based architecture with loose coupling and cloud-hosted container-based microservices as the gold standard. Organizations with older, self-contained products need to create less dependencies and more autonomy in systems or components of systems using microservices, multi-cloud containers, and self-healing.
Security breaches & data losses
Lack of proper evergreen investment in systems with years of focusing on maintenance and not keeping up with current versions, using patches, and running unsupported software creates security holes in software negatively impacting enterprises and customers. Open source software, purchased packages, unsupported/EOL tech stacks like .NET 2.0 or Java 6 present vulnerabilities. For example, Experian and Capital One both experienced breaches because each lacked current versions, causing the enterprises irreparable reputational damage and monetary losses. With new GDPR in EU and CCPA in California, businesses face stiff penalties for not adhering to data protection and privacy standards.
Investing in non-differentiators
Systems or services that do not influence critical business operations, add significant value to customers, or drive a main source of revenue are all non-differentiators. Companies, especially those trailing in performance, put themselves at even more risk by investing heavily in non-differentiating activities vs. modernizing core products. Prioritize modernizing core systems before considering an innovative business-style investment. For example, PNC Bank is now poised to react to customer needs and market drivers quickly because of a year-long BIAN.org Open Banking API initiative.
Outdated tech with green screen mainframes or Internet Explorer 7 or 11 handicap businesses from attracting and retaining talent. The best and brightest people expect to work for forward-thinking companies using top-level, innovative systems. Modern tech enables employees to focus on creating business value instead of decoding three-character acronyms, being locked to a desktop computer, and using antiquated technology stacks.
Insufficient domain expertise
Working with legacy systems requires domain knowledge from workers. As time goes on, key employees with this tribal knowledge leave the company or retire. In response, the organization recruits and onboards new resources to resolve longstanding IT problems. The new crop of talent lacks proper documentation chronicling the older system and attempt workarounds or hacks made to evolve the system over time. The team burns time, energy, and budget to understand the legacy application and implications of modifications before starting to resolve issues.
A failure to upgrade to most recent versions of libraries, products, and integrations creates technical debt exponentially. The technical debt grows causing security vulnerabilities, slower performance, dependencies that don’t need to exist, and the inability to take advantage of newer software. Workarounds barely keep old software afloat with custom integrations and patching—bleeding the IT budget dry, generating limited results, and burning out resources.