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The True Cost of Legacy Technology


The True Cost of Legacy TechnologyThe recent Bloomberg News article detailing the failure of the Delta Airlines worldwide computer network is just one of many examples of how legacy technology can bring major costs. With hundreds of flights disrupted due to power and computer system failures, the airline was looking at a 10 percent reduction in 2016 3Q earnings.

This is an all-too-common occurrence for the biggest and the smallest businesses. Primarily because it becomes difficult to see impending challenges from legacy technology even as some systems are upgraded.What lies at the heart of this lack of transparency is that many businesses find it difficult to make retiring legacy technology a priority. Limited expertise by stakeholders and reticence to let go are major problems, but so too is the lack of transparency of the soft costs of legacy technology within the budget. It can be difficult for businesses to see the true costs of legacy technology until they are faced with an inability to compete, a major technology outage, or the sudden cost escalation of maintaining these systems.

Reliance on legacy IT has potentially damaging consequences for both private and public entities. According to Dell’s State of IT Trends 2016 survey results, 70 percent of federal IT decision-makers cite outdated systems running important applications, while half of survey respondents cited computer operating systems past their official end of life. No business is immune to the problem and the costs that come with legacy technology. Here are just some of those costs:

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  • Maintenance costs for legacy infrastructure are an exponentially increasing problem. This is because, over time, every customization and change adds another layer of complexity to the system. Ultimately, updates become more time-consuming and costly.
  • Talent costs are an outgrowth of maintenance costs in that legacy technology not only brings exorbitant maintenance costs in man-hours, but they require skill sets that are expensive and difficult to find.
  • Support costs that continue to escalate with proprietary legacy systems are a result of an inevitable lack of vendor support, which leads to increasing talent costs for external support.
  • Integration costs make even simple integrations difficult, if not impossible, based on current and future business needs.
  • Compliance costs, where applicable, are a certainty where industry regulations and business laws are constantly changing. Consequently, the costs of keeping legacy technology in compliance in heavily regulated industries, as well as the risks of noncompliance, go up exponentially.
  • The costs of lost business opportunities, such as mobile data access to sales staff, as well as the inability to gather and act via analytics tools, among others, leads to lost business opportunities, lack of competitiveness, and a dwindling bottom line.
  • Agility costs can be seen in all the above examples, but in the digital age, the growth and the survival of every business is predicated on its ability to adapt to change. The lack of agility with legacy systems leads to an inability to be competitive, which can mean dwindling income and even the demise of the business itself.

Adopting new technology can bring a wealth of benefits ranging from risk reduction and meeting heightened regulatory demands to enhanced decision-making and improved efficiency. Cloud computing, mobility, and the Internet of things are now ubiquitous parts of the business landscape in many respects.

These technology approaches enable businesses to be more agile, innovative, and cost-effective in a constantly changing business landscape. The concerns of disruption in making the switch are often unwarranted, and the result is business processes and technology that are more manageable and adaptable. Security alone in an era of cyber crime is far more robust as many have embedded capabilities such as policy management, encryption, authentication, and continuous monitoring for greater control.

At some point, legacy technology becomes an impediment to business stability, streamlined processes, the ability to compete, and overall growth. By becoming aware of the true cost of running legacy systems, business leaders can see the clear ROI of embracing new technology and its tangible effect on the bottom line and future of the business.

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