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Why Companies Cling To Legacy Systems

April 25, 2019 at 7:49 AM

Innovative companies know they must embrace digital transformation in their business to stay competitive in the world of the fourth industrial revolution. But legacy systems often get in the way of transformation. In this blog, we look at why companies are reluctant to move away from their legacy systems and how to know when it really is time to modernise.

Why companies keep using legacy systems

Users understand them

People are scared of the unknown and if they are familiar with a system, it’s easy to stick to what they know.

They contain years of business processes and code

Most legacy systems contain customised business processes, code and integrations. These systems are seen as an IT and IP investment, that is difficult to replicate in newer systems.

There are operational risks to replace the system

These systems are often critical to business operations and the risk of loss or down-time while replacing it, will carry a heavy business cost.

The high costs need to be amortised

Legacy systems often come at a very high costs and take years to be amortised. Once they are, they are seen as “free” and every day that they continue to add value to the organisation is “free”.

There is no complete spec of the legacy system

With such a high degree of customisation and patches, businesses very infrequently have a complete specification write-up of the system, making it hard to replace as no-one can specify a new one where the functionality is matched.

The system may contain business rules not noted anywhere else

If the system contains business rules that is not captured in any other system, there is a high risk of some of these rules being lost when a new system is introduced.

IT would have to retrain all employees on the new systems

An IT department would have to spend time on training all staff on a new solution, which would increase costs. It’s easier to stick to a system on which your IT staff have already been trained throughout the years and it’s very likely your IT staff consists of experts of your legacy system.

How to know your legacy system needs modernisation

When the vendor stops investing in it

If your vendor makes the decision to stop maintaining and updating the solution, it will lead to problems that you might not be able to fix in-house.

When you can’t support it anymore

With legacy systems, you might experience skills shortages that prevent you from supporting the system. IT experts retire and if the system is based on an archaic language or protocol, younger IT professionals might not have the skills to take their places.

When there is a better solution

If there is a solution that can do what your legacy system does and more, it might be time to upgrade.

When the system is experiencing compatibility failures

A legacy system could start experiencing incompatibility with new a OS or infrastructures that would need constant patches to make it work.

When the system experiences incompatibility with new technologies

Legacy systems could experience compatibility issues with technologies that were not yet around when the legacy system was created. They could experience incompatibility with many new technologies that you need to adopt for digital transformation, like cloud or web-based services, or IoT technologies.

When the system has too many patches

When the software has too many patches, which legacy systems inevitably experience, performance is slower and lower, and consumption of resources is higher which causes it to become susceptible to security breaches or system failures: reducing efficiency and productivity.

When it causes siloed business information

Business information becomes siloed due to patchwork, inhibiting the sharing of information, with the rigid, hard-coded nature of legacy systems making the task of bringing all this siloed data together challenging.

When it runs up unnecessary costs to maintain the legacy system

Due to the nature of your legacy system, you could experience an excessive time & cost to deploy updates or patches and an excess of IT staff needed to maintain and support the system.

When it hinders fast decision making

If your legacy system has siloed data and data inconsistencies resulting from system patches and opaque processes, your decision making speed will be hindered.

The bottom line

While it’s often a difficult decision to move away from a legacy system, if you’re experiencing one or more of the above difficulties, it’s definitely time to start looking at another, innovative solution on the market, to replace your legacy system.

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Neré Jansen van Vuuren
Neré Jansen van Vuuren
Neré has over 15 years of credit risk, customer lifecycle and insurance consulting experience specialising in relationship management and sales in the financial services industry. Prior to joining Principa Decisions, Neré worked at a major credit bureau. During her career Neré has gained extensive knowledge of software, analytics, project management methodologies and international best practices. Currently Neré is responsible for managing a portfolio of corporate clients in the financial services and retail industry for Principa.

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