The proliferation of digital technologies across industries helps organizations increase competitiveness and become more customer focused. As customer experience becomes a key competitive differentiator, enterprises are looking towards new technologies and applications to navigate today’s complex world of business.

While technologies such as AI and the cloud are disruptive, it is hard to ignore the legacy application ecosystem that existed before this digital explosion took place. In this period of digital-driven transition, many of these legacy applications have suffered an erosion of their good name.

Often blamed for slowing down progress and business responsiveness, these applications are considered hard-to-manage, slow, and bug-prone. If that were to be the absolute truth, why would enterprises in spaces like banking and finance, healthcare and pharma, etc., still be using legacy applications?

Not All Is Bad in the Legacy Universe

It would be naïve to assume that legacy applications are irrelevant. This is especially true for heavily regulated industries, such as healthcare and pharma, that have some core legacy systems at the fulcrum of their business. Some of the main reasons why these applications are still visible in modern enterprises can be:

Compliance and Regulatory Needs

Industries such as banking and healthcare deal with a lot of sensitive data. Regulatory and compliance norms quite naturally lean towards protecting this data and establishing standards that ensure greater security.

Open standards often preclude the compliance needs of specific industries. The banking and finance sector, for example, has to step up to open system compliance such as BIAN.

Security

Some enterprises have legacy applications and systems that run core business processes. These, again, are usually in regulated industries owing to the degree of information sensitivity. These legacy systems are heavily customized to ensure information security and maintain a strong regulatory stand.

Upgrade Uncertainties

Most legacy applications and systems have been positioned as slow and unresponsive. It cannot be denied that these applications do not have the same agility as modern, modular applications. However, it is important to understand that the modern-day application ecosystem thrives only because of the regularly dispatched updates and upgrades.

Industries like pharma, defense agencies, banking, finance, and healthcare cannot take the risks associated with regular updates and upgrades. Any form of downtime because of a failed update or upgrade can have a huge impact on customer experience. Downtime also creates more opportunities to introduce vulnerabilities that can be manipulated. These can lead to tremendous reputation loss and penalties.

Outage Risks and Downtime

Ensuring constant application uptime for business-critical applications is imperative for customer experience and good business outcomes. Some legacy business applications have been customized to prevent failure since they run mission-critical processes. Enterprises hesitate to move away from these systems because the certainty of uptime trumps performance challenges.

Diminishing Legacy Technology Skills

While this might be a key reason to upgrade the legacy ecosystem, diminishing legacy technology skills is also one of the reasons coming in the way of upgrades. Many enterprises do not possess the skill sets to evaluate the needs of legacy systems and applications, identify their dependencies, and create a smooth and seamless transformation journey.

Also Read: Does the Mainstreaming of AI in the Enterprise Demand a Relook at IT Infrastructure Strategies?

System Stability

System stability is essential for performance. To address the needs of today’s business, legacy applications and processes have had to employ point solutions on top of the core system for performance. These overlapping systems have created a complex infrastructure that enterprises are reluctant to disturb.

While the complex infrastructure is less than ideal, it is keeping the system stable. Further, it becomes very difficult to detangle these complexities in the absence of specialized skills. Business process knowledge has to complement domain expertise, technology skills, and legacy technology knowledge to make any changes without impacting system stability.

The Road Ahead

There is enough evidence that compels the digital transformation of legacy systems and applications. While most enterprises have been maintaining and supporting a complex mix of systems, today, it is becoming clearer that this is as time-consuming and expensive as modernization or consolidation.

However, it is important to ensure that there is:

Strategic Assessment of Systems and Applications

Should legacy applications be replaced or modernized? While modernized systems are cost-effective, some legacy systems have become so complex that building new applications makes better sense.

Identifying which legacy systems to immediately target for modernization and which should wait, whether these can be modernized or need replacement, evaluating the downtime and costs associated with these initiatives, etc., become critical measures to ensure transformation success.

A great point to start is by evaluating the business needs and then upgrading the legacy ecosystem to support these business objectives. In industries such as banking, some modernization opportunities become essential, especially as:

Legacy systems cannot handle these demands and hence need transformation.

Robust Application Support

While some legacy systems will be transformed, some will have to wait for their turn. At this time, these systems will need more application support. In the face of lacking legacy skills, enterprises must look at leveraging technology partners who can capably meet the support needs of legacy technology. Combining domain expertise with technology expertise assumed importance here.

A Technology Evolution Roadmap

The technology evolution roadmap has to not only identify the low-hanging fruit but also make some careful considerations. Cybersecurity concerns, maintenance requirements, and operational costs are areas that help determine which apps to prioritize for modernization.

Along with that, it is critical to ensure that the technology choices in these initiatives are not based on what’s the latest in the market. Identifying which technologies can get the business ahead while ensuring regulatory compliance and security is essential for enterprises still running legacy applications.

Assessment of Organizational Readiness

Assessing organizational readiness also becomes essential when transforming key legacy applications. This becomes especially important when changing core, business-critical applications or systems.

In this regard, some important considerations include:

Also, core system changes and replacements can impact multiple systems, processes, and lines of business. These risks have to be accounted for to gauge organizational readiness and move along the modernization path.

The Bottom Line

The accelerating pace of technological change and the rise of the data economy are compelling enterprises to modernize the legacy application ecosystem. Adopting a multidisciplinary approach, which includes business strategy, technology integration, enterprise risk management, and regulatory compliance, is essential for the success of these initiatives. While this is a challenging move, having a strong technology partner like i-Source makes this journey simple and more streamlined and ensures that this exercise is not akin to changing an engine in a moving car. Connect with our experts to learn more about how we can help.

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