The Risks of Legacy IT

Paul Tatam, managing director of Seeburger UK, explains the governance risks with operating with legacy IT systems

10/28/2013

The modernisation of traditionally under-invested and complex legacy technology solutions has often been perceived as a daunting task – something to delay until a breach of security or major operational failure force a business to revise its systems and processes.

In spite of the speed at which technology progresses in power and efficiency, stringent budgets, cost-saving measures and a complacent attitude to seemingly-functioning IT infrastructures, has meant that the back-engine structures of enterprises are struggling to keep up.

Instead, legacy infrastructure remains in place, some date back several decades, creating bottlenecks by inefficiently managing the transfer of large volumes of information that in turn hinders the rate at which business growth and innovation can be achieved.

Many companies run a mix of point solutions acquired on a piecemeal basis for EDI, B2B integration and file transfer. These applications are expensive and complex to manage, lacking advanced capabilities, such as visibility that is enabled by integration with enterprise applications.

A closer look at dated infrastructures reveals multiple risks and downsides to running and persisting with legacy B2B and file transfer solutions:

1 – A lack of functionality and visibility in older infrastructures limits an organisation’s ability to comply with governmental and/or industry mandates for example, security, audit-ability and reporting. In certain industries, such as healthcare, strict data privacy and confidentiality regulations are difficult to comply in the absence of a modern platform.

Meanwhile, to meet regulatory mandates such as Dodd-Frank or Basel III, financial services companies need secure file transfer systems that provide the necessary functionality to be compliant. A lack of compliance can result in debilitating fines, restrictions and a loss of a positive reputation amongst customers and staff, particularly pertinent within the financial sector.

Furthermore, the lack of functionality in older platforms limits the ability to support changing trading partner requirements; often, the need to support a newer technology or protocol requires upgrading to a new platform. Unless such outdated structures are retrofitted with modern solutions, such a lack of functionality and visible processes can snowball, eroding bottom line profits.

2 – The costs and risks of supporting disparate systems and solutions are notorious. Companies that operate a mixture of products often have done point integration, leading to a spaghetti infrastructure – a proliferation of manually connected systems and applications, understood by only a few people within an organisation.

Such systems aim to handle structured and unstructured data such as marketing materials, financial information and design documents through incongruent solutions.

Trying to maintain such operations results in continuously growing costs as the people who understand the connections retire or move on to other positions.

Matched with a lack of lean processes eating into revenue, these mounting expenses stifle growth and business development.

3 – Existing software faces end of life, as such software vendors end their support of application and technology versions on a regular basis. Once these applications are retired, many vendors no longer offer support or version updates to meet B2B standards.

Unsupported software can lead to errors and security breaches that are no longer resolved by vendors, posing problems for companies that could range from inconvenient programme crashes to catastrophic IT infrastructure failure.

Such legacy solutions may require costly professional service engagements for any type of support, and even those may be curtailed.

4 – Companies that do not re-evaluate their IT roadmaps in light of technological developments and new hardware and software offerings at least every three to five years, risk missing major opportunities to innovate and increase business and corporate efficiencies.

Moreover, not updating IT infrastructures on a regular basis could force a costly, business-wide retrofit of a platform rather than easy-to-implement regular upgrades.

5 – Redundant resources mean wasted revenue. Many businesses feature teams of staff required to operate multiple point solutions rather than being trained to use a single integrated platform.

As such, resources are wasted training staff to use varied and disparate technology solutions, whereas the blanket adoption of a single platform could cut training costs and improve commercial efficiency from individual to corporation levels.

At the same time, multiple IT processes mean that teams of staff rely on the knowledge of their peers in order to work through multiple systems, which prevents workers from being autonomous potentially leading to a decrease in morale.