Your legacy system may appear to be performing well, but it could be costing the business more than you realise. Inflexible applications, high maintenance costs and a dearth of programming talent are often the hidden liabilities of legacy systems. These all add up to a high total cost of ownership (TCO). In addition, the longer you wait to modernise your legacy system, the more these liabilities will increase your TCO over the long term.
Modernising your legacy system may look painful, but it pales in comparison to the cost and risk of doing nothing. Here are some factors you should consider before putting off that IT modernisation project.
For instance, employees may get bogged down by processes that could be automated or streamlined with a modern system. For example, employees working with a legacy payroll system could be making hundreds of manual corrections each month or spend hours poring over spreadsheets to calculate labour costs. Modern systems automate many once-manual functions, so that employees can focus on more valuable activities, like innovation.
Your legacy system could be wasting your customers’ time, as well. If your system is too often out of commission or down for maintenance work, your customers could become frustrated and take their business elsewhere.
The typical result is layer upon layer of code built up over the years, making it more and more difficult to enhance legacy systems with new functionality. Just one change can ripple throughout other parts of the system. This increases the risk of code errors, which means additional testing. With a system like this, you can’t quickly roll out new services or adapt to changing business demands.
The Brazilian Navy, for example, couldn’t modify its legacy mainframe system quickly enough to meet users’ needs. The Navy moved to a distributed platform using HP Integrity and ProLiant servers and SAN storage using an HP Enterprise Virtual Array. The additional processing power and storage capacity increased agility, while also reducing operations costs by 80 percent.
Over time, as legacy systems become more complex and difficult to manage, the cost of adding functionality outweighs the benefits. The inevitable result of this is lost business opportunities.
Modern systems are usually simpler to manage and more energy efficient, requiring less time from personnel and less power to make them run.
For instance, a large manufacturing company migrated its SAP application suite off a legacy mainframe to HP servers.1 The move reduced server administration and operations labour costs by 48 percent and facilities costs by 46 percent, for total savings of more than US$4.8 million over four years.2 In addition, the new technology used 48 percent less space,3 reducing the customer’s data centre footprint by more than half.
You should also consider the labour costs required to maintain legacy systems. The IT workers that designed and built these systems are of the Baby Boomer generation and they’re retiring fast. The U.S. Census Bureau estimates that in the next 10 years, the worldwide proportion of people 65 and over will outnumber children under five for the first time in history. 4 That means large portions of the skilled workforce will be leaving faster than they’re being replaced. Also, the younger IT workforce is not learning outdated IT skills. So, as mainframe skills become harder to find, they’re also fetching a higher price.
If you’re considering a modernisation project, HP has a number of services and technologies to help. Common starting points to modernisation include:
Begin by estimating the total cost of ownership for your legacy system. Take the TCO Challenge.
