Having an IT system that matches your current organizational needs is extremely important for the efficiency and agility of your operations. Technology keeps on improving, which gives businesses the chance to minimize costs, increase security, among other major benefits. However, often businesses tend to hold on to legacy systems. There are reasons for this occurrence such as the risk of halted operations due to the delicate nature of system migrations. However, the main reason given for reliance on legacy systems is the cost of building and moving to modern IT systems.
Migration to new systems often has major unplanned costs. These include unscheduled downtime, the need for new hardware, overtime payment for staff, and procedures meant to ensure the integrity of migrated data. Nevertheless, it is possible to justify the cost of modernizing IT systems when you consider the costs of outdated IT systems.
The Cost of Outdated IT Systems
Working with out of date accumulates excess maintenance and support costs. The codebase for a lot of old systems is often large. When the codebase requires changes, it may lead to huge implications across the entire workflow of the company. The situation is worse when an old system’s documentation is poor. Changing the initial source code is almost impossible without proper documentation.
Another cost is in training of staff to work with legacy IT systems. The people who created and maintained such systems will retire. Working with the old system then becomes a niche skill. It then requires training of any new staff who join the company. This cost may be higher when the company must have dedicated staff to run the old system.
Modern IT systems are built to be easily integrated with third-party APIs. This avoids having to build existing solutions from scratch. For instance, taxi-hailing apps can use the Google Maps API instead of building their own solutions. Unfortunately, many old systems cannot integrate with such APIs which increases development costs when new functionalities are required.
Migrating to Modern IT Systems
Changing an organization’s legacy system is a capital-intensive affair, one which may require several years of planning before implementation. Most organizations will take a laid-back approach where if a system is not broken, it does not get replaced. In situations where an organization decided to move ahead with implementing a new system, a few strategies might help to minimize the total costs.
Leverage Cloud-Based Development and Testing
When building a new system today, organizations should embrace cloud-development and testing environments. It saves the company 100% of data center hardware costs. It also allows the company to build smaller applications. The development process is also shorter while updates can be implemented quickly. With cloud-based solutions, the company will only pay for the resources they utilize during development and testing. They get to switch off the service when no longer required.
Plan and Invest for the Future
When deciding on what kind of system to build, make sure to write a detailed schedule of all functionalities you require. Look at technology trends in your industry including what is yet to be implemented but is around the corner. Build a system that will not only solve current problems but one to get through next strategic planning period. Capital expenditures take a toll on a company’s financial structure. They can only be justified if they remain relevant for the foreseeable future. Building a future proof may cost a little more but is totally justifiable if it will avoid more capital costs and disruption a few months or years down the road.
Phased-Implementation of the new IT System
When strained for resources, it is possible to start building out the new system and make gradual transfer of functions from the old system to the new one. It allows the company to spread out the cost of the new system over several financial periods. Such an approach also protects the company against shifting all functions at once and risking total shutdown of all functions if not done correctly.
Joint Development of IT Systems
Building out custom IT systems may be too expensive for small and mid-size operations. To navigate the funding problem, companies can explore alternative financing options. One way would be for several businesses to commission a joint project if it can serve their organizations. This is also applicable in the public sector where government units such as cities can make use of a single system to dispense certain functions. Alternatively, a business can request the IT firm to build the system and lease it to them in exchange for royalties.
Focus Keenly on Implementation
IT modernization projects have a lot of moving parts and unforeseen contingencies. Organizations must have a dedicated project lead and team who are essentially sponsors of the project. There will be resistance to change from staff already used to the old system, they must get sold on the new system.
The company must have a communications framework to share information on progress. There must be a comprehensive plan on training people to use the new system. Proper planning on training will ensure that the budget set-aside for such purposes leads to attainment of intended impact.
Having a project sponsor and lead time also helps to ensure deadlines are met and the company can start earning a return on investment as quickly as possible. The team also helps decide on what compromises are worth making to rationalize costs.
Make Smart Compromises
In the process of IT systems modernization, your company might be forced to make some choices on what to change or leave as it is. Different functions will compete for resources leading to the need for smart prioritization. Focus on what most aligns with the core functions of the firm and whose return on investment can help improve other functions later.
About Transcendent Software LLC
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App Development CaliforniaFebruary 2, 2021 at 7:47 am
From a project perspective, modernization is difficult as an organization balances new technology and new vendors while replacing old systems. Many times the new technology has to be phased in, requiring the organization to support two systems for what could be an extended period of time.
Jake • Post Author •February 2, 2021 at 6:48 pm
This is very true. It can put great strain on an IT department to maintain multiple systems. This is a great opportunity to outsource the work and let the IT department do what they do best.
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