Other parts of this series:
Are your IT systems inflexible in the face of new business needs? Does it take months or years to implement simple changes? Does just “keeping the lights on in IT” feel like a full-time job?
If you answered “yes” to any of these questions, your organization is probably caught in a legacy technology trap, a conundrum that is all too common among enterprises the world over.
In this series, I will give you all the information you need to identify your own legacy technology trap, and outline steps you can take to get out.
The legacy technology trap obstructs operational efficiency
In today’s “New IT” environments, few industries are unaffected by legacy technology. Banks’ core systems, for instance, built for a bygone era of branch-based banking and overnight batch processing, have grown massively complex, unreliable, and expensive to run. Insurers, too, are grappling with industry-specific issues that make it particularly challenging to escape the trap.
The legacy technology trap can be defined as a situation where obsolete or aged technology capabilities hamper an organization’s agility, and there is no obvious business case for resolution.
Monolithic legacy systems—often dating back to the 70s and 80s—stand in the way of digitization. The explosion in digital technologies has transformed how organizations engage with their customers, along with the products and services they can bring to market. New digital competitors are emerging and, due in part to cloud-based software solutions, the pace of change is accelerating faster than ever.
Typically, aged IT architectures have become inflexible and unresponsive when they contain:
- Multiple systems-of-record, which often duplicate products and services they offer the business.
- Poorly understood applications, because platforms are old or complex, or only a handful of application experts are familiar with them.
- Applications with obsolete technologies, or applications that are out of step with business data needs and use cases.
- Inconsistent or poorly understood integration mechanisms.
But more than just obstructing operational efficiency, legacy IT issues impact the fight for relevance with customers and ecosystem partners. Adding to the difficulty is the fact that the legacy technology trap does not develop overnight, making the symptoms difficult to spot before significant issues arise.
Legacy does not equal obsolete IT
I should note that legacy does not always mean obsolete IT. In many cases, legacy platforms are decades old, but they can also be much more recent. Whatever the backstory may be, you know you have a legacy problem when one or more of the following issues arise:
- Platform change is expensive, the underlying economics of change are unfavorable, and changes can only be implemented with the involvement of deep systems experts.
- The organization cannot evolve to meet customer expectations.
- Duplication and inefficiency are common, with key business capabilities being serviced in different ways on different platforms.
- The IT architecture is problematic regarding new regulatory needs.
Because of the complexity of the multifactorial issues leading to the legacy technology trap, a tailored response is essential. In my next post, I will outline how you can identify its root causes.
Until then, take a look at the full Overcoming the Legacy Technology Trap—A playbook for legacy IT transformation in the insurance sector report. Our Escaping Legacy—Why bank’s core systems must be made fit for purpose report may also be of interest.