Learn how to balance the risks and rewards of IT modernization by addressing the three biggest challenges created by legacy technology.
The Cloud Industry Forum (CIF) found that nine out of ten companies believe that legacy IT holds them back as they look forward to transforming their businesses digitally.
The reasons are understandable. Legacy IT, from coding languages to enterprise resource planning (ERP) systems, is implanted in the critical business operations that keep a business running and removing older technologies can be unsafe and costly. The CIF survey emphasizes these fears: 46% of businesses believe that attempting to change legacy systems would result in significant disturbances, while 40% said it would cost too much.
One sector that continually suffers from slow digital transformation is communication service providers (CSPs). They are often at a standstill when trying to decide what to do about legacy IT, but the increasing importance of digital business models is making this more urgent than ever before.
CSPs can balance the risks and rewards of IT modernization by addressing the three most significant challenges created by legacy technology:
1. The Uninviting Complexity of Legacy
ITNew, rapidly changing business demands are placing unprecedented pressure on legacy systems. Businesses must introduce products and services to market faster to stay competitive while being able to maintain a steady stream of new devices, consumption models, and ways of interacting with customers.
CSPs and other large organizations have cobbled together a patchwork of systems to handle functions, such as billing, ERP, and CRM across different divisions, regions, products, services, and devices. These systems have become so complicated that many within an organization don’t understand the full effect that changing one part would have on the rest.
To get tangible, real-world benefits, complexities aforementioned must be reduced. For instance, adopting a more agile solution to a legacy billing system can help organizations get to market 50 percent faster, and the first-to-market advantage can increase product line revenues by 176 percent over three years.
2. Delayed Innovation of Legacy
ITIn the technology industry, it’s hard to determine what system deserves the â€œlegacyâ€ label. Some are easier to define than others. For example, software is written in COBOL, a 60-year-old programming language can probably be considered a legacy application.
In today’s digital economy, companies must be open to new ways of collaborating to deliver value to customers. For CSPs grappling with older technology, focus instead on whether a legacy solution is open or closed, or is API-addressable as historically, companies have built walls on products to keep competitors out.
World Economic Forum informs that open ecosystem of both, internal and external stakeholders â€œallow [companies] to accelerate innovation and develop features at a pace that is not possible when they operate alone.â€ For instance, closed legacy IT that doesn’t readily share data via APIs can make it harder to gain insights into customer behavior and delay innovation.
3. The Debts Incurred by Legacy IT
IT leaders are under extreme pressure to make decisions to keep operations running and don’t have time to focus on strategies that are beneficial in the long run.
This results in â€œtechnical debt,â€ a software development concept that also applies to IT operations. When a CSP chooses to patch an old ERP system that can’t meet its current needs, instead of evaluating solutions that would serve it better in the long run, the CSP is accumulating a type of technical debt.
The concept works for business strategies as well. For instance, a CSP that relies on price cuts and old go-to-market strategies to get a quick spike in sales volumeâ€”rather than deploying newer, flexible technology that can power the sales and provisioning of innovative digital product bundlesâ€”is building up a â€œstrategy debt.â€
Since legacy debts are difficult to quantify, and the full impact across the business is hard to measure and mitigate, they can be particularly challenging to address.
Winning Strategy to Legacy IT Through ExperimentationThe great news of digital transformation is that any company can overcome these issues and succeed.
Legacy IT is often challenging and expensive to change, so it’s best not to rip and replace. CSPs need to acknowledge an integration layer that connects legacy IT to new systems and acts as an interface for data flowing between them. Powered by APIs, a layer of this type is among the least disruptive and most cost-effective ways to decrease the effects of legacy technology.
Whether deciding to build the integration layer in-house or working with a provider, the solution should be easy to experiment with digital business models. Risk-taking leads to success in the digital economy, and technology that helps CSPs quickly try new strategies can be a crucial factor in accelerating innovation.