It’s 9 a.m. on a Saturday. Something failed at work, and you are “on call” this weekend. The legacy system limps on life support, years past its expiration date. Those who understand the system’s ailments, idiosyncrasies, and inner workings have become fewer, retiring one by one.
While the boss enjoys a well-deserved weekend with their family, alarm bells start ringing in your head and at the office.
Again you awaken in a cold sweat from this recurring nightmare.
One day the nightmare will become a reality. It’s not a question of if, but when.
Costs Increase, Confidence Decreases
Many companies endure the cost of maintaining legacy systems. “Just one more year. Just one more year,” executives insist. Yet these costs come at the expense of customers, employees, innovation, security, compliance, and the company itself.
New cloud-based solutions exist, and the benefits of replacing legacy systems must be considered in detail.
Why the Inertia?
When initially considering the scope of an IT project transition, companies cite many things that are initially seen as roadblocks.
Often the hesitancy to move forward centers on the resources needed from an already over-committed workforce. These employees’ current responsibilities already fill their days – and then some. They’re fatigued.
The daunting thought of assigning extra duties for a legacy transformation project often paralyzes leadership and senior managers.
Complex projects require tangible and significant financial costs. These involve both software and implementation costs. There could be project cost creep if the scope changes, as it often does. Missed deadlines frequently incur additional project expenses.
Committing resources for a lengthy and complicated timeline–a project that won’t arrive for 12, 18, 24 months, or even more–seems difficult to justify, despite the evident necessity.
Internal politics also play a role in inertia. Careful diplomacy is needed to get buy-in from all the stakeholders on a project’s specific requirements.
Evaluating Legacy Systems
Insurance companies operating an aging mainframe-based system in this position begin by identifying all quantifiable internal costs of maintaining legacy systems.
Operational Costs
Legacy systems drain funds because of the inherent operational costs. Often built to support simpler business models of earlier times, the equipment doesn’t keep pace within a highly-regulated environment and evolving industry. As needs arose, the systems were patched, or specific tasks were done outside the system with “data” being injected into the system.
Stagnation
Much-needed innovation can’t happen because legacy platforms have little capacity for modifications to achieve new business objectives. Ideas stagnate, and innovation stalls.
Speed
Data integrity and delivery speeds of aging systems fail to meet the needs of executives and employees accustomed to high-performance computing elsewhere. Confidence wanes as equipment lags. The rate at which data is retrievable does not match today’s standards, and often requires technical and programming gymnastics to minimize workflow disruption.
The Brain Drain
The company experts who know how to maintain and code the aging system are approaching retirement. It is becoming more and more difficult to hire and train anyone new to replace these people. Today’s young professionals have different requirements for a successful career, and being a computer “operator” is not current.
Even if staffing the department was not a problem, the efficiency of using the dated system is lacking and so very different than the visual platforms of today’s applications.
Additionally, backup procedures must be carefully followed in anticipation of a successful recovery from a major disruption. This involves nightly backup processes and periodic testing of the backup to ensure a successful “restore” in the event of an exception. Downtime must be minimized, and a regularly-tested disaster recovery plan is the key to lessening downtime.
Considering the Opportunities of a System Change
When evaluating the potential ROI of a legacy system change, it is good to consider the several qualitative opportunities that result from replacing legacy systems.
One major benefit happens from the customer’s perspective. In today’s world, customers expect to be able to access their customer profiles from home. They would like to see and pay their bills, upload supporting documents, dispute something, and chat with support staff from their device. When legacy systems do not offer access to external users, the companies using them look out of date, and become difficult to do business with. They will be overlooked by customers in favor of modernized competitors.
Remote work has taken off like never before. Often, to recruit the best candidates, a company must allow some flexibility for a hybrid work model. That becomes a problem as legacy systems do not compete with the newer Windows-based technology when adapting to the work-from-home model. Flexibility is key in attracting employees.
Also, cloud-based systems incorporate data storage security through an outside source. When cybersecurity needs are at an all-time high, having a security partner protecting your digital data is extremely beneficial.
During implementation, the company has the opportunity to configure the new system in the best way, all while addressing data inconsistencies and developing more consistent metrics. Trying to begin with a clean slate, reports could be configured to meet the executives’ needs with the push of a button. The right implementation validates data integrity, and business analytics are confirmed.
The bottom line is that upon transformation, the legacy system no longer restricts the business. New systems offer adaptability, innovation, and new outlooks. Employees become refreshed after removing the handcuffs of the old system.
Possible Next Steps
Knowing all of this, how does an insurance company proceed with transitioning its legacy system?
Weigh the best course of action. Remaining with the system of record or making a switch involves costs. Many have specific dollar amounts that can be assigned to them–others are more qualitative.
- Do you continue maintaining a legacy system – utilizing a patch-and-update approach to limp along?
- Do you commit to replacing a legacy system by building a proprietary system from the ground up?
- Do you purchase a new software package from a vendor, configuring it for your specific needs?
TAC4 experts can help you answer these questions while providing independent project leadership. Our Projenomics® approach leads to 100% success. Contact us.