While leaders work to meet organizational objectives, digital transformation to boost revenue, and cut costs, undertaking an enterprise-wide technology modernization initiative can feel like an expensive and time-consuming project. As a result, many organizations continue to run their business on legacy systems and postpone modernization efforts. It turns out legacy applications and systems are one of the riskiest landmines for an organization and cause undesirable consequences that could be avoided.
What are legacy applications?
When we talk about legacy applications and systems, we refer to outdated or obsolete software programs that continue to work but fail to work efficiently or effectively with modern operating systems, updated browsers, and current IT infrastructures. Organizations that continue to use legacy platforms are not keeping pace with modern technology and put their customers, users, information, assets, and reputation at greater risk for data privacy non-compliance, which can increase the institution (and ultimately customers), exposure to financial crimes and fraud.
Heavily manual and inconsistently applied functions lead to operational risk exposure, compared to intelligent automation, which removes swivel chair activity and improves your ability to identify and prevent internal and external risk. We believe that procrastinating on modernization can subject your organization to five main risks.
Five major risks of slow-moving legacy systems
Key insights from NTT DATA’s Executive Guide to the 2021 Global Threat Intelligence Report revealed that work-from-home and remote access are magnifying web and application attacks. As organizations continue to race to be digital-first, the increasing use of client portals and mobile and web-enabled applications also accelerate risks. Legacy systems are ill-prepared to detect or fend off advanced threats. Companies that fail to modernize risk five significant consequences.
1. You risk losing users and customer loyalty
Customers in today’s digital-first landscape have a world of options when it comes to selecting an organization to deliver their products and services. Whether a consumer selects a wealth management platform or a healthcare provider, customer experience (CX) is top-of-mind in the decision-making process. 76% of customers expect companies to understand their needs, and customers will spend 17% more for a good experience. As a result, customer-centric companies are 60% more profitable than companies that fail to prioritize CX.
According to recent research, a poor customer experience has consequences; 45% of consumers cut their spending with companies after having a bad experience. Legacy platforms frustrate users; a typical legacy system employs outdated user interfaces, client portals, and functions that often render unworkable. We believe that organizations that fail to modernize will see users and customers migrate to tech-savvy alternatives for better customer experiences.
2. You risk wasting money on maintenance
What’s the cost of maintaining legacy systems? A recent study investigated the cost of maintaining legacy systems in the United States and determined that ten of the government’s legacy systems cost about $337 million a year to operate and maintain. The older the system and hardware used, the higher the associated cost, system criticality, and security risks. Failing to invest in modernization will cost organizations in the long run and lead to annual budget increases that outweigh the cost and maintenance of adopting modern platforms.
3. You risk application instability
In 2021, our Global Threat Intelligence Report found that application-specific and web-application attacks saw a rise across industries. These attack types accounted for 67% of all attacks, up from 55% in 2019 and 32% in 2018. Cybercriminals identify vulnerabilities and exploit applications using worms, botnets, and other malware that put organizations at risk.
As organizations accelerated their digital presence during the pandemic, nefarious characters capitalized on mobile and web-enabled applications run on legacy platforms. As a result, account takeovers soared. Organizations with modern systems can better manage application security than 66% of organizations that claim they are unprepared for application threats.
4. You risk creating data silos
Data silos are a common by-product of legacy systems. A data silo occurs when disjointed systems create “islands” of data that must be manually connected. These silos are often a result of systems that fail to work together due to incompatible code and poor data governance, and ineffective data management strategies. Modern systems are designed to integrate with newer systems to provide one source of truth for a 360-degree view of data. Obsolete technologies fail to integrate with modern systems and require extensive manual effort to consolidate. Alternatively, modern systems achieve data integration to encourage better connectivity, reliability, performance, and security.
5. You risk creating a bad company image
Before digital transformation kicked into high gear, many companies could get away with using legacy systems and continue patching up problem areas, replacing old code, or relying on manual integration. However, the pandemic ushered in increasing competition, heightened customer expectations, and more security risks. As a result, we believe that organizations that fail to modernize will not only fall behind but will become obsolete in the next few years.
Leaders understand that legacy systems put their consumers and assets at risk, and with this knowledge, organizations that employ outdated systems damage their company image and reputation. Consumers, vendors, and partners are loyal to companies that value innovation and security.
Protect your assets, customers, and reputation from today’s top risks
How can organizations and leaders respond to today’s unpredictable risk management and regulatory environment? It’s possible to respond to threats to your business before it’s too late, with data-driven proactive strategies, technologies, platforms, and processes that mitigate the fraudulent activity, safeguard your organizational systems and make regulatory compliance timely and straightforward.
Post Date: 2021-12-16