The document discusses the reasons why companies should modernize legacy IT systems, even when the existing systems still function. It outlines several signs that a system has become a legacy system, such as aging infrastructure, obsolete programming languages, lack of vendor support, and disproportionately high maintenance costs. The document then lists seven important financial reasons for modernizing systems, such as reducing security risks, adapting to changing business needs, lowering long-term costs, improving data integration, enabling mobile access, attracting and retaining employees, and building technical expertise rather than accumulating technical debt. It emphasizes planning modernization projects carefully to achieve business innovation.

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Updating Legacy
Systems
Making the
Financial Case for
a Modernization
Project

2. Overview
Age Is Just a Number
Most people associate the term “legacy system” with
old code, but a true legacy system is any application
that is difficult to update. A two-year-old app can
already be in a legacy state if it’s unscalable.
Here are some signs you are working with a legacy
system:
1 Aging Infrastructure
How easy it is to purchase replacement parts?
2 Obsolete programming language
Do new developers know your tech stack?
3 No vendor support
Have vendors stopped supporting the
applications you use?
4 Disproportionate cost
Has it become more expensive to maintain your
legacy system than it would be to replace it?
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3. Topics
Making the Financial Case for
a Modernization Project
Many companies put off updating a legacy system,
even when they accept its limitations. It can be a
hard sell to replace functioning systems, but the
longer it is put off, the more expensive it ultimately
becomes.
There are important financial reasons you should
update a legacy system, including:
1 Replace Before It’s a Liability
2 Business Needs Change
3 Reduce Long-Term Costs
4 Integration Means Better Data
5 Increase Efficiency with Mobile
6 Improve Employee Recruitment & Retention
7 Build Tech Wealth
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4. 1
Replace Before It’s a Liability
Legacy systems make your company more
vulnerable to malicious attacks. Unpatched or
unsupported software, hardcoded passwords, and
no budget for upgrades all make legacy systems
vulnerable. Depending on the age of a company’s
system, it is possible a company may be unaware
it is operating with unpatched software or hard-
coded passwords, providing an entrance point for
hackers.
A security breach can impact your company’s
bottom line. Depending on the scale and scope of the
breach, you could lose customers, partners, licenses,
or contracts.
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5. 2
Business Needs Change
If you chose an enterprise solution five years ago,
your business needs may have already changed.
A company merger might force changes, new
compliance measures could force new application
features, or maybe your current system is so
outdated that people have created work-arounds
that the system cannot support longterm.
Whatever the situation is, if your system cannot be
updated to meet your current business needs, then
it’s time to replace it.
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6. 3
Reduce Long-Term Costs
It is expensive to operate and maintain legacy
systems. Your non-technical employees spend more
time interacting with older systems because the
interface is clunky and the system is full of bugs, and
your IT staff spends a large portion of their time fixing
bugs and maintaining the system.
The time spent interacting with the system cuts
down on overall productivity, which costs your
company money. Would you rather have your
developers writing new product enhancements or
fixing bugs?
The sooner you replace outdated tech, the easier and
less expensive it will be for the transition. If possible,
assign a dollar value to maintaining your current
system versus replacing with a modern system,
taking into account all of the risks and benefits.
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7. 4
Integration Means Better
Data
Businesses that evolve their systems with siloed
applications will eventually find themselves dealing
with poorly planned architecture that prevents
efficient scaling. IT staff spend a large amount of
time supporting one-off applications that do not
integrate with each other, often duplicating data and
holding it in separate systems. This tangled web of
siloed business software systems inhibits flexibility,
productivity, and slows down company growth.
Integrated IT systems increase visibility across
the organization by providing a uniform data pool
across departments, saving time and money for
IT support, and spurring growth through customer
loyalty and new customer acquisition.
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8. 5
Increase Efficiency with
Mobile
Your staff is on the move, and they carry mobile
devices. If your system can not be accessed from
mobile devices, including smartphones and tablets,
then you team is not as productive as they could be.
To maximize the productivity of team members
working in the field, they should be constantly
connected to your system with real-time data and
reporting features. Cloud services make mobile
connectivity an affordable option for companies of all
sizes.
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9. 6
Improve Employee
Recruitment & Retention
It is difficult to recruit developers to work on older
technologies. Most likely, new developers will not
be trained on the older tech your system is using.
Developers want to grow their skills and not get stuck
working on old tech, which can lead to skills atrophy.
The older your tech stack, the harder it is to find
developers with the skills and the desire to work on
it.
Even non-technical people want to work with the
latest applications because they are user-friendly,
fast, and integrate with other applications.
To recruit and retain the best talent across your
organization, invest in updating your enterprise
systems.
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10. 7
Build Technical Wealth
When you decide to replace your legacy system, plan
the replacement project carefully to build technical
wealth, not technical debt.
Invest in your team and plan for appropriate training.
You may need to augment your current team with
developers with experience in the new technologies
or outsource some of the modernization project with
highly-skilled consultants.
While building your new system, take steps to ensure
clearly written code, include good documentation,
build and run automated tests, and design the
system for integration.
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11. Next Steps
Choosing A Development
Partner
When you’re ready to outsource a development
project, you should carefully review all of the short
and long-term impacts for your company before
choosing a partner. You will be working with the code
for several years, so be sure you are happy with the
finished product.
Let’s Talk
ILM Professional Services provides expert
development advice to companies in Minnesota. We
can help you with a variety of development initiatives,
from an architectural review to a full strategy design
and application launch. Visit ilmservice.com or call
(952) 960-2220 to learn how we use development to
drive business innovation.
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(952) 960-2220 | ilmservice.com