Discover why replacing legacy systems isn't always the best path to digital transformations and better business outcomes.
When I first joined Keller Schroeder well over twenty years ago, one of my first assignments involved helping a client evaluate a short list of flagship financial suites identified as candidates for replacing aging modules within their highly customized ten-plus year-old ERP. One of my first tasks was to ensure proper documentation of their requirements and evaluation criteria. These ranged from UI modernization and a long list of relatively minor but meaningful feature additions and enhancements, up to addressing large functional gaps for things like commission processing.
Rather quickly it became obvious that none of the candidates could support commission processing without a significant custom development effort at a less-than-well-defined initial cost, plus the ongoing costs of maintaining the customization to keep it aligned with patches and updates.
After some discussion with stakeholders and vendors, I proposed a preliminary assessment of the business value of the short list against a requirements list that purposefully excluded the commission processing, using the rationale that the significant custom development constituted a separate issue. Long story short, the ensuing discussion surfaced a more cost-effective approach that involved investing in tools and development to achieve the same objectives with the existing system, and included the commission processing module, all at less initial and ongoing cost than implementation of the candidate solutions’ core modules alone.
Legacy systems are frequently (mis)identified as barriers to digital transformation with their replacement an implied prerequisite for various high-priority business initiatives, ranging from web enablement to data analytics and AI deployment. The truth of the situation is often more complicated and nuanced. Frequently, legacy systems contain a veritable goldmine of data, but it’s often structured and/or formatted specifically for its original purpose, which may or may not align with the requirements for newer initiatives. Sometimes the data is effectively “invisible” to stakeholders because tools for ad hoc inquiry were never implemented or failed to gain traction.
Ironically, a substantial portion of the value derived through replacing these systems is often rooted less in implementation of a new solution, and more in doing the hard work of engaging in a long overdue review and transformation of the data. In other words, work that probably can and perhaps should be done without replacing a system. As an example, building a separate product information database is sometimes the practical solution when exposing data to new stakeholders and use cases, engineering and quality management or product catalogs require data elements and formatting that inventory processing doesn’t. A good bit of the effort required lies in designing and building the additional data, with or without a new solution.
Given the notorious failure rates of projects like ERP implementation, not to mention the very high price tag and long timelines required when legacy system replacements do succeed, exploring more practical outcome-oriented alternatives is certainly worthy of consideration. At Keller Schroeder, we have deep and broad experience supporting, modernizing, integrating and extending legacy systems, as well as developing custom databases and applications to drive business results. Contact us today to discuss your problems, initiatives, and strategies.
