10 Signs Outdated IT Systems are Killing Your Business

August 8, 2019

Originally published by CIO

Progress comes at a price. In the IT world, that price includes the cost of upgrading or replacing the aging systems that are responsible for keeping your enterprise thriving and competitive.

Knowing exactly when to pull the plug on an existing IT resource requires both insight and awareness, as well as a willingness to embrace new technologies and practices. To get started, here’s a look at the 10 telltale signs that it may be time to consider an IT system change.[ Be sure to learn the secrets of highly effective digital transformations — and beware the 7 myths of digital transformation. | Get the latest on digital transformation by signing up for our CIO Leader newsletters. ]

1. Dysfunctional workflows and processes

When workflows and processes are designed to meet a legacy technology’s capabilities rather than what needs to be accomplished, technology can actually become a business hinderance. “For example, if you lack modern collaborative tools, such as video conferencing or group chat capabilities, you might pick a team just because people are local instead of a team of people with the best skillset for the project,” says Diane Chaleff, product manager in the office of the CTO for Google Cloud. “Outdated technology forces us to work within its constraints, instead of doing what’s best for the business.”

2. Inability to capitalize on new opportunities

In the wake of the 2008 economic downturn, many enterprises focused on cost-cutting measures, including maintaining legacy technologies rather than replacing them. “With new developments in cloud, analytics, business models and markets, IT operations have been steadily disrupted,” notes Nishita Henry, principal and chief innovation officer for business consulting firm Deloitte Consulting. Legacy systems, nursed along for years, frequently lack the resources needed to leverage powerful new resources.

Companies burdened with legacy infrastructures are at risk of being disrupted by outside forces, including competitors taking advantage of rewarding new technologies. Outmoded tech can also sour customer sentiment. “With technological advances, customers expect headache-free experiences and your enterprise needs to be able to perform at a level that anticipates the customer’s needs,” Henry observes.

3. Slowing or stalled growth

Growth projections can be a strong indicator of technology readiness. “For companies that are properly using technology, top-line growth should be matched with a much lower cost of operations,” says Chris Stephenson, a business consulting principal at professional services firm Grant Thornton. “If companies are finding the cost of running the business is growing as fast or faster than the top line, the culprit is almost always a technology gap.”

4. Sagging sales

Poor sales can also be traced back, at least in part, to IT neglect. “Businesses will increasingly lose deals to competitors that more effectively integrate new technologies and better enable clients,” explains Jonathan Victor, CIO of Insurity, a property and casualty insurance technology and services provider. “Technology’s largest impact on business today is its ability to drive customer experience, and companies must keep up with an ever-increasing demand for better and quicker service delivery.”[ Looking to upgrade your career in tech? This comprehensive online course teaches you how. ]

5. Flatlining IT productivity

The signs that outdated IT technology is killing your business are usually subtle and, unfortunately, quite easy to ignore, observes Tirena Dingeldein, lead analyst at Capterra, an online peer review software website. “One of the most important signs that a business’ technology is doing more to harm than help is if productivity starts to flatline,” she states.

It’s widely acknowledged that failing to meet deadlines is a telltale sign of a larger productivity problem, but there are other precursors that are frequently glossed over. “Some signals of failing IT technology are if you see your team devising workarounds for software, using supplemental software to make up for shortcomings in your current system or an increase in time dedicated to patching or fixing software so that it meets your needs,” Dingeldein says.

6. An inability to make changes dynamically in real time

Wasted time is a business killer. Whether it’s relying on your IT team to make updates to your proprietary CRM or having to call your ISP to ramp up bandwidth during peak utilization periods, seamless flexibility and scalability are always the fundamentals of a sustainable tech stack, notes John Meko, director of engineering, North America, for commercial real estate ratings platform provider WiredScore.

Meko suggests auditing the existing internal technology stack, beginning with an evaluation of the physical connectivity that underpins your operations. “The key to a successful business in the digital world is coupling a scalable, cloud-based tech stack with reliable, flexible internet connectivity,” he says. “This will not only enable your business to scale quickly and efficiently, but will ensure that your employees always have access to the tools they need.”

7. Declining market share

A gradually eroding market share can often be traced to the fact that your enterprise is developing a bad reputation due to products and/or services that are inferior to competitors’ offerings. IT plays a major role in assuring consistent quality. “Your business unit leaders [may] say that competitors are running rings around you because they have invested in infrastructure that enables them to sense and respond faster to the market,” says Sanjay Srivastava, chief digital officer for professional services firm Genpact.

Srivastava believes that solutions should be modular in nature. “The big issue with most legacy IT is that it’s monolithic in design and changing any of it impacts a large portion of the infrastructure.” More recent architecture design strategies, such as separation of concern, microservices, abstraction layers and systems of engagement can all enable more flexibility to address a rapidly changing business landscape that IT needs to support.

8. Siloed systems

There’s been a major technology shift over the past decade toward openness and integration. Legacy IT has been left behind, leaving teams to work in isolated silos. “Most, if not all, modern platforms have APIs and integration points built in … and, in a lot of cases, include pre-built integrations to other popular systems, such as Slack, GitHub and Dropbox,” explains Matthew Baird, founder and CTO of AtScale, a data warehouse virtualization firm. The synergy between data producing and consuming systems has a value that cannot be understated, he added. “The big struggle … is how to integrate mission-critical systems that are now over 20 years old in a lot of cases.”

As with many system-related challenges, accepting there is a problem is the first and most important step toward resolving it. Yet Baird urges IT leads to proceed with caution as they approach IT modernization. “Boiling the ocean is not an option and attempting to upgrade too many systems at once could slow down the overall pace and deny you important proof points as you upgrade systems,” he says.

9. Creaky core applications

Key legacy software, such as ERP and CRM products, are often taken for granted by IT leaders and therefore go largely untouched for many years. “The fact is, no one wants to replace these large, all-encompassing systems more than once per decade because doing so has the potential to cripple the business during that time period,” says Keith Lutz, IT vice president for Ivanti, an IT security management software provider. “However, the applications that tie into these core systems are changing much more quickly, and users are demanding that these core systems keep up with the features, functionality and integration they desire.”

The best way to address the issue of outdated core applications is to be flexible and to move in sync with changes in business and market demands. “If you find that technology within your organization prevents you from achieving this goal, you must align yourself with technology platforms that can deliver this kind of flexibility,” Lutz notes.

10. Reliance on orphan applications

Using an application that’s no longer supported by its developer can bind an enterprise to older IT systems and heighten security risks. “In the case of packaged software, one big indicator [of an orphan application] is that patches are no longer released for the product or perhaps there isn’t even a vendor that’s supporting the product any longer,” explains Michael Cantor, CIO of Park Place Technologies, a data center maintenance company. “In the custom development world, it becomes evident when there’s no longer a community of developers working with the technology and sharing knowledge/open source code,” he adds.

Orphan applications need to be addressed before there’s an issue. “Mature IT organizations are constantly road mapping, evaluating technology and ensuring there’s a long-term path to technology selections,” Cantor says. “Markets do change quickly, so continuously looking at trends and evaluating what’s coming to the forefront and ensuring the technology in place can support what’s trending is critical.”

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