Even though legacy systems may not sound as modern as Artificial Intelligence, in many aspects it is still crucial. When integrated with modern solutions, legacy systems are key for remarkable outcomes. Explore in this article what legacy systems are and in which ways you can use them in your favor.
What is a legacy system?
Legacy systems are known nowadays as “outdated” technology; for instance, computer systems, software, or apps are considered essential for the existence of our modern world. However, even though they may have been technologies that changed the world to the one we now know, they may become obsolete when not integrated with the constant intelligence advancements.
Why are Legacy Systems Important? How Do Legacy Systems Work?
To understand deeply what legacy systems are, it is crucial to understand how they work. For instance, users typically input commands through the system’s interface that it processes based on its programmed logic and data structure. The system retrieves information from the database to generate outputs regarding its function. As these systems require specialized knowledge of their programming languages, many organizations have specialized teams that are familiar with all the quirks a certain system may have.
Let’s delve on legacy systems particularities to further understand how they work:
Legacy systems are typically built as a single, integrated unit whereas modern systems usually use modular systems.
These systems are commonly programmed in older, less common programming languages such as COBOL or Fortran.
Database technologies that legacy systems use are usually hierarchical or flat-file databases.
Legacy software interface is character based which means that users interact through the system through command-line prompts.
Many legacy systems rely on batch processing. This means that transactions are collected over some time and processed in batches rather than in real-time.
But if considered old, why are legacy systems still important?
There are many reasons why legacy legacy systems are still relevant such as the fact that they may be integrated with other databases within an organization. This integration may be complex and, therefore, may also need custom-built interfaces that are already adapted to the company's needs. About this, legacy systems are often highly customized to the specific needs of the company it is developed for. This customization is what makes them even more difficult to replace since newer systems may not offer the same level of customization without extensive development.
Problems caused by legacy systems
Legacy systems may bring along many issues that these days may seem difficult to approach. Let’s see which are the main challenges that legacy systems have to understand their place nowadays more deeply:
First and foremost, legacy software has a high cost of maintenance, not because of the system itself, but due to its outdated technology and the need for specialized skills.
In addition to this, they are frequently inflexible for updates and complicated to modify. These may become one of the biggest obstacles for a company as it may hinder its ability to adapt to changing business requirements or to integrate new technologies that may be useful for the organization’s profit.
Another aspect to take into account is its vulnerability. Legacy systems are at a great disadvantage regarding security as their software is not protected by modern operating systems and, therefore, are more vulnerable to cyberattacks.
While customization, as stated before, can be a game-changer as it attends to business needs, it can also be challenging given that legacy software does not integrate easily with modern systems or software.
In connection with this, many of the original providers discontinue support for older systems. As a result, legacy systems lack access to critical updates or tech support.
The latter is also linked to its poor performance, as legacy systems may struggle to handle data volumes which leads to a slower performance and, consequently, decreases productivity. Their aging hardware becomes more and more complex as it becomes difficult and expensive to replace or upgrade.
Regarding this issue, these systems may not always scale well to accommodate changes in demand as they may also lack features that are nowadays standard. All of the issues mentioned above are, as shown, problems regarding the obsoleteness of the system.
What also can become an issue regarding legacy systems is the continuous change in regulatory requirements as legacy systems may not be compliant with those standards.
But why do companies not transition from legacy systems? The difficulty here relies on the complexity of data migration to a new system as it may require a bigger effort and a lot of time.
Why do companies still rely on legacy systems?
As it has been mentioned before, data migration can be a tough process, not only because of outdated software but also because upgrading a legacy system can become a significant investment of time, money, and resources.
In addition, data migration can implicate a substantial loss of information and it may also disrupt established dynamics of work. Indeed, this impacts businesses in terms of productivity which makes companies avoid maneuvers that may introduce risks to their core operations.
Losing customized work that has been elaborated for years and years is also a risk that many businesses are not willing to take. This customization may be extensive and unique to the organization and replacing its system could require re-engineering it, which means a lot of time, money, and effort.
Moreover, employees from a company who are familiar with a certain legacy system could struggle in the process of training, which is not only time-consuming but also disruptive to productivity.
Even though many legacy systems are no longer supported by the original manufacturers, there are still third-party support services available. This is also much more effective than making a huge investment in renewing the whole system, with the outrageous cost that it entails.
All in all, deciding whether to keep using a legacy system or not depends mainly on the balance between risk, cost, and the specific needs of each organization. Even though nowadays keeping up with the latest technology seems to be the rule, it always involves much more effort that could make your business lag behind.
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Types of legacy systems
There are many legacy systems; some of them are well-known, some of them not so much. Let’s take a look at the most used legacy systems to delve into their special functions and particularities:
Mainframe systems: These are centralized computers that were used between 1960 and 1980 for critical business functions such as insurance, banking, and large-scale data processing.
AS/400 or IBM iSeries Systems: Born as AS/400, the now-called IBM iSeries is used for many commercial business applications such as accounting, order processing, or inventory management.
COBOL Systems: It is a programming language commonly used in finance, government, or healthcare due to its capability of handling complex processes such as payroll, billing, or account management.
Client/Server Systems: Though it may seem outdated, client/server systems used PowerBuilder or Oracle databases for inventory management, customer relationship management, or human resources.
Custom-Built Applications: As we have stated before, this is one of the most common kinds of legacy systems for businesses as companies develop custom processing systems, inventory tracking tools, or specialized data analysis software.
Legacy ERP Systems: Dedicated to finances, HR, manufacturing, and supply change, Enterprise Resource Planning is one of the most challenging for updating Legacy Systems due to its extensive customization and integration.
DOS or Windows 3.1 Applications: Nowadays, Modern Windows-based applications have replaced these systems used mainly for data entry, inventory tracking, or accounting. Nonetheless, many companies still use them due to the cost of their migration process.
Customized Spreadsheets or Access Databases: Excel spreadsheets continue to be one of the most trustable tools up to the point of being used to handle critical business functions. The more information these systems have to handle, the more prone they become to make mistakes.
What are examples of legacy applications?
Let’s take a look at some of the Legacy Systems mentioned above and see some examples of these systems applications.
COBOL is one example of the legacy applications used mainly by Core Banking systems to handle transactions as well as by Government Systems for social security, tax processing, and public administration.
Mainframe Applications are legacy applications that are, on the other hand, used for inventory management or even patient record management in healthcare systems. Insurance policies, claims and customer information is also handled by mainframe applications.
Custom-built legacy applications are another common example due to their capability to elaborate custom-built solutions for organizing and managing digital documents.
Customized Spreadsheets or access databases are examples of legacy applications that work from a small scale to a large scale as they are well known for budget and inventory tracking as well as project management.
AS/400 (IBM iSeries) Applications stand out as legacy applications for any kind of order processing such as handling customers' orders, shipping, or invoicing.
DOS or Windows 3.1 Applications are legacy applications that are better for word processing. For instance, WordPerfect or older versions of Microsoft Word.
Who still uses legacy systems?
Even though many companies and businesses rely on legacy systems, institutions may be at an advantage regarding this topic given their intrinsic quality of having to handle large amounts of data. But, what do they use legacy systems for?
Banking and finance mainly rely on legacy systems for core banking functions such as account management or transactions while insurance companies use legacy systems mainly for policy management, claims processing, and customer information.
Legal and Professional services such as law firms or accounting firms may still use legacy systems to handle case management, client databases, client records, and case tracking.
Healthcare and Education institutions also rely on legacy systems. The former is for patient record management, billing, scheduling, and medical history while the latter is for student information management, course registration, grading, and administrative functions.
Governments also still use legacy systems at local, state, and federal levels, generally for administrative functions such as tax processing systems or social security administration.
Legacy systems are also still used in manufacturing and retail for managing product processes, inventory management, inventory control, quality assurance, or even supply chain management.
Energy and utility companies as well as telecommunication companies, still depend on legacy systems for managing power distribution, network operations, call routing meter readings and, indeed, customer service.
Finally, as we have mentioned above, SMEs (Small and Medium-sized Enterprises) use legacy systems due to the initial investment in these systems and the significant cost of migration that they may not be able to handle. These may have legacy accounting software, inventory management, or even customized applications.
Legacy system modernization strategies
There are no easy paths towards legacy software modernization though there could be some smooth solutions for migrating data and adapting the good old system to a more fast and effective system.
For example, rehosting involves moving the existing system to a new infrastructure without changing its functionality. It can be done by moving from on-premises servers to the cloud to benefit from lower maintenance costs, scalability, and improved performance.
Another modernization strategy is re-platforming. This case requires making minor changes to the existing system to improve scalability and performance. This strategy could be beneficial due to the fact that it doesn’t require as much maintenance as legacy systems and it also improves performance and scalability.
Refactoring, on the other hand, involves making significant changes to the codebase to modernize the architecture and improve efficiency while also removing technical debt. One of the disadvantages is the fact that it may involve restructuring the code, updating to newer programming languages, or adopting new design patterns.
Service-oriented architecture is also useful for breaking down monolithic applications into smaller, modular services that can be independently developed, deployed, and scaled. This way, legacy functionalities are encapsulated into services with well-defined interfaces.
Regarding this, containerization and microservices are also convenient. The former involves packaging applications and their dependencies into lightweight, portable containers while the latter breaks down applications into small, independently deployable services.
Application Programming Interfaces allow companies to modernize by exposing their functionalities so that they can interact with modern applications and services.
As we have mentioned before, data migration and modernization are one of the hardest challenges of legacy systems. One of the better ways to do it is by migrating data to modern databases or data warehouses for better performance and analytics.
While these all could be useful, a hybrid approach may come as one of the best solutions as it combines multiple modernization strategies based on the specific needs of the system and organization, which is also one of the reasons why organizations tend to stay fixed in the same old legacy systems.
This way, it is easier to balance cost, time, risk, and benefits in a smooth tailored way while addressing different aspects of legacy systems challenges.
Finally, one of the most important aspects is to make progressive enhancements by gradually adding modern features and functionalities to a legacy system. These new features are added gradually while ensuring compatibility with the existing system.
