There are some obvious differences between ‘legacy technology’ and ‘cloud technology’, but does that necessarily mean we should all make the move? Here, we look at both options and some of the things that businesses should consider when thinking about their technology plans strategically.
Typically, technology is considered to be ‘legacy’ if it is no longer supported and/or outdated in terms of the tech stack or usefulness. Whilst a business cannot operate with useless technology, it can, in theory, operate with old technology, so long as it is still supported by the supplier, is compliant with the respective industry’s standards, and is fit for purpose in terms of functionality. It is also possible that a suitable modern solution is not currently available on the market.
Legacy technology hosted in-house on an ‘on prem’ basis requires more resource to manage, as opposed to a cloud solution managed by the supplier. It will also typically have little opportunity for automations or the ability to integrate with other systems, so rekeying is commonplace. The point here is the high level of resource, and therefore cost, required to sustain the use of a legacy system.
If a business was to complete a cost/benefit analysis, it might find that the cost of changing from a legacy to a cloud-based solution outweighs the benefits, depending on a number of things including the size of the business, the number of users effected, the culture within the business, other projects in flight and on the roadmap, and of course financial cost. It is also important to note that the results of an analysis can change at any given time, so it might be decided that a change is required but to defer it and plan for a change in the future.
Awareness of the importance of business continuity has increased substantially in the past year and a half due to the pandemic. Businesses with cloud technology found the transition to remote working remarkably more seamless, and moreover it has become ‘business as usual’ where benefits have been realised. Businesses using legacy technology sadly experienced the opposite.
Of course, different industries have differing levels of ability to work remotely. A McKinsey study found that finance and insurance industries have the highest potential for successful remote working, with three-quarters of time spent on activities that can be done remotely without a loss of productivity. They found that potential for remote work is highly concentrated among highly skilled, highly educated workers in a handful of industries, occupations, and geographies, so the insurance industry is well placed for this – and to speak of geographies, the insurance industry is well used to doing business with clients and customers spanning the globe. But, let’s not forget the London Matters report a few years ago urging the London insurance market to make themselves more accessible to global trade. There are cloud-based technology solutions for this. Additionally, the emerging workforce are also notably tech savvy and are now actively seeking jobs that they can do from home.
In 2018, pre-pandemic, Forbes published that some industries were ahead of the curve, already benefiting from a better work/life balance by being able to work in more flexible way due to the modern technology they were using within their businesses. The top career fields offering this kind of work included the computer/IT market. As a technology company ourselves, naturally Cenata’s employees have been taking advantage of this for a while. We’ve experienced the advantages first-hand.
Modern technology is important for other reasons too. It can improve whole industries at a strategic level. For the construction industry there are many ‘accepted norms’ that require disruption to achieve desired outcomes (Construction Leadership Council, Mark Farmer 2016) – and this is true for most industries. Mark reported that there was no real mechanism for property developers to interface with the construction industry they so heavily rely on. There is a distinct lack of investment in technology within the sector.
The potential for improvement, in multiple areas of any business, that modern technology brings is vast. Key benefits include flexibility, scalability, continuity, better-informed decision making, data security, efficiency, greater functionality… the list goes on. However, if the culture within a business, or indeed industry, is not open to a change then it may not be possible to embed that change. Below are some of the key things that should be considered before deciding if/when to make a technology change within your business.
Things to consider
- Is your current solution fit for purpose? Can you find an alternative that’s fit for purpose?
- Know your hard code versus config – It might be possible to make your existing system better (in the short term) if there is not too much hard code (versus opportunity for configuration). Find out from your suppliers. Additionally, some suppliers are creating ‘new versions’ in the cloud of their existing legacy systems, albeit cloud-native solutions will be arguably a better option.
- Will your users ‘accept’ a change? And, moreover, be willing to/able to be involved in user acceptance testing, do they have capacity for training etc?
- Have you got the right people within your business to embed and take advantage of a new piece of technology?
- Workflow considerations – What are your current business processes? Could a new piece of technology imitate these processes, or, even better, could it be an opportunity to improve upon them/make efficiencies?
- Do you have any other dependencies on your legacy system, such as integrations with other systems? Have you identified all of the user groups?
- Appropriate planning – Decoupling with other systems, contractual obligations with current providers of the system to be removed, infrastructure changes required, project approach (will you need to do it in manageable phases or take a ‘big bang’ approach, etc), change management, lessons learned from previous change projects within your business, procedural documentation updates including business continuity plans, etc.
- Financial considerations including when you will get return on investment, is this a CAPEX or OPEX expenditure, what process do you need to go through to get budget for a new system approved…
Completing an assessment such as this also gives you something measurable in terms of ‘as is’ and ‘to be’ that can be tracked throughout an implementation of a new piece of cloud technology. To talk to us to see how we can help, reach out to Nick Freer, Managing Director of Cenata Limited