Legacy systems are computer hardware or software that is outdated but still in use. Companies hang on to these dated systems for two primary reasons:
- They've invested a lot of money and staff time in the system.
- The system impacts a wide range of functions in the organization and would be costly to replace.
And yet, many organizations often fail to realize the high costs of keeping these systems in use.
Sometimes the largest companies are the most hampered by legacy systems because they've made the largest investments in technology. HR professionals hoping to make the case for replacing legacy systems that have outlived their usefulness can take some steps to convince their companies to let go.
Building the Business Case
Ideally, said Pieter Vaniperen, managing partner at PWV Consultants and a veteran software architect and security expert, "every business should be moving to the cloud and undergoing digital transformation." Some, though, are putting this move on hold because of legacy technology. That's problematic, he said.
"The problem is, the longer this tech sticks around, the more fragile it becomes," Vaniperen added. "It could already be breaking, and the fixes are just Band-Aids that will eventually fall off. With legacy tech, it's not a matter of if it will break, but when it will break."
He said that it is always more cost-effective and efficient to replace or upgrade legacy technology before it breaks.
Rhonda Marcucci, vice president of the HR and benefits technology consulting practice with Gallagher, a global risk management and consulting firm based in Chicago, suggested spending some time considering the potential negative impacts of existing technology.
She said HR professionals should consider such questions as:
- Are my current legacy systems standing in the way of flexibility for managing my workforce?
- Are my current legacy systems standing in the way of flexibility in my benefits offerings?
- Are my current legacy systems creating employee perceptions of the organization as an employer that provides state-of-the-art tools to help them get their jobs done?
To build a case based on business objectives—which will resonate most with CEOs and CFOs—the first question HR leaders must ask is 'What do I want to do that I can't do now, or only with great difficulty?' " said Mike Loukides, vice president of emerging tech content at O'Reilly Media, an online learning platform in Sebastopol, Calif.
For example, Loukides pointed out, there might be an issue with supporting employees who are working at home that has emerged during the pandemic. Enabling remote work might require providing software for managing employee time or vacations that is both accessible from home and secure. Or there might be a need to account for remote work in compliance with state and local laws.
"If keeping up with compliance is impossible with your current software, you really have to address your legacy issues," he noted. Other factors to consider include: How easy is it to add new products? How easy is it to expand into new territories?
"If the answer is 'difficult,' or even 'impossible,' you're losing money, and it's time to rethink your legacy systems," Loukides said.
Marcucci agreed. "Buying and optimizing the best HR technology available in the market should be the goal to support HR automation, HR compliance and the CEO's people agenda," she said.
[Want to learn more about HR technology? Join us at the SHRM Annual Conference & Expo 2021, taking place Sept. 9-12 in Las Vegas and virtually.]
Making the Business Case
Legacy systems shouldn't be replaced just because they're old, Loukides pointed out. "That argument isn't going to impress any senior executive," he said. Instead, he suggested focusing on lost opportunities: "Legacy systems are frequently inflexible, and inflexibility has a way of costing a business money. Lost money means lost opportunities," he said.
In making the business case to replace legacy systems, it's important to create context for senior leadership, especially the CFO, Marcucci said. She noted that, for most companies, their biggest expense is people—salaries and benefits. "The cost of new software is usually a fraction of a percentage of that cost," she said.
Putting your pitch into that type of context, she said, "speaks to the CFO."
But, Loukides cautioned, it's important to make your business case based on business objectives—not technical objectives. "This means thinking critically about how the current software is causing the business to lose money and how much more money the business could make if it updated or replaced the software," he said. "This is the bottom line for any CFO and CEO."
Don't focus on all the bells and whistles of some trendy new technology. Instead, focus on what it will do and how that translates into more revenue or reduced costs.
Business leaders and executives are concerned with two things, Vaniperen said: staying in business and making money. "When legacy tech comes up in meetings, make sure the decision-makers understand the repercussions of not modernizing the technology that is the foundation of the business. Ensuring leaders know what could really happen by leaving legacy tech alone is key to getting a change made."
Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.