Martijn Groot, VP of product management, at Asset Control explains why reluctance to move on from dated legacy systems will not only stifle your business’s potential, but guarantee a costly headache later down the line.
Whether due to past mergers, failing to keep up with developments in technology or a reluctance to budget for development other than small scale solutions, many organisations will have a diverse collection of legacy technology platforms.
While these platforms may have once been efficient and instrumental to day to day operations, like any software application they do not age well if not looked after. Their use further down the line can become a burden, becoming costly to maintain and unable to scale to new volume requirements. Yet, while most businesses recognise the need to update their data management systems, they are sometimes reluctant to do so due to the cost of change and perceived difficulties of integrating their systems with new solutions.
With these perceived challenges and costs to businesses preventing a large number of businesses from updating their platforms and holding them back from their true potential, we look at the true costs businesses are likely to face if they fail to bring their data management capabilities in line with 21st century requirements.
Why legacy platforms will cost you
Despite the difficulties associated with implementing and integrating new data management platforms, businesses are more likely to be negatively impacted by inertia than by taking action and updating their data management solutions.
According to our research, more than a third of financial institutions saying that legacy data platforms are the biggest obstacles to improving their data management and analytics capabilities. For financial institutions this is a worrying statistic as they are heavily reliant on easy access to quality data and analytics to perform their role effectively.
However, this is just one of the issues preventing businesses from taking action, with a further 31% of financial institutions citing the cost of change is holding them back from updating their legacy systems. For these organisations, there is a mistaken idea that it is cheaper and therefore more cost-effective to stick with legacy systems than to update them. Yet, this doesn’t take into account the indirect costs of legacy platforms and the effects these have on a business which can be felt across a number of other areas, including information security and lack of business user enablement and productivity.
Organisations must consider how much their current data management systems are holding them back operationally as they typically take longer to carry out processes, delaying data delivery to end-user applications and reports and lowering productivity.
Legacy systems can slow down organisations as they are costly to maintain, miss audit or lineage information, often cannot scale to new volume requirements, and do not quickly and easily provide business users with the data they require. Especially with frequent new regulatory requirements on data quality and due process, the cost of change can be formidable.
A further significant and potentially costly by-product is the potential for data discrepancies because they lack a clear and comprehensive view of their sourcing and validation process. Similarly, legacy platforms are a higher security risk as they tend to no longer be supported or patched. This leaves data businesses vulnerable which can be costly in several ways, including potentially breaching GDPR or other data regulations.
The solution: Towards insight driven data management
It is vital that businesses invest in the right tools to overcome the challenges posed by legacy platforms. While the initial cost of a new solution may seem off-putting, by delaying and continuing with outdated solutions, businesses are likely to encounter greater risks and a growing number of indirect costs.
Fortunately, while businesses may be reluctant to change, many understand what they require from new data management solutions. Our research shows that when considering new data management and analytics capabilities, firms remain focused on the fundamentals with more than a third citing ease of use and flexible deployment as their top business consideration, while 41% consider ROI to be the biggest factor. As such, organisations must look for data management platforms that deliver this and are able to be easily integrated with other systems within their business.
Data management has been a challenging problem to solve for the industry for a long time, and it can be tempting to accept an unsatisfactory status quo. For financial institutions, changing data management strategy and tactics is undoubtedly a difficult task, owing to it being expensive to start again - not just in terms of systems spend, also in time and resources to undo a solution which is typically deeply embedded.
However, as established, legacy platforms come at a high cost and risk to an organisation, affecting business continuity, security and reliability. In an industry where regulations govern many processes and data is king, businesses must ensure they have the most efficient and effective solutions in place to avoid data discrepancies and potential non-compliance and optimally support the business in an ever more data intensive environment.