Insurance Solutions

4 signs that your legacy systems don’t have long left

Insurance Solutions | Georgina | 30 January 2015

In almost every industry today, organisations are wrestling with the question of what to do with legacy systems and applications. Here at Endava, some of the firms we work with are insurers who’ve been using the same technology since as long ago as the 1960s, facing any number of business pain-points on a daily basis as a result. And yet the prospect of migrating to a more modern solution is seen as too big and expensive a shift to even think about.

There comes a time, however, when making the leap ceases to be simply a source of competitive advantage and instead turns into the only way the organisation can continue to operate sustainably.

If this hasn’t happened to your business yet, it might only be a matter of time. Would you be able to recognise the tell-tale signs that your legacy systems don’t have long left? Here, in no particular order, are four of the key things to look out for.

There’s limited or no integration between systems

Most organisations’ legacy systems grew up organically, with new applications added over time and often only to fulfil a single purpose. Sometimes, a merger or acquisition might damage efficiency for years because nobody bothers to integrate the two firms’ systems.

The consequence of historic developments like this is that the organisation might end up with dozens of different hardware and software solutions in active use, and with limited or no integration between them. This can lead to all sorts of problems, such as excessive time spent on low-value admin tasks and the non-availability of data at critical junctures.

In an industry like insurance, the ability to share information between one system and another – using information from the original policy management during the claims handling process, for example – has enormous value. If your rivals have begun to leverage this model, there’s a good chance you’re at a serious competitive disadvantage.

It’s difficult to adapt to new market conditions

Maintaining a mix of legacy systems also makes it very difficult for a firm to be truly agile. These environments simply weren’t developed to enable rapid innovation – IT at the time would have been perceived as a support function, not as a key pillar of business strategy. As such, rolling out an innovative new product or service can be a distressingly long and drawn-out affair, and this delay might well compromise its chances of success.

Your systems are expensive to maintain

Even if your legacy systems were built as recently as a decade ago, they probably require a very different technical environment in which to run than solutions at the cutting edge today. We live in an age of virtualisation and cloud computing, but lots of firms are still running applications that require their own antiquated databases, libraries, operating systems and even hardware. The price differential here is getting bigger and bigger, making the latter route less and less sustainable as time passes.

Also, note that in all likelihood, the people who developed your legacy systems have probably long left your company or even retired. Were something to go wrong, how cheaply would you be able you fix it?

You struggle to comply with new regulatory requirements

Finally, working with an ageing environment can make compliance with new regulatory requirements extremely taxing. While it’s more pertinent to some industries than others, it bears remembering that legacy systems were rarely designed with today’s high standards of data security in mind and don’t respond well to retrofits. As such, there are a tonne of headaches associated with aligning them with new laws and regulations.

The implications of a compliance failure can be huge, comprising everything from lawsuits to long-lasting reputational damage. If your organisation’s legacy systems are its weakest link, it might well be time to start thinking about an update.