Outdated IT Systems and Processes

Risk # 3 - Outdated Systems and Processes

This is the next article in this series of 5 IT Risks That Could Cripple Your Business: How to Mitigate ThemPlease refer to last week’s article for risk #4.  Today, most businesses use a number of different systems to cover functions like accounting, inventory control, customer management, supply chain, project management, and on and on.  The number can be quite extensive.  Some organizations choose comprehensive ERP systems SAP Hana, Oracle ERP Cloud or Microsoft Dynamics that have separate modules that satisfy a number of different business functions.  With all those systems, managing upgrades and keeping up with new versions can be a challenge to most organizations.  However, this brings on many issues from security vulnerabilities to user satisfaction.  It is fairly common to see outdated IT systems playing a key role in a business IT portfolio.

There never seems to be a great time to replace an outdated system or even perform major system upgrades for that matter.  However, most of us are familiar with the term Digital Transformation ? People have been talking about it for years, however, ask 10 people what it is and you get 10 completely different answers.  My definition is simple, integrating technology into all areas of the business to reimagine business processes by leveraging technology to improve processes, increase efficiency, and improve the way they deliver value to customers.  However, so many business processes are coupled with systems that are a major pain to make any changes because they are old. It is hard to take advantage of all the promises of digital transformation if your technology stack is littered with old outdated systems that do not scale well.  Not only do they keep an organization behind but there are many risks that are caused by outdated systems. 

Outdated IT Systems and Processes

Why Outdated Systems and Processes is a Risk:

I have seen organizations hold onto old, really outdated technology systems way past their prime over the years.  There are a number of reasons why they do so.  It is too difficult to replace.  It will be very expensive to replace. A replacement project is on the roadmap and will be done someday in the future.  They have not found the right system to replace it with.  People in the organization are familiar with the current system and replacing it will really disrupt the organization.  They are having trouble getting business stakeholders to buy into change being pushed by IT.  The list goes on an on.  However, business is littered with organizations that did not want to change and before they knew it, competitors had gone right past them and they quickly became obsolete.  Walmart is known as a great Supercenter but it is also an organization that has used technology to get a leg up on some much larger and established competitors.  Anyone remembers K-Mart or Montgomery Ward ?  These days, the winners are those that disrupt the status quo.  Adopting new technologies that enable organizations to scale and add more value to customers is paramount and therefore, replacing old, outdated systems is a must.  Don’t believe me, here are a few risks that should be considered for those that continue to rely on older, outdated systems: 

  • Speed and System Failures: When systems age, they are more likely to fail.  This often results in unplanned downtime.  The older the system is, the more unstable and prone to failures they become. Often, the system runs on older operating systems and/or older hardware.  Many times, the software is not compatible with the latest hardware.  That means they miss out on hardware and operating system advances that could make the system run faster. 
  • Loss of Company Intellectual Capital: Since the Pandemic, business as we once know it has changed.  For many companies, employees are no longer required to work full time from the office.  Many offer hybrid working arrangements or even fully remote.  While this really benefits and makes employees happier, there are some unintended consequences.  What is often lost is knowledge gained during water cooler conversations or doorway conversations in colleagues offices. A lot of knowledge in all areas of the company is shared during these unplanned meetups including systems ins and outs. In addition, many of the systems lack proper documentation.  Much of it is just knowhow gained by supporting the system over the years.  The loss of knowledge can prolong downtime because IT may not know how to fix or troubleshoot the issues as quickly as they once did. 
  • Reduced productivity: Outdated systems over time gets slower and can be inefficient.  Maybe they don’t actually get slower but when compared to newer technology that is running much faster, they seem to be getting slower.  This often makes it difficult for organizations to keep up with the competition.  In addition, new systems normally come with open APIs making it easier for other systems to integrate with them and exchange information.  If you are familiar with products like Zapier, they use APIs to integrate different systems enabling them to seamlessly share information. Older systems might not contain such APIs making it more difficult to integrate.  This usually results in more manual work and a decrease in employee productivity as well as a reduction in employee morale.  Note: Employees generally do not like to do a bunch of manual, time-consuming tasks that could be automated.
  • Competitive disadvantage: Isn’t the whole point of the digital  transformation wave is to adopt  newer, better technology and business processes to help organizations run faster, scale further and operate more efficiently.  Outdated systems make it difficult for organizations to innovate and adopt new technologies, putting them at a competitive disadvantage in their industry.  Forrester’s 2023 Global Technology Innovation Survey found that companies that invest in innovation are out growing their competitors by 10%.  They are also more profitable than their peers.  
  • Difficulty attracting and retaining top talent: The best IT persons want to work for innovative companies.  They want to be exposed to the latest and greatest technologies. Organizations that use outdated systems and processes often have difficulty attracting and retaining top talent.  Employees often become frustrated and lose motivation when forced to work with outdated tools. 
  • Security Vulnerabilities: System security is critical to organizations.  With all the ransomware attacks, companies must do all they can to remain secure.  Older systems can lack the security updates required to defend against the latest cyber threats. This makes the business more susceptible to cyberattacks, data breaches, and unauthorized access. 
Outdated IT Systems and Processes

How can we mitigate the risk of Outdated Systems ? 

The risks for continuing to use outdated systems can be great.  Many organizations may think that we cannot afford to change the systems right now but what they should be saying is that we cannot afford not to change the systems right now.  What if I asked you to build a list of companies that you are aware of that really took off and scaled by playing it safe and using older, outdated technology.  Now think about the ones that were known to have used technology to the fullest and scaled.  I would suspect that it would be much easier to build the latter list.  

However, many things can be done to protect against the risk of using outdated systems.    

  • Replace System – Of course, the first thing is to consider upgrading or replacing the outdated system with a more modern system that is in alignment with the organization’s current business needs.  This will enable organizations to get the highest return on investment in terms of speed, scalability, and integration. 
  • Install Regular Updates and Patches – One of the best ways to mitigate the risks associated with outdated IT systems and processes is to implement a regular upgrade and maintenance schedule. This will help to ensure that systems are always up-to-date with the latest security patches and bug fixes. It is also important to have proper documentation in place for all IT systems and processes. This documentation should be regularly updated to reflect changes to the systems and processes.
  • Regular Backups – We can assume that all critical data is backed up regularly but you know what happens when you assume.  Most organizations back up data but far less ever test the backups until they are needed.  Companies should run periodic tests on the backups to be certain that data can be restored if needed. 
  • Training and Knowledge Sharing – Companies should ensure that IT staff is well-trained and share information.  That way, if someone leaves, all the knowledge doesn’t just walk out of the door with them.  This is always a challenge. As a consultant, there were times when I have had critical information or know how for systems where I don’t think anyone else in the organization had.  I found that documenting everything including configurations, customizations, and troubleshooting procedures really helped.
  • Infrastructure Audit / Evaluation – If you are concerned about the risks posed by outdated IT systems and processes, it is important to conduct an audit to evaluate the technology and examine all risks.  This can be an internal project or an opportunity to have a qualified IT professional assess your company’s IT infrastructure and make recommendations for improvement.  
  • Employee engagement – Involve employees in technology decisions.  Help promote a culture of innovation and adaptability and inclusiveness.  Employees that are involved in technology decisions will go the extra mile in assuring new technology is a success. 

In closing, outdated systems are definitely a risk to a company.  The very nature of companies that are  agile would suggest that those who whole-heartedly embrace digital transformation realize that change is necessary and will be less likely to keep Outdated systems in place long after their best usage dates have passed.  Organizations should remain proactive and regularly evaluate their technology stack to be sure that it aligns with their business goals and have the staff on hand to properly support it.

Please look for next article on Risk #2 next week. 

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Outdated IT Systems and Processes