It’s a difficult time for new investments, and indeed it might be for a while. The pandemic, the geopolitical situations, the rising cost of living and surges in pricing on global markets – on anything from food and resources to fuel and energy. Now, while not investing in something is a sure-fire way of saving money, we all know that missing the boat on any given innovative solution can end up costing money. A prime example is the hidden cost of legacy software solutions and the risk of sizeable expenses down the line when it comes to inertia, or ‘playing it safe’. It’s an interesting and very topical subject, to which we’d like to add our insights as well.
Let’s start by defining legacy systems. It is a term generally used to describe out-of-date systems that tend to be(come) incongruous with modern, more contemporary solutions. It includes anything from hardware applications running on ancient operating systems to once state-of-the-art software solutions that have since been overtaken by better, faster and more effective tools. Moreover, by nearing its economical end-of-life, the supplier ceased to provide useful updates and upgrades. It might still function and all, but the real question becomes: can it still deliver – reliably, effectively, cost-efficiently – in comparison to the newer models, or is it simply no longer your best option? In other words, it not only has served its purpose, but has now become more obstacle than aid to whatever business needs you acquired it for. That’s where all kinds of costs come in, hidden or otherwise.
That’s also where we get into the meat of the matter, because as much as we can’t avoid change, legacy systems are still very much something companies tend to hang on to. Especially companies that have implemented a very specific, perhaps even custom-built solution they just can’t seem to say goodbye to – even if it no longer optimally serves their needs. Which is why we’ll now dive into the cost of keeping legacy software solutions around.
Actual costs of keeping legacy software solutions around
Firstly, there’s the matter of actual costs. Nothing hidden, nothing we need to send out a search party for, but the obvious, actual costs of keeping any legacy solution on the payroll. Which includes anything from license fees to support and software development.
Yes, any young and cool replacement worth its salt will have those costs as well. However, for legacy systems, they tend to rise over time. All the fixed costs related to keeping the software working will, by and large, increase when fewer companies start using the outdated solution, there are fewer – if any – updates and upgrades, while the flexibility of integration will start to fall behind as well. Not to mention the cost of training new staff to work with old software. Moreover, there comes a point in the lifecycle of any software solution where updates, if at all available, will simply fall short. Meanwhile, various non-fixed costs emerge, as downtime, maintenance and the incremental need for specialists are on the rise too. The thing with those expenses? They usually don’t diminish as time goes by.
Cost of upkeep and staff costs
Now, ‘overpaying’ – in this case, for legacy system management and tech support – is also a bit of a common thread when we dive into several other hidden costs, because so far, we’ve mostly talked about the more obvious expenses of keeping legacy software solutions. The following hidden costs have more to do with opportunity costs (which we’ll address in a minute as well). For instance, there is the;
lack of mobile support
Your clients are quite used to accessing all their data on mobile devices. It is 2022, after all. They can quickly check anything from bank balances to check orders and credit scores. However, a fair share of legacy systems out there only offers access on local office computers. The system simply wasn’t designed for the modern era, let alone serve multiple users at multiple points of entry. Guess who does offer mobile support though? That’s right – the competition. (And, as it happens, Agiblocks).
lack of scalability
Modern software solutions are in the cloud. They don’t care about what data you need, where you are, or how many there are of you. However, the benefits of cloud-based integration don’t apply to most legacy solutions. Again, they were developed before our time. But no matter how old the software is, you have to be able to integrate it – and integrate it well – with the various other tools and applications that have come to be part of your company’s ecosystem in order to run things smoothly, effectively and more efficiently and effectively. That lack of integration, scalability and flexibility is not something that will show up on the credit side of your company’s budget statement, but it will cost you.
Agiblocks software is easy to install, simple to maintain and integrates well with existing systems or IT-platforms. On-premises, Cloud-hosted or SaaS. The design of our software offers a clean and simple user interface, with fast access to all the vital functions for any given task, while our technological innovations and unique industry-specific functionalities guarantee all the information you need is just a single click away – anytime, anywhere.
The oft-forgotten hidden cost of legacy solutions is the level of frustration of those who have to ride the three-legged donkey on a daily basis. Yes, it takes on their load, gets it from A to B and might in all fairness still be a rather charming creature, but it’s really no match for the stallion in their neighbor’s meadow. Quick, easy and efficient is the way forward. We’re not sure how that applies to donkeys and horses, so let’s leave our metaphor behind.
security issues and risks
We’ve sort of already addressed this in terms of rising costs of support, but there is indeed another level: the burden of the IT crew that is constantly applying band-aids to legacy solutions that should be put to pasture rather than patched. Patching takes time and can get costly, but that’s not all. The older the system gets, the more vulnerabilities it will develop. Suppliers are less and less keen to provide solutions, while you run the risk of cyberattacks and data breaches. Do you want to build on that shaky foundation?
“It sounds kitschy, but if you talk to someone who knows what you are talking about, that is always a relief”, to quote one of our clients in the cocoa industry. “To the big IT service providers, we are but a number. But talking to Agiboo, we felt you know how the industry really works, how the company works, and moreover what you need as a trader in general, and a cocoa trader specifically – the physical trade, the terminal market, and currency, and so on. It was the perfect fit, and the level of integration is amazing.” | Full interview here to find out more about our prowess in integration.
As with all investments, there’s the matter of opportunity costs – briefly mentioned earlier. Opportunity costs represent the potential benefits that a business misses out on when choosing one alternative over another. Because opportunity costs are unseen by definition, they can also be easily overlooked. It’s also why the real cost of keeping legacy solutions around is pretty much impossible to calculate.
However, we would advise those in charge to try it anyway.
Of course, it can be terribly shortsighted to upgrade to newer and better systems when there’s really no need to. But if you want your business to grow, develop, innovate, or at the very least keep up with the times, your software solutions will have to keep up as well. If they don’t, you might end up investing (heavily) in adapting your business to your ailing software – while software ought to adapt to your business.
“In the end you come to a crossroads, as with any business decision”, said Erik van der Flier, managing director of Agroforce Commodities, when reflecting on choosing Agiblocks. “Do I invest amount X in a supplement to my current solution as an easy fix, say ‘Excel-plus’, keeping expenses low but risking that my newly implemented solution will be outdated within the next few years? Or do I take the leap by turning to an innovative business solution that has already been tried and tested by other firms, and has become the go-to solution for cocoa traders?” | full interview here
Leap of faith
When it comes to implementing new solutions and leaving the legacy software behind, hesitancy is completely understandable. In the end, software that has aged into the realm of ‘legacy’ is not merely ‘no longer viable’ by definition. Indeed, it could still function, well. The real question, the one we’ve already posed, is this: can it still deliver – reliably, effectively, cost-efficiently – in comparison to the newer models? Does it offer what you need?
Speaking of offering what users need, Agiblocks is not just the next generation of CTRM systems, but a solution that truly meets all technical as well as business needs for anyone working in the trade business. We take pride in the fact that our software matches all the intricacies of the industries it intends to support. A true multi-commodity system right out of the box, not limited to a particular commodity and built on modern technology.
Our key objective has always been to make a trader’s daily endeavors more efficient – from drafting a contract, setting prices and handling logistics to evaluating risk and adjusting your current position. We have commodity trade in our hearts and understand that technology – having new and innovative features – is an important part of choosing a CTRM solution.
“The benefits to our operations have been immediate, and with much more to come”, says Patrick Dean, founder and CEO of Carfax Commodities, about switching to Agiblocks. “We have a much better view of the landscape and greater clarity of detail, and the business has become more cohesive. Reconciliation of data has become quick and accurate and it’s straightforward to extract reports. Customers buy into and gain from our management expertise and on-the-ground know-how of all aspects of the supply chain. Thanks to Agiblocks we can provide them with even better service. That’s what it’s all about.”
| full interview here
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