Do you have legacy systems?
Technology continues to emerge at a rapid pace with the digital economy in full swing. What creates this tremendous demand for new technology? The answer is simple: technology helps businesses gain a competitive advantage by streamlining their operations and administrative procedures. Unfortunately, when businesses do not keep their IT systems current, they struggle to remain competitive. Their legacy systems simply do not deliver what their customers expect and what their business needs to remain competitive. The right IT network improvements can help a struggling business get on the right track to profitability.
Of course, a business cannot afford to implement all changes as they arise on the market. The cost of doing so would soon exceed any benefit gained. Realizing an ROI from an IT investment takes time. Choosing the best technology investments, which provide a good ROI, requires a strategic approach based on knowledge of industry trends and of the evolving technology market.
A competent IT MSP can help businesses remain aware of new technologies and can help them evaluate the need for change. Additionally, by taking a strategic approach to system design, they can help the business build a scalable system that proves less costly for implementing change as the market dictates.
In this article, we identify some of the signs that your business may be lagging the competition and whether IT upgrades can help you gain a competitive advantage. If these signs seem familiar, you may need to replace or update your legacy systems to help you remain competitive or return to profitability.
High Administrative Costs
Sure, designing a new system and installing it bears a cost. A system upgrade also requires a dedicated budget. However, over time, the cost of operating an inefficient administrative and/or operational system can run higher than the cost of installation or a system upgrade. Does your company’s high administrative cost prohibit your ability to provide competitive bids for products, projects or services? If so, you can benefit from an assessment of your IT and business systems to learn how you can drive down administrative costs and improve business performance.
Consider the extreme of a paper-driven system. Manually initiating and tracking the manufacture and delivery of goods consumes significant manpower and other resources. For example, a paper-driven system requires manually filling out purchase orders, production orders, manufacturing QC documentation, packing information, shipping orders, delivery tickets, invoices, and account statements. This archaic system requires an ongoing substantial investment in administrative resources.
In addition to high administrative labor costs associated with paper-driven systems, we should also consider:
- Cost of generating, moving, and storing paper: This includes the cost of paper, printers, and storage space, as well as labor costs for moving. Also factor in the inefficiencies associated with retrieving the information when needed.
- Impact on production: Manufacturing equipment often requires large capital investment. For this reason, manufacturers strive to minimize equipment downtime, and maximize equipment run time. Any operation or action that results in equipment downtime will reduce production capacity. Inefficient administrative systems can produce system slowdowns (or equipment downtime) due to the paperwork not keeping up with the production schedule.
- Logistical impact on material movement: When the paperwork is not immediately available at the end of one stage and the start of another, the process delayed. This results in an overall decline in productivity and capacity to fill orders.
- Incidence of Errors: Manual entry inherently increases the risk of errors. Manual entry allows freedom to choose designations not relevant to the field. Additionally, manual entry on paper relies on penmanship and interpretation. All of these factors combine to produce errors, which require time and expense to repair.
By contrast, using a data-driven system significantly drives most of these administrative costs. Even if you are not using a paper-driven system, you still may have some inherent administrative inefficiencies built into your system. For example, data generated by applications operating on different platforms can output data in different formats. As a result, translation is necessary to enable using the two different data sets as feeds to a separate application. The translation process can be imperfect, causing inefficient and error-prone workarounds.
As your IT systems age, and as emerging technologies appear in your industry, you may find difficulty managing transactions in the normal course of business. You may realize an increasing need to translate data between your system and those of suppliers, vendors, and customers that operate more advanced systems. This situation results in an increased overall cost of production and sometimes causes productivity decline. The right IT system upgrade can help resolve issues with incompatible systems.
Departmental Interface Issues
Unless all of your systems are highly integrated, you may experience problems tracking orders between departments. This is common when data is not stored in a centralized database. This situation causes an increased cost of production because of the extra steps required to move material through the system. Additionally, this type of arrangement (non-integrated system components) often induces errors inherent to data translation, particularly when performed manually. These errors cost time to correct, which drives up the cost of production and drives down production efficiency.
Employee Dissatisfaction and High Rate of Attrition
Operating an aging system can contribute to employee dissatisfaction and a high rate of attrition. Competent and competitive professionals want to work with modern systems and they want to achieve a high level of production. When forced to work with outdated systems, these competitive and normally productive employees may experience frustration and demoralization.
Legacy Systems Not Scalable
Do you experience problems with your legacy systems accommodating increases to production quotas and the associated addition of hardware and equipment? Can your legacy system easily accommodate users from new remote locations? Scalable IT systems provide the ability to respond to such changes quickly and efficiently. When an IT system is not scalable, such changes can limit or cause delays in realizing the increased production potential desired.
Factors to consider for scalability:
- Administrative scalability – Allows the system to accommodate an increase in the number of individuals or organizations interacting with the system.
- Functional scalability – Allows adding new functions to the system without significant effort or system upgrade cost. In general, functional scalability promotes ease of IT upgrades.
- Geographic scalability – Accommodates changes to the physical location of system components; for example, remote computing.
Implementing a scalable system requires taking a strategic planning approach to system development. Taking a strategic approach to system design positions your business to manage changes to scale efficiently and economically.
Increasing Incidence of Security Issues
Does your IT management have trouble keeping up with emerging cybersecurity threats? Do you experience downtime because of the spread of malware or viruses? Have you experienced digital data theft? All of these problems may signal that it is time to upgrade your legacy systems, with a focus on cybersecurity. Your legacy system may contain cybersecurity vulnerabilities that can cause damage to your computing network and ultimately to your business reputation.
A proper cybersecurity system upgrade involves more than simply installing the latest cybersecurity software. Providing adequate protection requires attention to several fronts. You need to review your cybersecurity policies as well. Additionally, performing a cybersecurity audit can help you understand your system’s vulnerabilities, which is essential to designing the right system for your needs.
Can’t Compete With Lower Cost Providers
Losing business to your competitors may be the single most telling sign that your legacy systems need an upgrade. This is particularly the case if you experience some of the problems highlighted above. Perhaps you cannot deliver a product with competitive turnaround times or you can’t offer products or services that your customers want. If you struggle with these issues, you likely find difficulty producing at a cost low enough to offer competitive pricing.
All of these issues can drive your customers to your competition.
Where Do I Start?
If these themes seem familiar, and your business struggles to compete, you can benefit from an IT systems assessment. You can learn whether your legacy systems need replaced or maybe they just need a few IT upgrades.
Custom Information Services (CIS) has a strong track record of helping its customers improve their businesses by taking a strategic approach to IT system development. They also offer a range of managed services to ensure your systems continue to operate as designed.