Don’t get stuck
In business literature that is still quoted today (as recently as a few days ago by Salesforce’s Marc Benioff), Clayton Christensen highlights the need for businesses to recognize when to abandon outdated business practices. He states: “No matter the industry, a successful company with established products will get pushed aside unless managers know how and when to abandon traditional business practices.” This insight is particularly relevant when considering the impact of legacy software systems.
: Christensen, C. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business Review Press.
What is Legacy Software?
According to a report from Dell, more than 70 percent of software used by Fortune 5000 companies was developed 20 or more years ago.
Legacy software refers to outdated applications that a company continues to use, often because they are deeply integrated into its past business processes and operation models. While it may have once been innovative, legacy software becomes a bottleneck over time. It becomes cumbersome, difficult to update, and incompatible with modern technologies, posing significant challenges for business innovation and growth.
Why is it Vital to Break the Chains?
Freeing your business from legacy systems is necessary because:
● Old application frameworks prevent the implementation of essential, innovative business processes that address rapidly changing technology and market dynamics. Simply put, they just don’t perform. For example, in our trade promotion optimization platform, CPGvision TPO, many models must execute rapidly to reap the advantage of artificial intelligence, allowing our clients to effectively gain productivity in their trade spend – the number one cost, after cost of goods, in their business. With the latest technology to auto-scale (putting the processing power you need, where and when you need it ) optimizing models that wouldn have taken hours now take minutes to execute on our platform.
● Workarounds don’t work. Critical upgrades and technical debt owed by legacy application providers are often hot-wired, or lipsticked on, to support new business paradigms. They look OK to the user on the front end, but the engineering and effort required to use them on the front and back end is practically not workable.
● The user burden is too high – if your users have to perform many extra tasks to enable the legacy system to function, we are asking the users to assist the technology. The equation is backward. Technology should allow users to focus on value-added tasks, non-essential functions must be done by the systems to free up business people to further the overall business goals.
● Legacy systems often present a security risk – Security and Compliance requires more time, cost, and retrofits which introduces risk and drains valuable IT and business user resources.
● Maintenance costs are high – the legacy application providers often “milk” old products for as long as possible with clients paying significant support fees. The clients fear change which imprisons their business innovation and transformation.
● Businesses confined to the use of legacy applications lose valuable time and often their most valuable employees. These change agent employees get frustrated by the status quo and lack of business system innovation and seek to use their skills elsewhere.
Inertia: the easy, and costly! path
There are real-world challenges to overcome in replacing legacy software, but these come with practical opportunities as well. Consider:
Data migration – upgrading from legacy systems is a large lift in many cases. It also represents an opportunity. Legacy systems tend to be chock full of “bad” data, there is an opportunity to clear out the bad, migrate the good and shore up the data foundation most systems rely on. At PSignite, we begin our client implementation process with a data workshop so that we can fully understand the scope of your data needs. Whether you are working with a data lake or migrating data directly, ensuring that our TPx/RGM solution is built on a solid foundation of accurate data and sound AI predictive models is job one, and should be for any vendor you work with to upgrade your systems.
System integration – It goes without saying, IT is key to engaging in the decision to replace a legacy system. Integration decisions will impact the selection of new systems and the implementation timeline. IT must ensure that new systems are compatible with the data, hardware and network infrastructure of the organization. PSignite provides a wealth of advice and expertise when customers come to us with these challenges, offering best practice advice as well as assistance in ensuring our trade promotion and revenue management solutions are successfully integrated to our clients’ ERP, demand planning and other vital systems.
Disruption in business processes – this also represents a significant opportunity. Sub-optimal business processes are often maintained solely to accommodate the legacy system. Our solution is designed with this in mind. Configurable financial and pricing logic, KPIs, workflow, and financial calendars enable clients to flex their trade promotion management to their needs, rather than force a process based on system capability. Our business experts present best practices, provide perspective on how others handle business processes, and work with you to put into practice the processes that work for your business. While systems and processes are in redesign however, there must be a plan in place to continue to run the business and minimize operational downtime.
Cost can be one of the biggest challenges of replacing legacy systems. Be sure to weigh that cost against the cost of NOT upgrading. How much is the legacy system costing you in terms of spend, efficiency and productivity? At PSignite, we assist our clients in quantifying this impact, our platform CPGvision, for example, nearly always pays for itself in year one of operation
Change management – With everyone being so busy just getting their jobs done, it can be a challenge to get an entire team to buy into, train and fully transition to a new solution. When we plan change management with our RGM/TPx software clients, we do find some would rather not learn a new system but there are far more who are relieved that the challenges they faced in their daily work on the old system are eliminated with our solution.
Long-term strategy – It is important to future-proof your systems decisions. You want to make sure that you work with a vendor that has a vision for remaining relevant and scalable in the future. This includes upgrade paths that do not require significant expense and redesign.
Competing IT priorities – Have a need but can’t seem to break through the competing priorities for IT dollars and time? This is where building a business case is important. In the world of trade and revenue growth management, efficiencies across trade spend, forecasting, deduction management, optimization, and productivity produce a very compelling business case.
Navigating the Transition – Invest in a Long-Term Strategy
Transitioning from legacy systems to modern solutions can be daunting, but it’s essential for long-term success. Here are some strategies to consider:
Future-Proofing: Choosing a new system that will remain relevant and scalable in the future is crucial. The risk of investing in a solution that may become outdated itself needs to be considered.
Continuous Improvement: Implementing processes for ongoing evaluation and optimization of the new system to ensure it continues to meet business needs.
Assess Your Needs: Evaluate your current systems and identify the gaps and limitations.
Plan Gradually: Implement new technology in phases to minimize disruption.
Invest in Training and Change Management: Ensure your team is prepared for the transition by providing adequate training and a long-term change management plan.
Seek Expertise: Consider consulting with technology experts to guide you through the process.
Valuable Resources to Prepare for Replacing Legacy TPM, TPO and RGM systems:
ROI Calculator and Building a Business Case
Do you have legacy Trade Promotion Management, Trade Promotion Optimization and Revenue Growth Management systems? Contact us to talk about a journey into the future of TPx and RGM today!