Just Launched! Achieving Sustainability in Your Supply Chain.
Access Guide Now

5 Ways Your Legacy System Can Let You Down

September 14, 2022

As the fashion and garment industry transitions to a world in which quality, compliance, and tracking are increasingly digitized and interconnected, the problem of legacy systems looms large.

According to Gartner, legacy systems are any computing software/hardware “based on outdated technologies but critical to day-to-day operations.” These systems are often aging, proprietary systems for enterprise resource planning (ERP), quality management (QMS), transport management, or data collection.

What’s more, a 2021 global supply chain survey by Reuters found that 55% of respondents still use manual processes to make planning decisions. Although your company may rely on them, such systems do not allow growth and fail to take advantage of new technologies and innovations.

That’s something CIOs and production managers may be aware of, but face challenges in resourcing and planning a unified, digital solution. Success with any new system is not guaranteed, and no one wants to risk downtime during a system change. There’s also the lifecycle and return on investment of current business systems and infrastructure to consider. It’s a lot to think about while managing a business as usual.

The choice for you isn’t so much ‘when we can implement a new system’ but ‘how soon can it be implemented?’ The pressing reality is that many of the problems faced by today’s organizations can be traced to legacy systems. Below, we look at their drawbacks and the arguments you can use to replace them.

Why shift from a legacy system?

Here are five key areas where your legacy system could result in a competitive disadvantage.

1. Risk of falling behind

Few of us like change — the least of all large enterprises with massive operational requirements. If the system works, why change it? When you settle for things as they are, it puts you out of touch with opportunities for new efficiency and informed decision-making. In terms of your legacy system, you miss out on the technology that gives your competitors an edge while increasing your organizational risk.

McKinsey reports that “Pre-COVID-19, approximately 18 percent of executives suggested increasing their investment in digitization and automation by over 20 percent. Today, that portion is as high as 34 percent.”

Among the CIOs surveyed by Gartner on their 2021 IT talent acquisition strategies, the need to accelerate digital initiatives is, by a large margin, the driving factor.

2. Hidden and explicit costs

Outdated technology has costs beyond the obvious ones, often adding up to millions of dollars over a few years. A 2019 study by the USA’s Government Accountability Office found the cost of operating and maintaining the “federal government’s ten legacy systems most in need of modernization” is $337 million per year.

From 2010 until now, it’s estimated that about three-quarters of enterprise-level spending worldwide on IT products and services went toward operating and maintaining existing systems.

3. Wasted data and resources

Consider how much data your organization generates and the available resources to analyze that data. This drawback worsens with every passing month as companies that have adopted new systems benefit from greater pools of historical data to become leaner and more effective.

Cloud-driven tech allows companies to “centralize data from multiple systems and see the broader picture of their businesses,” writes Forbes on how legacy systems can hold back your business.

4. Lost competitiveness

New technologies can collect immense amounts of data and analyze it autonomously using artificial intelligence (AI) and machine learning (ML). Beyond simply being more comprehensive, such data is now much more flexible than ever before.

By contrast, legacy systems generate data that is inflexible and difficult to use without requiring significant additional investment. This hurts your company’s agility and prevents swift, data-driven decision-making.

Recent research shows that 44 percent of large companies claim legacy systems are holding back their projects, which hurts their ability to stave off competition from newer, more nimble companies.

5. Security issues

Hold onto your legacy system for too long, and your business will be at risk of data leakage, security breaches, and/or losing system support.

Operating systems are constantly updating to ward off quickly developing cybersecurity threats. Protecting your legacy tools will require high, continuous overhead costs, and yet these won’t compare to the costs of losing client and customer trust when an attack occurs.

The benefits of replacing your legacy system

New management systems built on current technology can prepare your company for success in four fundamental ways.

1. Higher ROI

As mentioned earlier, legacy systems generate several hidden costs. Did you know that between 5 percent and 20 percent of a company’s revenue goes toward the cost of manual pen-and-paper quality programs?

Advanced technology cuts these costs by automating as many tasks as possible. In addition, the availability of real-time data and monitoring reduces risk by up to half, allowing you to prevent issues rather than react to them after the fact.

Consider your existing system’s maintenance costs as well as the cost of interrupted operations. Adapting to modern technology could help you avoid these types of losses.

2. Improved efficiency

If you are using an in-house legacy system, it’s likely to be much less capable than modern solutions and has a use-by date based on support for the operating system and hardware. The result is inefficiency; you may encounter slow performance and late updates, which can clutter your workflow and waste employee effort.

Using a cloud-based software-as-a-service (SaaS) solution offers you the opposite scenario. It comes with a dedicated support team to help you use the software and keep your systems up-to-date and reliable. All software maintenance is taken care of behind the scenes, and capacity can be easily scaled to improve performance.

3. Automation and flexibility

Legacy systems suffer from disconnected, inflexible business processes that prevent companies from being able to see where issues lie.

A SaaS solution offers real-time data and advanced analytics capable of turning that data into real-time insights. This facilitates faster, more effective decision-making.

4. Trust in transparency

If your mix of manual and digital systems isn’t connected, vital information is siloed, making it difficult to coordinate multiple functional areas into shifting gears, quickly addressing issues, or seizing opportunities.

Data-driven tech makes it easier for organizations to centralize information from multiple systems, allowing you to see the big picture, zoom in on granular details, and leverage advanced analytics to make evidence-based decisions. It keeps you technologically relevant to customers and aligned with their evolving expectations.

Perhaps the most important impact of transparency is that it can foster a shared sense of trust and accountability and change the way you manage your supply chain.

The future of supply chain is digital

Increasing numbers of decision-makers are realizing that legacy systems are holding back their businesses and that the solution lies in new digital supply chain management (SCM) platforms like Inspectorio.

As the technology landscape continues to evolve rapidly, the sooner you transition to modern solutions with newer, cutting-edge tools, the sooner your organization can benefit. Adopting a SaaS solution can be the fastest way to enhance productivity, reduce IT spending, gain greater agility and transparency, and make better-informed decisions.

Our message is not to avoid change but to embrace it. See a real-world example of how replacing a legacy system delivered rapid results for Liberty Mills, a top textile manufacturer in Pakistan, in just six weeks.

We can help guide your digitization journey and give you resources to bring your supply chain partners with you – contact Inspectorio today.

Request a Demo
Become a partner
Subscribe to receive our newsletter
Sign Up to the Webinar
Contact Us
Get Your Copy of The State of Supply Chain Report 2024