How Much Does it Cost for Project-Driven Organizations to Stay on Legacy Systems?

Many project-based organizations still maintain legacy software solutions for a variety of reasons, but what is the cost to maintain and support these systems?

James Thomas

Industry Director, Professional Services

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    Many project-driven organizations still maintain legacy software solutions for a variety of reasons, but they are very costly to maintain and support. Many believe that maintaining legacy systems is more expensive than modernizing them. According to the United States Government Accountability Office, ten of the government’s legacy systems cost approximately $337 million annually to operate and maintain. For all industries, an average of 60-80% of IT budgets are allocated to keeping legacy systems running.

    What are Legacy Systems?

    Legacy systems are outdated computer systems, software applications, and technologies designed to perform specific tasks in a specific way. These systems use obsolete programming languages and hardware components that are often difficult to maintain and scale, as the underlying technology can be difficult to update. Many project-driven organizations avoid upgrading because of the time and cost involved, but it likely costs more to maintain based on the reasons below.

    Siloed Applications

    One of the costliest things about legacy systems is the sheer number of third-party applications that it takes to address project-driven needs. Project-driven organizations may have a legacy ERP system such as Microsoft Dynamics GP, but they need to fill in the blanks with add-on third party apps for time collection, accounting, project management, reporting, CRM, and much more. To give you an idea of the prevalence of third-party apps for Microsoft Dynamics GP, I performed a simple Google search for “Microsoft Dynamics GP third-party apps” and there were 330,000 results. Many of these applications have manual or custom integration, leading to a huge cost to upgrade and maintain the system. Not to mention the inefficiencies, errors and inaccuracies involved in siloed solutions.

    It’s also difficult to find the skillset involved in managing older solutions. For example, Microsoft Dynamics SL is a 25-year-old product that many project-driven organizations use. There are very few consultants left who can work on the system, and they are very expensive and hard to find. Not to mention costly hardware requirements for all these siloed applications.

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    Security Expense

    Legacy systems can be vulnerable to cyber-attacks, due to the lack of modern security features in outdated software and hardware. If you’ve ever been a victim of a cyber-attack, you know how expensive it can be to clean up the mess, and you may lose revenue while you’re getting your business back up and running. As technology advances and newer cybersecurity measures become available, the gap between cutting-edge technology and legacy systems grows wider, making it more expensive to use internal resources to protect against the latest exploits.

    Security patches pose a significant cost when maintaining legacy systems. This cost is particularly noteworthy because it combines the immediately apparent costs with those that have the potential to occur in the future. With legacy systems, the expenses related to creating and implementing security patches increase over time. Additionally, you don’t have as much control over rapidly deploying a security update to the end-user, because they must take specific actions to install it, making it more challenging to protect against data breaches and other security threats.

    Security is one of the areas companies cannot afford to cut; it might save money in the near term, but when it leads to a security incident, the costs to repair the damages will far outweigh the investment to protect the business.

    Legacy Systems can Impede Growth

    As your company grows, can your legacy application support its expanding business operations? Sticking with a legacy system built on outdated technology inhibits your capacity to leverage the latest advancements and is incapable of meeting your changing needs. If your software is unable to keep up with your fast-evolving requirements, it will impede your growth.

    Modernizing legacy software will enable you to leverage an advanced IT architecture that can manage your growing needs and operations expansion. It will give you an enhanced throughput capacity to manage increased scale and growth. With modernized systems, you can tune your environment to leverage data across the organization, integrate systems to optimize processes, adapt to business conditions or quickly jump on the next innovation opportunity to beat your competitors to the marketplace. Legacy code inhibits your ability to meet customer demands and achieve business growth. With a legacy modernization project, your business gains a competitive edge over your competitors who still function on a legacy system.

    Inability to Meet Project Deadlines

    Many legacy systems fail to help project-driven organizations meet budget, scope, and time deliverables for clients. Huge fees and penalties can be incurred depending on your contracts, and you may even be at risk of losing clients. When data is hard to come by, or the system is down, you are at risk of missing deadlines. A modern ERP and project- solution allows you to define project budgets and monitor budget vs. actual costs in real-time, helping to ensure that projects remain within budgetary constraints.

    Inability to Track Billable Hours

    Billable hours are the lifeblood of a project-driven organization. Firms face significant challenges when tracking billable hours with a legacy system — including effectively staffing projects, logging hours and expenses, and gaining real-time visibility into resource utilization and availability.

    Tracking billable hours is also critical for maximizing revenue and profit margins — and it’s directly linked to utilization. What’s more, something as simple as employees forgetting to log billable hours or submit reports on time can undermine profitability. Tracking utilization against actual billings allows project managers to identify discrepancies between what was forecasted — and what work was performed. When businesses can track billing and utilization— by individual contributor, project, and the entire portfolio, they have an opportunity to drive improvements at every level.

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    Without a reliable means of tracking billable hours in real-time, firms miss out on critical data points that can impact everything from budgeting and work assignments to forecasting, planning, and investments in future growth.

    Upgrade to Microsoft Dynamics 365 Business Central with Progressus

    Microsoft Dynamics 365 Business Central is a comprehensive, cloud-driven ERP solution for small to mid-sized businesses, connecting sales, service, finance, and operations to work smarter, adapt faster, and perform better. It has the best ROI in the business – a recent Forrester study shows that organizations typically experience 162% ROI with Dynamics 365 Business Central over a three-year period.

    But Microsoft Dynamics 365 Business Central alone doesn’t have all the functionality that project-driven organizations need. Progressus is purpose-built on top of Microsoft Dynamics 365 Business Central to provide project-driven businesses with the tools they need to ensure every project is profitable.

    Many clients across the Proserv industry count on Progressus to assist with Project Accounting, Project Management, Project Resource Management, and Project Reporting. Progressus was built by professional service industry experts who understand the intricate and complex requirements of a business like yours. It supports remote work environments and is available 24/7 via the cloud.

    Progressus allows for efficient task tracking and completion to determine which team members are the most productive. Progressus is the premier solution for Microsoft Dynamics Business Central for project-centric companies.  Features like project accounting, resource management, time and expense tracking, subscription management, Jira and Microsoft Azure DevOps integration, scheduling, and Microsoft 365 Outlook and Excel integration have made it a must-have for companies that rely on billable resources and complex projects. Progressus also includes Power BI reports and Power Automate features right out of the box.

    The integration of Microsoft Copilot to Business Central will allow Progressus to utilize AI and natural language processing to enable business users to create content faster. Along with other Microsoft productivity tools, users can complete routine and time-consuming work tasks with minimal effort, eliminate many manual processes, and streamline business processes like never before.

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    It may seem daunting to upgrade legacy systems that you and your users are so accustomed to. Velosio has helped over 4,000 clients with systems modernization projects and is the top Microsoft Dynamics 365 Business Central partner and 2023 Microsoft Dynamics 365 Business Central US partner of the year. Velosio developed Progressus for project-driven organizations to succeed. We can evaluate your current systems and develop a roadmap to upgrade any lingering legacy systems. To learn more about Progressus, visit the Progressus site here.

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    James Thomas

    Industry Director, Professional Services

    Follow Me: