The High Cost of Integrating Legacy Systems: A Closer Look

The modern business landscape, specifically as it relates to the integration of technology systems is crucial for staying competitive. Integrating legacy systems can be a costly endeavour that businesses often underestimate. This article explores the expensive nature of integrating technology systems, with a focus on the scarcity of resources, the expense of older skill sets, challenges despite API’s, flaws in the ETL process, and time delays associated with integration programs.

Scarce Resources & Expensive Skill Sets

Integrating legacy systems often requires specialised knowledge and skills that are becoming increasingly scarce. Skilled professionals familiar with outdated technology may demand higher salaries due to their expertise. According to a survey by Robert Half Technology, the average salary for IT professionals with legacy systems experience is significantly higher than those with modern day tech skills.

API Integration Challenges

While Application Programming Interfaces (APIs) are designed to simplify integration, they aren’t a silver bullet. Legacy systems may lack API support, making integration a complex and expensive task. A study by Gartner found that organisations spend an average of 33% more on integration projects involving legacy systems than on projects with modern systems. The critical success factor is the data and the data mappings that allow for efficient integration using API’s, integrating with legacy applications often causes major mapping challenges and ultimately project delays.

Issues with todays ETL Process

The traditional Extract, Transform & Load (ETL) processes involve extracting data from source systems, transforming data, and loading data into a target system. This process results in a loss of context around the data and actual data quality issues. A study conducted by Informatica suggests that data errors and inconsistencies during ETL can cost businesses up to 10% of their total revenue. Using generative AI, the ETL process gets reinvented and delivered as an ELT process. Meaning you extract and load, prior to making any transformations. This allows a digital twin to be built of the source system including all current integrations, which inturn allows fit for purpose applications to be generated.

Time Delays in Integration

Large-scale integration projects often face significant time delays. A report by McKinsey & Company found that such projects can take up to 15% longer to complete than initially estimated. These delays can lead to additional costs, including extended project team salaries and lost opportunities for revenue. The lack of skilled resources and complexity of technology landscapes further the delays associated to integration projects.

In conclusion, integrating legacy systems is an expensive and challenging undertaking for businesses. The scarcity of resources, the high cost of specialised skill sets, API limitations, flaws in the ETL process, and time delays all contribute to the financial burden of integration projects. To succeed in this endeavour, organisations must carefully plan, budget, and allocate costs while considering the major challenges associated with legacy system integration. A key focus should be looking to the technology sector, specifically Generative AI, to assist in solving current challenges in new ways.

Written by: Bryan Difford (Director SAI Intelligence)