Legacy software, also known as outdated software, is easily overlooked within a business. Many companies wait for an issue to occur before replacing legacy software on their systems. While others wait until a critical issue occurs before hastily scrambling to find a new solution.
The worst-case scenario is that you lose all your data in a system crash or you face cybersecurity breaches that compromise sensitive financial data, both of which lead to devastating consequences.
The benefits of replacing legacy systems with Cloud accounting solutions extend far beyond accounting. It assists finance teams with evaluating trades, facilitating risk management, and meeting new business requirements by providing real-time reports to stakeholders for making efficient decisions.
Cloud accounting software simplifies the process of storing and retrieving data. Databases such as these are used to record a firm's financial holdings and positions. Think of them as the gold standard.
If you are still using outdated software, it's likely that you will encounter risks that can be harmful to your business. Reliance on clunky legacy systems isn't just a burden on productivity, it's a ticking time bomb waiting to disrupt the whole operation of the finance function.
There are many reasons why businesses stick with legacy systems
"It's difficult to find the right software."
The process of finding a good replacement for legacy software can take some time. In fact, the best solutions to solve the finance function’s unique requirements may not be known to you yet.
"It costs too much."
It may seem expensive to some businesses to upgrade and move to new technology from outdated software. However, their legacy accounting software results in more expenditures long term.
"If it isn’t broken, don’t fix it."
It is still possible for aging legacy systems to appear to work, just as long as they perform the tasks required by the finance team to maintain day-to-day operations. As a result, some businesses decide to stay with the aging system until it breaks. In the past, this was perceived as a "cost-effective method" to give more value for money invested at the outset. CFOs must therefore identify the underlying maintenance costs for the upkeep of their outdated system.
Although these may seem like valid reasons to continue using legacy accounting systems, they are usually accompanied with many risks for businesses.
What are the risks of continuing to use outdated software?
Security issues can arise because of slow, obstructive legacy systems. There's inevitably a problem with it because it's old and no longer supported by the vendor or company. Because your vendor has lost support, they aren't investing in developing bug patches or adding security to your outdated software platform. Unpatched software is more at risk for attacks and automated scanning bots that could put your sensitive company data in the wrong hands. That’s not to mention that a total crash of your software could leave your IT team to figure it out all on their own. The only way to reduce these significant security risks is to upgrade your outdated software or to move to a new platform entirely.
Unable to meet legal and regulatory compliance
It’s important to ensure your data is safely and securely stored by adhering to regulations. Continuing to use legacy systems in your business may violate these laws, resulting in costly consequences as auditors can fine companies that use outdated or unsupported software. Moreover, financial compliance practises such as Making Tax Digital require the latest software to keep up to date with submission requirements and documentation.
Increased operating costs
The maintenance and upkeep of legacy systems is costly and can frequently lead to failures which lead to delays in business activity, which negatively affect customer trust and reliability. A new software system will cost you money initially, but you will save on costs in the long run if you switch. Moreover, old technology is difficult and complex to integrate with new, modern technology. It essentially means that business processes aren't as efficient and opportunities to leverage new functionality are often missed.
Productivity at work is affected
Older software runs slower, executes tasks more slowly, and requires more maintenance and updates than its newer counterparts. It will lead to demotivation in your team if the tools or applications are preventing them from doing their job and causing them to waste time waiting for issues to be fixed and leaving them unengaged. In terms of revenue and ROI, decreased productivity can hurt your business.
Delays in data processing
Data processing is a routine part of a business' operation, but it shouldn't take a long time for them to get the results they need to make informed decisions. Most give the excuse that it's the way it's always been done. However, this doesn't have to be the case. Upgrading an outdated software solution is all about increasing efficiency, enhancing productivity, and simplifying operations across the business.
Software integration issues
The integration of systems is a requirement in today's business environment. By not integrating software, employees will need to manually move data between different tools, which is very time consuming. Often, outdated software has been designed as a standalone program and was not designed to integrate with other programs. That might have worked once, but now it drastically reduces your organization's flexibility and financial scalability, as well as the integration possibilities.
Signs your legacy system is slowing your business down
It's not scalable
Managing processes within the finance function can quickly become overwhelming to manage as your business grows. Managing new subsidiaries, regulatory frameworks, tax jurisdictions, and product costs can be challenging.
Legacy accounting software, however, does not scale as a business expands. As a result, when your business expands, you need Cloud accounting software that can keep up with your needs and grow with your business.
Insufficient automation capabilities
The era of technological advancement is bringing automation to numerous industries, including finance and accounting. If your legacy system doesn't have automation features, you are wasting a large portion of your time, and you are falling behind as your competitors grow. Put simply, automation eliminates the risk of errors that are inherent to manual processes, provided your data is clean.
Be on the lookout for:
- Using manual processes to send monthly invoices to the same clients
- The management of expenses involving sorting through piles of receipts
- Taking several hours to reconcile bank statements with your legacy software at the end of every month
- Cloud accounting software updates can also eliminate the data entry tasks associated with payroll, invoicing, bank reconciliation, and expense management
No recent updates available
Continual software development is essential for software vendors looking to retain customers. Keep an eye out for the absence of essential updates, as this can indicate that your vendor may be in the process of discontinuing their legacy software. If your legacy software hasn't been updated in months, it may be time to invest in Cloud accounting software.
Although change can be daunting, choosing the right Cloud accounting software for your company is crucial. It is imperative that your accounting software is updated on a regular basis to incorporate evolving legislation and regulations, such as Making Tax Digital. Without this, you could become liable to fines incurred by not providing the right information on time.
No support for integrating with new applications
For your accounting software to be of value, it should be set up to work seamlessly with other business applications. Without effective integration, it can be time-consuming and frustrating to make different applications work simultaneously.
Be on the lookout for:
- No integration between your expense management software and your billing software which results in tedious data entry
- Your legacy software integrating with older versions of your applications, which no longer work well together due to updates
- Using legacy software that only supports integration with a few applications
There is no mobile functionality
The ability to access your accounting software via your mobile device was once considered a luxury, but now many things have changed. With the continuous development of mobile technology and the upsurge in remote working, mobile access to accounting software has become an essential tool for CFOs and finance teams looking to operate with agility.
Be on the lookout for:
- No iOS or Android applications available for your legacy accounting software
- Limited mobile functionality options
- It may work on mobile devices, but it lacks essential features
What does Advanced Financials accounting software mean for your business?
By moving away from traditional, on-premise legacy systems, you can free your company from rigid data structures and outdated processes. As a result, you will no longer need to compromise, be complacent, or put up with underperformance.
Choosing your strategy should not just be about what's right for your business today, but what's right for your business in the future too. Your customer and stakeholder expectations will remain high, and you can expect the same from your competitors.
So, if you are sitting here reading this and relating to these issues with your legacy software, then it's time to look into a new Cloud accounting software solution for your business.
Have a look at our powerful Advanced Financials finance and accounting software solution and find out how we can help you lead into the future of the finance function.