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Steve Pulman

Why is everyone torn between legacy systems and SaaS?

Posted in by on October 21, 2014 and has no comments yet

Data breaches and security threats are common reasons for holding onto legacy systems as a ‘safe haven’ – they’re good for disaster recovery, no downtime, low cost of ownership, good for security etc.

But, as the below research proves, we are experiencing a shift as more companies move towards cloud-based, new technology solutions across their enterprise resource software.

Some interesting stats from 2012 Forrester research predicting what would happen in 2014:

  • SaaS and data-driven smart apps will be the major growth engines for the worldwide software market
  • SaaS software market will increase 25 percent in 2013 to $59 billion, a 25 percent increase. In 2014, the market is expected to total $75 billion.
  • Smart computing software market to be $41 billion in 2013, increasing to $48 billion in 2014

What the 2014 Forrester reports say:

SaaS adoption is poised to surpass the 50% mark within the next 12 months — with adopters using an average of four SaaS solutions (a number that we expect will double in one year’s time).

According to Forrester, these smart-process apps overlap with SaaS products “because the browser-based access model for SaaS products works better for collaboration among internal and external participants than behind-the-firewall deployments.”

Legacy systems – are they all bad?

The banking world certainly doesn’t think so, although legacy systems aren’t exactly the safest and most reliable option either.

Chris Skinner, chairman at the Financial Services Club, says “as ever more systems are digitised, core bank systems are “creaking at the seams and, in some cases, falling apart”.

“Most UK banks are stuck on legacy systems, built in the last century, that work. As a result, most banks add middleware and front-end systems to their core systems, rather than replace the core.”

He says banks have a mistaken view of technology. “Banks in the last century all held the view: ‘If it ain’t broken, don’t touch it.’ So they had all these core processing systems for deposit accounts and payments that, once built, were never touched again. They were just maintained.”

Is now the time that we will see everyone jumping to SaaS? Absolutely not according to this banking IT expert.

“Too expensive, too difficult, other priorities, no budget, and the legacy systems actually work (subject to human error of course). Yes, there will be a few cases, but I don’t expect a trend from what I know of budget priorities.”

“I actually think the so-called legacy systems are the good quality, proven systems,” says an anonymous senior IT professional.

“They’ve been around a long time and survived the test of time. It’s the new, quick, cheap software that worries me more. However, as legacy systems support is prime for outsourcing and offshoring, the skills and knowledge disappear and a firm is left unable to work on its legacy systems or jump in and fix them if they go wrong. It becomes totally reliant on external providers. I don’t feel this is so much of a technical issue – developers can solve those – it’s more of a management, cultural, structural and outsource issue.”

On the security front, we know that a lot of financial institutions already have their core banking systems housed in an outsourced Data Centre – probably the same one from where the SaaS is delivered – so from a physical security, disaster recovery and business continuity perspective, the scenarios are actually the same.

From a skills perspective, as the legacy systems get older, fewer skilled people are around to support them so it becomes more expensive. People aren’t trained in these languages and hardware systems anymore so support costs increase, but more worrying is the potential risk for anyone to be able to support it in the future at all, expensive or not.

In simple terms, what are the pros and cons of SaaS for organisations?

Saas benefits

  • Low cost
  • Payments only per usage/licence
  • Vendor responsible for hardware and software maintenance and upgrades
  • Quick and easy to implement
  • Easy to use
  • Scalable
  • Low reliance on IT resources
  • Best practise technology and processes

Saas challenges/concerns

  • Security (the most common one we hear and probably more of a perceived risk than a real one)
  • Availability (browser)
  • Accessibility – reliant on internet connection and speed
  • Potential lock in with vendor
  • Vendor reliability

For SaaS to be delivered successfully and for you to build trust with your customers and clients, a well designed and implemented security framework needs to be in place. We believe that the right SaaS technology, implemented in the right way, is much better than what you could afford from a technology and skills perspective – unless of course you are one of those financial institutions with plenty of money to spend! 

What’s your experience with SaaS? Do you have any tips for other organisations looking at new technology solutions?

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