What is a Legacy System and Software?

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Many organizations rely on old software to streamline their business processes. It usually happens when they don’t have time or money to consider modernization or replacement. Since the costs of new software are often high, many businesses put the purchase off and try to work with what they already have.

While it can be hard to let legacy systems go, the downsides of using them usually trump all the benefits. Unfortunate errors, time-consuming manual tasks, problems with integration, and many more issues tend to stay in the way of improving the company’s bottom line.

Let’s take a closer look at what legacy systems and legacy software are all about, and why they require your close attention.

What is a Legacy Software?

Legacy software is the software that your company has been using for a long time because it fulfills its core needs. This type of software is usually outdated. It doesn’t receive regular updates and security patches from the developer or can’t meet compliance standards.

Legacy software could be running on specific hardware, which reached its end of life. However, the company still uses both because replacing them can be too complex or expensive. It’s worth noting that many business owners don’t have a clear understanding of the replacement costs or complexity, leaving legacy systems in place without a significant reason.

What is a Legacy System?

A legacy system is a system that relies on outdated technologies but continues working to fulfill certain needs. This doesn’t just involve outdated hardware but also programming languages, operating systems, and applications that can’t support the organization’s technology requirements.

A legacy system can still work to meet the needs it was initially designed for. However, it doesn’t allow any room for growth and development. It can also lack the possibility of regular support or be incompatible with other IT system elements. Legacy systems often don’t meet the required level of compliance.

Companies that continue using legacy systems put themselves in danger of errors, security breaches, compliance issues and other IT problems.

Types of Legacy Systems

The common types of legacy software systems are:


End-of-life (EOL) legacy systems are systems that reached the end of their efficiency. The vendor decides that they are past the useful stage of operation. As a result, the vendor or developer decides to stop producing or supporting the product.

Good legacy system examples of end-of-life software are Windows 2003 and Windows 7. While users can still take advantage of these systems, the support and updates are no longer available. This makes such software vulnerable to security threats.

No Updates

Sometimes, instead of offering updates, vendors start developing new versions of systems. This is what commonly happens with Windows. With time, the vendor stops updating the old product, leaving it unprotected from security issues.

In some cases, vendors stop supporting the product entirely. They don’t offer any updates or develop new versions of the product.

Lack of scaling

An outdated system may work properly and receive timely updates from the developer. However, it may not be flexible enough to handle the growing needs of your company. As a result, you have to rely on additional software to take care of something your legacy system can’t.

For example, as your company grows, your HR software needs to handle more data for payroll processing or benefits administration. If the legacy technology can only handle small teams, it becomes almost useless.

Outdated Technology

Systems that use obsolete technology can no longer help your company achieve its goal. Common examples of outdated technology are financial applications that work with local databases. Meanwhile, the company needs to use advanced technology to move to the cloud for optimizing performance and improving customer experience.

Why are legacy systems still used?

On average, over 30% of an organization’s tech stack is made up of legacy systems. If legacy applications are outdated and poorly supported, why do companies still use them?


When you buy a new system, there is always a certain risk that it may not meet the company’s needs. Some business owners are afraid that it could work even worse than a legacy application, making the ROI of such a decision extremely low.

Meanwhile, the variety of options for legacy system modernization can confuse the decision-maker and cause them to put off the change for months or even years.

Many companies try to choose between setting up new systems and modernizing outdated systems. The former may seem expensive while the latter might seem too complicated.


While outdated software can hinder your business operations, spending money on replacing a company’s legacy systems can be a tough decision. New system development can be time-consuming and costly. Meanwhile, off-the-shelf solutions may not suit business needs.

Some companies agree to initiate the legacy system modernization process. However, they are afraid that the digital transformation could make the existing system more cumbersome and harder to use.

Overall, application modernization is cheaper than new app development. That’s why companies with a limited budget usually consider this option.

Operation Problems

Replacing old systems, migrating existing data, modernizing applications, and learning how to use new software takes time. Many business owners are afraid that this will disrupt their operation, lead to downtime, and affect their relationship with clients.

Hidden Costs of Legacy Software

While it may seem that you are saving money by holding on to the legacy system, you could be hurting your company’s budget. The hidden costs of legacy software include:

1. Maintenance and support

Maintaining an outdated system takes time and money. If the vendor decides to end the support, it can cost a hefty amount to resume it.

Most likely, you would need to delegate this task to a member of an internal team, who doesn’t have sufficient experience with this type of maintenance. As a result, you can run into compliance issues and leave the system vulnerable to security threats.

Another option is to hire a maintenance and support expert. However, the recruitment, onboarding, and retention costs of a new employee can be high.

2. Security

If the vendor stops updating your legacy system, it becomes vulnerable to security breaches. If hackers find a loophole in existing security barriers, there won’t be anything you can do without the vendor’s updates.

Cyber security measures become outdated quickly. Without timely updates, cybercriminals will be able to hack the system and steal data.

3. Integration and compliance

If you are handling private customer data, you need high-quality and updated systems to ensure compliance. If your system becomes outdated due to the lack of support, the security vulnerability makes you non-compliant. This could lead to significant fines and other penalties.

4. Lost business opportunities

Using outdated technology keeps you behind the competition. While industry leaders are already operating on the cloud and automating various parts of their operations, you are still trying to figure out how to eliminate manual data entering. Eventually, you are going to give up your market share and start losing money.

Meanwhile, many business opportunities are likely to pass you by since you don’t have the technology to handle them.

Legacy Software Modernization

If you are worried about using legacy systems but don’t want to spend money on app development, consider modernizing your existing system. Modernization involves upgrading the system so it regains its operational power, overcomes technology constraints, and supports the integration of other systems.

Modernized systems come with just as many benefits as new systems do. Meanwhile, they cut down the downtime and don’t have a significant learning curve.

Using outdated legacy systems isn’t just inconvenient, it’s dangerous. By continuing to take advantage of them, you are putting your entire company at risk of losing data, facing fines, and falling behind the competition.

Legacy Systems and Software FAQ

What defines a software or system as "legacy"?

A software or system is classified as "legacy" when it relies on outdated technologies or methodologies but continues to be used because it fulfills some operational needs. This can include applications, hardware, and even programming languages that are no longer supported or updated regularly.

What are the key issues associated with using legacy software and systems?

Key issues with legacy software and systems include frequent errors, incompatibility with newer technologies, high maintenance costs, increased security risks, and limited capacity for growth and development.

What's the difference between legacy software and a legacy system?

Legacy software typically refers to outdated applications that are still in use. A legacy system, however, encompasses an entire IT infrastructure, including hardware, operating systems, and applications that rely on old technologies.

What are the types of legacy systems?

Common types of legacy systems include End-of-Life (EOL) systems, systems that no longer receive updates, systems that lack scalability, and systems that utilize outdated technology.

Why might an organization continue to use legacy systems and software?

Organizations may continue to use legacy systems due to a reluctance to change, budgetary constraints, or fear of operational issues during system modernization. Moreover, the transition to a new system can be complicated, time-consuming, and potentially disruptive to current operations.

What are the potential risks of using legacy systems?

The use of legacy systems can expose organizations to various risks, including data breaches, non-compliance penalties, operational inefficiencies, high maintenance costs, and missed opportunities for business growth.

What is legacy system modernization?

Legacy system modernization refers to the process of updating and upgrading legacy systems to improve their efficiency, security, and compliance with current standards. It allows organizations to retain the beneficial aspects of the existing system while enhancing its capabilities to meet modern needs.

How can legacy systems impact a company's competitive edge?

Legacy systems can limit a company's ability to adapt to changes in the market and implement newer, more efficient technologies. This can result in missed business opportunities, inefficient operations, and a competitive disadvantage.

What are the hidden costs of maintaining legacy software and systems?

Hidden costs can include expenses for maintenance and support, increased security risks, issues with integration and compliance, and loss of business opportunities due to outdated technology.

How can a company manage the transition from a legacy system to a modern one?

Transitioning from a legacy system to a modern one can be managed through careful planning, budgeting, training, and potentially partnering with a technology consultant or service provider. It's also essential to prepare for possible downtime and to have a robust data migration strategy in place.

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