Has Legacy Become Loss? Steps for Modernizing Your Retail Systems

There's a reason why retail IT professionals cringe when presented with the prospect of replacing a legacy system. For many retailers, updating core systems is akin to changing a tire while barreling down the highway—challenging and dangerous. Most companies don't have the luxury of shutting down while transitioning systems.

Of course, aging legacy systems are a real problem. They don't allow retailers to produce, test, or introduce new digital offerings across their various channels quickly or easily. As a result, retailers who rely on outdated systems find it hard to compete with flexible, modern and mobile-first e-commerce architectures.

To highlight how critical the customer experience is to business success, the Flexera 2020 CIO Priorities Report indicates that the customer experience is the primary driver of digital transformation efforts—69% of respondents rate it as very important with only 36% considering themselves as highly mature in this area.

Making matters worse, most retail databases contain sensitive, personally identifiable information (PII) like credit card numbers. Managing and maintaining these systems' security is of the utmost importance but can be incredibly tricky when using outdated platforms.

When legacy becomes loss

Due to the fatal combination of cost, complexity, and lack of expertise, retailers often focus on making incremental changes towards a digitally-enabled platform rather than embracing a complete transformation. The patchwork nature of the resulting systems leads to significant challenges down the road regarding security and flexibility.

According to Gartner, a typical corporation spends between 60 percent and 80 percent of its IT budget to maintain existing systems and applications.

Replacing legacy systems presents an immense strategic challenge because they often touch nearly every aspect of the business. For successful implementation to occur, internal stakeholders need to buy into the project's vision and agree to move in the same direction and at the same pace.

Couple this with the fact that senior leadership often places a high value on rapid returns on investment, and you can see how problems are usually allowed to linger.

The result is often a focus on short-term, incremental change rather than wholesale replacement. This doesn't necessarily have to be a bad thing, however. When properly guided, this gradual change strategy can lead to massive organizational gains.

One bite at a time: Mapping your legacy system replacement strategy

The U.S. Air Force has a saying: "How do you eat an elephant? One bite at a time."

This wisdom is just as true when moving from legacy systems as it is for fighter pilots. Rather than tackle everything at once, it's often better to break the effort into discrete steps that can be implemented in parts and rolled out in phases. These shorter timelines minimize disruption and allow organizations to realize the benefits of the change rapidly.

In our experience, it’s critical to have a strategy in place that includes the following foundation:

Ensure business strategy and objectives align with the modernization initiative
Develop the business case for modernization early and socialize it often to gain buy-in from stakeholders
Choose vendors and partners based on knowledge and experience: Have a backup plan for risk mitigation
Start small and simple and increase program scope and velocity after initial success
Assess the business and technology value and leverage insight before making recommendations on the approach to modernization
Rigorously pursue benefits to achieve expected results: Manage to the “outcomes”
Select a strong leader with experience and courage

A full legacy system replacement is a multi-year long process at best, the benefits of which aren't realized until everything is complete.

The phased rollout in action: an example

An automotive quick lube service provider with over 2,000 locations in the United States faced the challenge of an increasingly outdated POS system that struggled to serve its customers and the internal workforce's growing needs. As technology changed, the company was increasingly concerned about compatibility, ease of use and future updates.

The replacement was an 'uplift' of the company's existing POS system, built with the ability to scale to newer operating systems within the software's lifetime. In moving to new platforms, the challenge would be to identify and report usability challenges for the end-user.

To manage this change, we established a project team consisting of key stakeholders, including an operations manager, help desk supervisor and lead technician. This approach ensured that each stakeholder helped guide the overall project through the discovery, change, verification and user education processes.

This approach allowed for more knowledge transfer between teams, which led to a significantly more efficient deployment across 2,000+ franchise locations. While there were many factors involved, the new system's rollout was complete in just under eight months, compared to a two-year timeline for the previous POS rollout.

In closing: Continuous improvement

Perhaps the best way for organizations to break free of the grip that legacy systems often have on their operations is to embrace a culture of continuous improvement.

Under this structure, the organization modifies and improves system segments regularly, never allowing the system to become outdated or limited.

This quick return model is not only more effective for retailers; it provides them with the increased flexibility needed to continue adjusting to an ever-changing environment.