By Kirk Littleton, Sales Director and Investment Accounting Veteran, FundGuard
In the modern world of computing, there’s a certain kind of software that’s dying a slow death: It’s the legacy mainframe and client server investment accounting software that many asset managers and fund administrators have relied upon for decades.
And the cause of this slow death? For a long while it was largely because the natural order of the marketplace had not reacted with the entry of new alternative solutions. Now it is more a case of buyers becoming more informed and overcoming their long held hesitations and fears over the costs and perceived risks associated with transitioning to a cloud-native platform.
There is often a perceived safety in doing nothing, but the reality is that staying the course and allowing the legacy to continue carries great operational, financial and reputational risk.
The high cost of Stagnation
Migrating to cloud-native operations is crucial to achieving a total digital transformation, and while the journey is undeniably challenging, the alternative—sticking with status quo legacy systems—is downright perilous. Not only do these outdated systems become more expensive to maintain over time, but they also pose significant operational risks as they become less compatible with newer technologies and more vulnerable to security breaches.
And there is a darker side. Faced by the looming threat of emerging, cloud native solutions and the resulting stagnation of their addressable market and new license revenues, legacy providers may try to maximize their revenues in the little time they have left, by leveraging (and stoking) their customers’ greatest migration fears. It might not sound so nice when put this way, but it’s a common end-of-the-rope strategy.
So how can you assess whether your current providers are truly transforming, or just grasping at straws to stay relevant?
Signs Your Software Vendor is Grasping at Straws
- Hosting and Management Services: When your software provider offers to host the hardware and manage services related to technical infrastructure, it’s a red flag. This is a signal that they are trying to retain their dwindling client base by providing additional services.
- Cloud Migration Mirage, AKA Cloudwashing: If a software company claims to be migrating to a cloud solution, scrutinize the specifics. Often, it’s just a rebranding of the first tactic; they’re hosting the legacy system in their own data center, or sticking a native cloud client portal behind their legacy calculator, which doesn’t leverage the full benefits of cloud technology.
- Skyrocketing License Fees: A sudden increase in license fees can be an indication that your software vendor is trying to offset the loss of clients who’ve moved on to more modern solutions.
- BPO Services as a Last Resort: When all else fails, and the software cannot be modernized or sold due to its obsolescence, the company might offer Business Processing Outsourcing (BPO) services. By doing so, they can essentially keep the aging software “hidden” from clients, while effectively going into business with them.
- Reduced Services: If you notice your provider decreasing releases and upgrades, while charging “consulting fees” to deliver new features, be concerned about their ability to keep pace with market changes.
The Hard Truth
The transition from legacy systems is challenging, but it’s a necessary evolution. Staying anchored to the past due to fear of change can cripple an asset management firm or an outsourcing services business. Legacy software solutions are not just outdated—they represent an active risk to business continuity, security, and growth.
It’s imperative for businesses to recognize the signs of a software vendor that is on its last legs and make informed decisions for their future. The slow death of legacy software is not just an IT issue—it’s a business one. Don’t let your firm get trapped in the past. Embrace the future, with all its challenges and opportunities.
From Traditional to Transformational
By alleviating the burdens associated with aging legacy systems, FundGuard is ushering in a transformation in investment operations.
Our cloud-native, AI-powered cross-enterprise investment accounting platform perfectly aligns with forward-thinking firms ready to transition their investment operations from multiple systems and monolithic setups to a dynamic, efficient, and future-ready investment accounting solution.
Contact us to learn more.