Does it reduce your risk profile? Does it increase or reduce your cost base? Does it enhance revenue?
Legacy tech brings with it unconsidered or unknown system constraints.
These problems catch you out. They frustrate sales and marketing. You’ll ask yourself “why didn’t we know about this already?”
They won’t be resource constraints, like people, time, or number of servers. They’ll be technical bottlenecks that affect the scalability of your portfolio companies.
What happens when legacy tech limits the number of users on your platform, reduces the orders you can process or define how you deliver products.
The problems become more complex to solve the bigger a portfolio company gets. This can be a limiting scaling factor particularly with mid-large cap buyout investments.
Technology constraints you can solve with money are the easiest to solve.
Your first thoughts will be to replace the platform with a new one, add more servers or outsource the whole thing.
The answer isn’t that simple.
Replacing legacy technology comes with baggage. Large-scale IT systems are heavily interconnected and dependent. Unpicking legacy systems requires deep expertise, often from staff who left the company years before.
When it comes to legacy systems the first step should be thinking, ‘What could I do make these systems technically efficient?’.
Technical efficiency comes understanding how you and your customers use your platforms. Being able to show the relationship between business>service>application>infrastructure is a great first step.
Doing this lets you see at a high level how everything fits together. You can then start moving levers to reduce your reliance on your legacy systems.
There are some choices to be made…
Do you transform your tech stacks or look to optimize what you already have? How do you calculate the ROIs for each option? What do you see as the tradeoff?
Until next time.
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