A sure-fire way for any budgetting committee looking to save money on software?
Not spending any.
It’s a difficult time for new investments, and has been for some time now. The pandemic, persistent inflation, the geopolitical landscape, energy shocks, stretched market valuations – there never seems to a good time for new investments, period.
But have you considered the cost of not investing?
When budgets are under pressure, delaying software investments can seem like the safest option. But while avoiding an upgrade may reduce costs in the short term, holding on to legacy software can become expensive in ways that aren’t always obvious. In the commodity trade industry, the real question isn’t whether your CTRM system still works – it’s whether it still delivers the reliability, efficiency and flexibility your business needs.
Legacy systems aren’t necessarily broken. They may still perform the tasks they were designed for, but as technology moves on, they become increasingly difficult and costly to maintain. Over time, software that once supported your business can start holding it back.
Here are seven hidden costs to consider before deciding to stick with legacy CTRM software.
1. The rising cost of maintenance
This one immediately addresses the (trick) question in the intro above – because costs are very much involved when avoiding (or, let’s call it what it is, delaying) spending money.
Every software platform comes with running costs, which means that maintaining an existing solution is in and of itself not a freebie. The most obvious costs of legacy software are licences, support and ongoing development, but legacy systems tend to become more expensive over time as wel. As fewer organisations continue using older software, updates become less frequent, specialist expertise becomes harder to find and maintenance becomes increasingly complex. Fixed costs continue to rise, while additional expenses for downtime, emergency fixes and custom development become more common. These costs rarely decrease as a system gets older. Are you familiar with the sunk cost fallacy?
2. Higher support and training costs
The rising cost of keeping legacy software is not limited to licenses, support and other maintenance fees. It often requires significant effort from your IT team as well. Rather than focusing on innovation, your skilled experts start to spend valuable time on temporary fixes that serve only to keep ageing systems running. Meanwhile, training becomes more challenging too; new employees have to learn software that was designed for a different way of working, maybe even a different time, slowing down onboarding efforts and increasing dependence on experienced senior staff. These costs might not always be directly visible, but can sure have a measurable impact on productivity and operational efficiency.
3. Limited mobile access
Today’s users expect access to business information wherever they are. Whether checking contracts, reviewing (and quickly adjusting) positions or monitoring transactions, mobile accessibility has become a crucial part of everyday business (we know, we’ve made Agiblocks accessible anytime, anywhere from the very start). However, many legacy software solutions were developed long before remote and mobile working became the norm. As a result, they often only provide access through office-based environments and weren’t designed to support multiple users across different locations. Businesses that rely on these systems may find themselves falling behind their competition.
4. Poor scalability and integration
Legacy software often struggles to keep pace. Integration with newer applications becomes increasingly difficult, while expanding the system to support new processes or larger operations can require significant effort. The result is reduced flexibility and greater operational complexity (costs that don’t always appear directly on a budget but can affect the business every day) – in a business where reducing complexity is the way forward.
Modern CTRM platforms are designed to integrate with other business applications and support organisations as they grow. Cloud-based technology makes it easier to connect data, streamline processes and respond to changing business requirements.
In an earlier article, we’ve presented the myriad of integrations and microservices Agiblocks offers so that you have everything you need in one place – from procurement, accounting, logistics and everything else -‘ERP’ to risk management, physical contract management, mark to market valuation and flexible reporting.
5. Frustrated employees
Possibly one of the most overlooked costs of keeping legacy software solution is employee frustration. We tend to naturally compare the technology we have at our disposal at home and in our everyday life with the tools we use at work. If business software starts to feel slow, outdated or unnecessarily complicated, we lose valuable time on working around those pesky limitations rather than focusing on our actual job. We agree that that frustration might be difficult to quantify, let alone embed in your P&L, but it can still reduce productivity and make routine tasks more time-consuming than it needs to be.
6. Increasing security risks
If you’re not convinced by employee frustration, security might be a clearer area where legacy software becomes increasingly expensive. As systems age, suppliers gradually reduce support and security updates become less frequent. IT teams often have little choice but to continue patching vulnerabilities, even though those fixes become less effective over time.
The older a system becomes, the greater the risk of cyberattacks, data breaches and operational disruption. Continuing to build critical business processes on ageing technology can therefore create risks that extend well beyond the cost of software maintenance.
7. The opportunity cost of standing still
Perhaps the biggest cost of all is the one that’s hardest to measure: the road not taken. Every investment involves opportunity costs: the benefits you miss by choosing one option over the other. Any other. In the case of legacy software, missed opportunities could include greater efficiency, improved flexibility, faster innovation or better support for growth.
It’s impossible to calculate these costs precisely, which is also what makes them the easiest to overlook. Yet if you continue adapting business processes to ageing software, you may ultimately spend more than by investing in technology that adapts to the business instead.
So, is it time to move on?
We understand that the decision to replace legacy CTRM solution is never taken lightly. If your existing software still meets your daily business needs, there may be little reason to change at all, let alone simply because it’s old.
The real question should be: does it still deliver the reliability, efficiency and cost-effectiveness your business requires today? If maintenance costs continue to rise, integration becomes more difficult and the system start to limit productivity and growth. So much so, that the cost of doing nothing may be higher than the cost of upgrading.
Agiblocks was developed to meet both the technical and business needs of modern commodity trading organisations. As a multi-commodity CTRM solution built on modern technology, it supports the entire trading process – from contract drafting and pricing to logistics, risk management and position monitoring – helping traders work more efficiently with software designed for today’s business environment rather than yesterday’s.
