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Legacy Technology Challenges in Accounting

September 2, 2021

Humans tend to find it difficult to change, for various reasons. Some of these reasons include a perceived loss of control, the fear of more work and competence.

We tend to look to the past to see what worked and repeat the process. However, to progress in any business, you need to look forward to see what could be coming and prepare for it. In this article, we’ll be going through some of the challenges with legacy technology and how to solve them.

Why Some Accountants Still Use Legacy Systems

Unfortunately, accountancy as an industry hasn’t been the best at innovating. Progress in adapting to new technologies has traditionally been slow, much slower than in other industries. 

One of a few reasons that some accountants are not keen to adopt new systems include:

 

Compliance

Whether that be the FCA, SEC or any other financial regulatory body, accountants are under a lot of pressure from these organisations and, of course, their clients to adhere to the respective regulations. 

The consequences for failing to comply can be severe for both accountants and their clients. As a result, they need to be sure that any new tools won’t compromise their ability to remain compliant. 

 

Risk Management

Being responsible for a person’s or a company’s money is a position with incredible responsibility. If an accountant has spent a long period of time working with a particular system that has brought them success, they’re likely to continue using it. The profession naturally breeds caution as a result. 

 

Client Buy In

The adoption of new accounting technology may bring new benefits in the form of lower costs, greater visibility and time savings. However, the final decision is not often one that an accountant can make. The client will also have to be convinced of the benefits, particularly if they’ve seen no issues prior to being told about it.

If something has gone well and their money is safe, they’d probably be reluctant to change tactics and potentially put their finances at risk of being compromised. 

Accountants must develop their sales skills in order to clearly show how the benefits outweigh the potential risks in order to convince their clients to implement more modern systems. 

 

Integration

 Thankfully, an increasing number of businesses no longer work in silos. However, the downside of that is that any changes made to systems will have an impact on businesses as a whole, not just one department. This is another aspect that needs to be taken into account when trying to implement a new system.

It may take longer to get buy-in from different departments, and even then there may still be disagreements on how to proceed. Sometimes, accountants may not feel comfortable causing a potential conflict, even if it’s for the advancement of the business.

Disadvantages of Legacy Systems

Cost

While it may save money to stick with existing legacy systems in the short term, failing to upgrade can drive up costs associated with system maintenance and workflow inefficiencies further down the line. Not upgrading systems can have a negative impact on the profits of a company, as well as the speed at which they can adapt to a change in business conditions. 

 

Security

Legacy systems are more difficult to update, making security an issue. The development rate of nefarious individuals far outstrips the rate at which legacy systems can be updated to try and prevent security breaches. 

 

Compatibility

Legacy systems haven’t been built with modern compatibility in mind. They were created before APIs were widespread, so there wasn’t much thinking behind their architecture. 

Nowadays, accounting software isn’t used in a vacuum. It needs to be able to integrate with other tools to create workflows. Legacy systems can be disconnected from other tools, making workflows inefficient.

The Benefits of Upgrading Legacy Technology

Cost Savings

It costs money to upgrade legacy systems. However it’s also likely to cost even more money not to upgrade them. As we mentioned before with maintenance, this is something that will likely be reduced as most digital platforms are regularly updated. The cost of maintenance now becomes a fixed, lower cost rather than a variable one, making it easier to plan ahead and make financial projections. 

 

Future Proof

Due to the prevalence of API integration, upgrading legacy systems means that your software is now prepared to be integrated with any new tools that you may need to use in the future. By upgrading your legacy systems, you can be safe in the knowledge that even though you can’t predict which new platform will appear, you can be sure that you’ll be able to adapt to it when it does. 

In addition to this, you can make major technological upgrades with only minor disruption to working practices. 

 

Flexibility

Today’s tech platforms are often subscription-based according to a set of parameters, e.g. size of company, numbers of users, or suite of tools needed. This means that the amount of money needed to commit is lower. Companies can try different tools in a relatively short space of time before making a final decision. As business trends change, there may be a need to change systems, and upgrading from a legacy system makes it easier to do so.

How to Get Buy In For Innovation

Empathy

 Different departments are made up of different people with different personalities. When communicating the reasons why it would be beneficial to upgrade technology, the messaging must be adapted accordingly. For example, it can be explained via email, a physical presentation, case studies etc. 

 

Benefits

Features won’t sell a new platform, especially when an existing one has worked well for a long time. Regardless of which method or tool that is used to attempt to get buy-in from the relevant stakeholders, the core benefits must be communicated clearly. A picture must be painted of how working life could be with the addition of the new platform. 

 

Small Scale Experiments

 Sometimes it may be difficult to get people to agree to large-scale change. A solution for this is making small changes, such as implementing change for a short amount of time or making changes for specific tasks.

Become an Even Better Accountant

Here at INAA, we connect accounting firms who aim to deliver quality professional services around a shared vision to make global business personal, and take personal business global. 

With every industry change, our collaborative association of international businesses is committed to being a part of the conversation around auditing and accounting.

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