Retirement may conjure up images of lazy mornings pottering about the garden and evenings spent over a game of mah-jong or bridge. But retirement plan management is a whole different ball game, as plan providers are well aware.
Retirement plan providers must be at the top of their game, constantly updating plans and ensuring that their clients get the most for their money invested.
However, legacy plan administration applications often remain in use for far longer than ideal, which doesn’t support growth plans.
If your organization runs one or more dated or legacy systems, here are some problems you probably encounter. It could be time to consider a change if any of these sound familiar.
1. High maintenance costs
A legacy system continues to cost a company money for maintenance even though it cannot provide any new or innovative solutions to evolving problems. According to a 2018 survey by Deloitte, on average, an enterprise spends 57% of its IT budget on supporting business operations and only 16% on boosting innovation. According to the report, finding people with the skills to support software written in outdated languages is becoming more difficult and expensive.
Legacy systems often contain information that is inaccurate, outdated, incomplete, or incompatible with current systems. Siloed data creates barriers to information sharing and collaboration within an organization. Data is considered ‘healthy’ when it’s accessible and easily understood across the organization. If data isn’t easy to find and use, it isn’t adding value. Many older systems cannot integrate with newer, better systems as they were not designed to do so. Additionally, from a human resources point of view, if one team within the organization maintains a legacy system while others upgrade, the team may become isolated, and the business is likely to suffer.
When it comes to the retirement sector, government regulations are strict and ever-changing – so you’ve got to ask yourself if your legacy systems can keep up to date with maintaining well-governed records. It is a known fact that the Department of Labor actively reviews compliance standards, especially in terms of inaccurate documentation, so it is crucial to stay on top of complex legal and regulatory requirements. Constantly keeping track of it can be costly, time-consuming and disruptive to business, so that outsourcing would be a better option.
A data breach can result in a great deal of downtime and money lost. This year, the US Department of Labor’s Employee Benefits Security Administration issued cybersecurity guidance for retirement plan providers to mitigate the rising threat of cyber attacks. It even listed tips for hiring a service provider with strong security practices. This is crucial, especially when, as retirement planners, you hold millions of dollars or more in assets and personal data on participants. According to a report by Cybersecurity Ventures, global cybercrime costs are expected to grow by 15% per year over the next five years, reaching USD 10.5 trillion annually by 2025. Legacy systems are more vulnerable to hackers because they have outdated data security measures. As technology advances, so does the vulnerability of your legacy system.
Is it time to consider retirement or modernization?
There are, of course, pros and cons on both sides. Retiring a legacy application and moving to a modern SaaS-based platform could mean reducing the challenges of maintenance and upgrades and providing improved functionality immediately. However, it will involve a learning curve to get your team familiarized with a new platform when they’ve operated on a different system for years – this is not something to be taken lightly, considering the criticality of the data being handled in plan management.
On the other hand, modernizing your application preserves the familiarity of the system and the processes that you already have in place while at the same time also making the app more maintainable, enabling upgrades, modernizing its infrastructure platform, and more. Here, the challenge can often be the ‘how’. Many outdated applications lack clear documentation of architecture and functionality, making modernizing them a tightrope walk. The solution to this could be reverse engineering, to examine and document the nuts and bolts of your legacy system to prepare it for modernization.
Whether you move to a modern SaaS platform, modernize your legacy application through reverse engineering and re-architecture, or even outsource the activity entirely to a capable third-party partner, Congruent has you covered on every front. Our depth of experience with the American retirement plan management industry and strong technical expertise enables us to offer solutions to each of these problems. Talk to us today for more information.