What to Consider When Upgrading or Replacing Your Financial Services IT System: Part 1

Today, we’re continuing the discussion about upgrading and replacing legacy platforms within the financial services industry.

In the last session, we had discussed what exactly is a legacy platform and what are some of the challenges faced by having one of these legacy platforms within your business.

There are things that we can do with legacy platforms, whether we want to upgrade or replace them, but the discussion doesn’t always go down the route of upgrading legacy platforms.


Today, we’re going to open up the pages on upgrading legacy platforms. Certainly, the elephant in the room as Colton had mentioned previously is that (according to Gartner) in order to have a digital transformation for wealth management you have to abandon those legacy systems.

That’s not always the case as in some instances as there often is no option to get rid of a legacy platform (discussed in the part-one).

So today, we think it’s time to stop thinking about replacing and start thinking about upgrading legacy platforms. But of course, what exactly does that mean? What does it mean when we talk about upgrading a legacy platform and how does that compare to replacing a legacy platform?

I’m joined by Rod De Vos and Colton De Vos from Resolute Technology Solutions to discuss this question. Rod is the President of Resolute. Colton is Head of Marketing and Communications.

What Does it Mean to Replace or Upgrade Legacy Financial Services IT Systems?

Rod De Vos:
It means, basically, you can take a platform and break it down to its core components and figure out which pieces are the most important for upgrading and then prioritize from a development perspective.

In this case, you may upgrade one piece at a time. Alternatively, you may do a package selection to replace a particular piece of a platform and you pinpoint replacements instead of taking a big-bang approach and taking multiple years to rewrite the whole thing.

That way, you can get value-add quicker by solving a pain point now rather than waiting for the end to achieve your immediate goals. It reduces that risk of the overall “big-bang”. So if conversion to the new system is too difficult and you’re relying on it to do everything but you get to the end and it’s not successful, you’ve poured everything into one unsuccessful path.

By upgrading specific pieces, you’re taking steps in terms of upgrading and replacing your platform overtime without swallowing that one big pill.

Why Upgrade or Replace My Legacy Financial Services IT System?

So noting that there’s two different paths you can take, the less risky but more cost-effective upgrade path and, alternatively, replace everything all the way down to its foundations: when would you even consider replacing a legacy financial services IT system?

Rod De Vos:
If there was a package that existed or even an acquisition and the company that you ended up buying essentially had a better system than your legacy system. In that case, you would do a conversion over to that platform. Or the market finally caught up and wrote a package out there that actually meets your needs or close enough to meeting your needs that a replacement is actually a viable alternative and cost effective.

Colton De Vos:

Another reason might be if your current system actually starts failing and you have a lot of outages or business losses. Then it becomes prudent to actually replace the legacy system with a new platform, piece by piece.

How Do I Upgrade My Legacy IT Applications?

So when we’re looking at whether it’s replacing piece-by-piece, if you have been acquired or if you have acquired a business that has one of these systems, how can we get more out of current legacy systems without this massive, incredibly risky replacement project? What are some options that we have for upgrading legacy systems?

Rod De Vos:
Well you can add new front-end features to the application using modern technologies that allow you to improve the user experience and build your business process into workflows to get more efficiencies. This way, you’re not stuck using older technologies that hinder productivity and training time, like command line driven codes, rekeying, and manual workflows vs automated.

You could purchase certain functions from other companies, like a business process outsourcing arrangement. Let’s say I’m processing claims for an insurance company. If it’s too difficult to rewrite the claims engine, you can typically buy that service in the insurance industry from a third-party in which case you get the benefit of their system without having to build/acquire and maintain it.  

That would be an example. So you can partner with other companies or rent their platforms or use softwares and service for functions of your platform rather than the entire thing.

So let’s say your entire business is built on one of these legacy platforms and was built on an older language that many might not be familiar with today.

Are you saying it’s possible to pick-and-choose specific pieces of the platform for replacing and just leave the database-end or the mainframe end running as it is?

Instead, just plug-and-play with some modern functionalities that let you still remain on the cutting-edge of digital transformation, but without having to undergo the incredibly risky and costly replacement of the system at its core?

Rod De Vos:
Not as easy as it sounds, but yes that’s correct. You may have several databases in play that need to be kept in sync.

Upgrading Legacy IT Systems is Still Complex

Rod De Vos:

I don’t want to understate the effort required for that, because you’re extracting data from the legacy platform, potentially using it differently than it was intended and then putting it back at into the legacy platform.

This often requires two way integration or at least integration back into legacy, in which case you do still have the limitations of legacy from the data perspective.

You can enhance and store the data in a different database, i.e. in a different format. That’s how data warehousing got its start in a lot of ways. But you still have some of the inherent problems of the legacy still being around.


Leverage 25 Years of Financial IT Experience to Develop a Feasible Upgrade Roadmap for Your Legacy IT System


Integrating New Systems to a Legacy IT Suite

So noting that there’s certainly much more than meets the eye, even if we’re going down the safer route of upgrading an existing system (rather than a full replacement), how do you go about implementing one of these upgrades? Where do you get started? What should you keep in mind?

Rod De Vos:
You identify your top priorities based on your business strategy.

Some of them can be new products you need to offer or the direction you want to go in for the growth of your business. Some of them might be, “I need to understand my customer-base and want to implement things like data mining”.

You would take the data out of your legacy system and migrate it to a modern database.

You can put modern tools on it to actually mine the data, do data analytics on top of it, provide insights for your business (buying patterns, transaction flow, next product recommendations, AI,  etc. You might do mobile on top of the data (that you migrated out) and create a different customer experience using modern day user interfaces and/or mobile or web screens available to the customer for self service.

Colton De Vos:
Yeah. It’s like a bank or credit union providing a mobile app. It still connects back to their back-end system in the end, but it gives the customer a much better experience where they can select options or at least view things from their phone.

Rod De Vos:
If the integrations were taking a long time with legacy, you can write them at a different integration layer that talks to legacy in a completely hidden way. It’s easier than to plug-in third-parties from that perspective.

You have to decide if this is something you can build yourself or pay someone else to build for you. With modern day packages that you might plug-in or bolt-on, they come with a complete list of interfaces pre-built or APIs as they call them that allow you to plug-in to third-parties so as long as you can meet those requirements for plugging-in.

You can essentially leverage some degree of your legacy system by plugging that into an integration layer such as an enterprise service bus (ESB).

Its very interesting that you’re bringing that up because that was actually going to be my follow-up question.

Some plug-in software does offer quite a bit of API options and perhaps your legacy system might be using a program language that is not so old that is not able to integrate with some of these APIs.

At the low end, or the easy-end of the scale for some of the things that you’ve seen in wealth management, what kind of talent would a financial industry firm need on hand to make this happen?

And on the more complex implementations that you’ve worked on, what kind of talent would business planners need to take stock of and do a little bit of internal inventory taking to see if they could even do this on their own or should they consider doing a little bit of outsourcing to make this happen smoothly?

Ensuring That You Have the Necessary IT Staff or Expertise

Rod De Vos:
Well typically, if you had a team of regular legacy programmers, they wouldn’t have the skills necessary to migrating the data to a modern-day database, building a warehouse or writing the integration layers. So those are typically specialized skills that you’d be looking for. It is not that it can’t be learned by the legacy team, it is just that they are busy keeping the lights on with legacy system.  You might use a third-party firm for that to bring those skills to the table or build another team of integration developers.

If you already have that, then you’ll also need skills for successfully running a project to leverage those technical skills. So project management, business analysis and people who are capable of doing the integrations and data conversions.

What Is the Cost of Replacing my IT Application?

Now what do the costs look like on a legacy system upgrade (part of the system) versus a full legacy system replacement?

Obviously the costs are lower, but how exactly do these costs play out? What could somebody keep in mind as they’re trying to do the business analysis and cost some of these things out.

Rod De Vos:
An upgrade can be as small as in the $50,000 mark depending on the size of firm. That would be maybe typical for small-to-medium business or medium-sized business. For large business, they can be up to $5,000,000 to do a replacement or massive integration.

So the cost comparisons we’re looking at from a legacy system replacement: it would be into the several millions as opposed to a simple upgrade, which could range around $50,000 and up?

Rod De Vos:
Correct. It all depends on the size of the legacy system as well and how complex.

Well that’s excellent information. I appreciate the opportunity that we’ve had to discuss some of the challenges of replacing legacy systems.

There are just a lot of assumed conclusions that people make and upgrading legacy systems is always an option on the table, regardless of the system that you have.

All you need to do is take stock of the talent that you have on hand and make sure that you have the capacity to run it and if not, you can always reach out to an IT outsourcing specialist like Resolute Technology Solutions where you certainly have all the talent on-hand and the experience both at the project management level and at the technical level to make one of these things run smoothly and efficiently.


We have a Part 2 of this series coming soon on what to consider when fully replacing your legacy system or platform including:

  • When it becomes ABSOLUTELY necessary to fully replace
  • What to include in your IT replacement planning roadmap
  • How to build a successful implementation team – what roles and skills are needed for a successful roll-out
  • Risks to watch out for during re-platforming
  • Expected costs for mid-size and large scale projects


Resolute Technology Solutions offers IT Project Delivery and consulting for financial services firms all across North America to lead small to large scale projects for successful roll-outs. Whether you are looking at upgrading your legacy platform or doing a full replacement, our team leverages over 25 years of experience to ensure that your financial services company isn’t left behind when digital transformation becomes mandatory for your business growth. To learn how we can help you, contact us today for a free consult.



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