Imagine you have an old car that is fully paid off. It gets you from point A to point B – most of the time. But every few months, something breaks down, and you find yourself spending hundreds (or even thousands) on repairs.
Sure, it feels good not to have new car payments, but how much are those constant repairs actually costing you? More importantly, how much are you missing out on by not upgrading to a modern vehicle that is more efficient and reliable?
This scenario is not so different from equipment finance companies still using legacy asset finance software. They have been using the same software for years, maybe even decades. This could be due to deep ties with existing vendors or concerns that new software could cause disruption, and updating it seems like a costly and time-intensive endeavour.
While the legacy tool technically still works, it’s far from being capable of keeping up with today’s technologies and a growing company’s needs. Moreover, just like that old car, legacy systems come with hidden costs that negatively impact profitability, growth potential, and operational efficiency.
In both cases, you incur both incidental and opportunity costs for maintaining the status quo. The cost of doing nothing isn’t nothing. Let’s explore the financial impact of holding on to outdated tech and why upgrading to modern, cloud-based software is a smart business decision.
The incidental costs of legacy software
You might think sticking with an older system is the cheaper option, like holding onto that old car. But the reality is that while you might be saving the onboarding and migration costs of adopting a new tool, you may be footing other significant costs.
The cost of constant repairs and upkeep. Just like an old car that constantly needs repairs, legacy systems often require costly and extensive upkeep. As a result, manual workarounds and inefficient processes pile up, making your operations more expensive than they should be. In a McKinsey survey, CIOs estimated that technical debt amounted to 20%–40% of the value of their technology assets, before factoring in depreciation.
“Legacy systems come with hidden costs that negatively impact profitability, growth potential, and operational efficiency.”
On the contrary, a modern platform is like a new car with a warranty – less maintenance, fewer breakdowns, and far more efficiency. Instead of throwing money at a system that’s barely holding together, you can invest in tech that reduces operational costs and frees up your team’s valuable time.
The cost of talent. You need talent with specialised knowledge to maintain legacy systems, and that expertise is becoming harder to find by the day. Companies often end up spending a great deal on acquiring such talent. Salaries for specialist developers who can work on outdated technology are significantly higher than salaries for resources dedicated to modern tech stacks.
Modern platforms are designed to handle today’s regulatory environment, automating compliance tasks, and reducing risk.
Even if you find great talent, would they want to spend their time maintaining an old, clunky system? Chances are they’ll seek opportunities with employers offering more cutting-edge work. This turnover leads to additional costs.
Upgrading your software not only boosts operational efficiency but also improves employee experience. It’s like upgrading to a new car with all the bells and whistles, more enjoyable, less frustrating, and smoother all around. Happy employees mean higher productivity and lower turnover, which directly benefits your bottom line.
The cost of customer dissatisfaction. You would agree that customer experience is paramount, right? Now, think about your customers as passengers in that old car. They are along for the ride, but it’s not exactly a smooth experience. Legacy systems often lead to slower service, longer wait times, and a lack of real-time data, making it harder to meet customer demands.
Upgrading to modern software is like upgrading to a luxury vehicle. The ride is smooth, the service is faster, and everything just works better. Your customers notice the difference, and they’re more likely to stick around for the long haul. Improved customer satisfaction directly fuels growth, and with better tools, you can deliver a superior experience.
The cost of non-compliance. Non-compliance is like failing to follow traffic rules, you risk getting costly tickets and penalties. Regulations are constantly evolving, and legacy systems often aren’t built to keep up with those changes. Updating outdated systems to meet new standards is both expensive and time-consuming. Manual processes to do the same increase the risk of noncompliance.
“Regulations are constantly evolving, and legacy systems often aren’t built to keep up with those changes.”
Modern platforms are designed to handle today’s regulatory environment, automating compliance tasks and reducing risk. It’s like driving with GPS – you are guided through the regulations, avoiding costly mistakes and ensuring your business stays on track.
The opportunity cost of doing nothing
Choosing to stick with a legacy asset finance tool doesn’t just cost you in terms of repairs and inefficiency, it also costs you opportunities to grow and improve. Here are some of the major benefits of upgrading your asset finance software:
Capitalising on today’s innovation. The usage of artificial intelligence (AI) to automate monotonous tasks is no longer just an idea but a reality today. Companies worldwide have actively started working on it. AI-driven automation can save your company a great deal of personnel hours and eliminate human error.
Switching to a modern tool will help you steer ahead of other companies still running on legacy systems as they will be slower to take advantage of such technological innovation. The benefits will far outweigh the cost of the switch.
Ability to harness the power of data. Just as an older car may lack modern fuel efficiency, legacy systems lack the data processing power needed for today’s business landscape. Data is the fuel that drives decision-making, and without real-time analytics, your business could be running on empty without even knowing it. Legacy systems often don’t have the capabilities to track, analyse, and interpret data as efficiently as modern platforms.
Modern software can give you that visibility, helping you find inefficiencies, optimise your processes, improve service offerings, and ultimately, improve profitability. For example, with the right data, you will be able to eliminate inefficiencies, offer usage-based billing, track an asset’s environmental impact, and so much more.
Integrations with other tools in your tech stack. Modern cloud-based systems excel at enabling integrations, unlike older systems that often require clunky, custom fixes. A great example of this is how you can streamline your workflows by integrating various tools. Imagine you need to create a quote in your equipment finance system and then send that data to another tool to assess credit risk.
With a modern system, this can happen in real-time – data flows smoothly between platforms using APIs, allowing the finance team to instantly receive credit risk information and make decisions. This kind of modular functionality boosts efficiency, reduces costs, and automates processes.
Legacy systems, by contrast, can’t offer this level of integration, which can leave your business struggling with inefficient workflows and missed opportunities.
Adaptability to comply with new regulatory requirements. When you choose a modern system, you get a tool that can quickly adapt to changes, especially when it comes to regulations. Regulatory bodies frequently issue new rules that businesses like you must comply with, often within a year. For businesses using a 17-year-old platform, making those adjustments can be a massive headache – both in terms of time and cost, often requiring
expensive custom workarounds.
On the other hand, modern cloud-based platforms are built to handle these updates efficiently. They benefit from continuous improvements based on extensive learning across a wide user base. This means you will be able to meet new regulatory requirements with minimal effort, avoiding the long, complex process that legacy systems typically demand.
The freedom to scale. For all your scalability plans to materialise, you need a tool that doesn’t make it costly and difficult to scale. When you scale, the volume of assets on a single schedule grows exponentially. Legacy systems simply aren’t built to handle that level of volume, which can result in limited flexibility and higher costs due to manual workarounds.
Alternatively, modern equipment finance platforms are designed to manage large volumes of assets efficiently. These systems can easily accommodate thousands of assets on a single contract, providing the flexibility needed to meet growing customer demands.
Proof of the financial upside of a modern asset finance tool
Canon Financial Services (CFS) faced the tough decision of whether to stick with their old systems or make a leap to something new. It is similar to weighing the choice of holding onto that old car or trading it in for a newer model.
Once CFS made the decision to upgrade, they realised how much the old system had been holding them back. Projects that used to take six months suddenly took just six weeks as per CFS President Dominic Janney. They expanded into new markets and captured opportunities that their outdated tech would have missed entirely.
“Data is the fuel that drives decision-making.”
Like getting a new car that opened up new roads, upgrading their system transformed their ability to grow and compete. CFS’ success shows that sticking with old technology might feel like the safe, “cheaper” option, but the financial benefits of upgrading can be huge.
It’s time for an upgrade
In the end, holding on to outdated technology is like driving an old car that costs more in repairs than it’s worth. The price of doing nothing isn’t zero – it’s eating into your margins, slowing your growth, and frustrating both your employees and customers.
Upgrading your asset finance software may seem like a big decision, but the financial case for it is clear. With lower operational costs, happier employees, better customer satisfaction, and improved compliance, the benefits far outweigh the costs. Don’t wait until your system breaks down – take control and upgrade today, just like CFS did.
The time to upgrade is now, the financial rewards are waiting for those who make the leap.
Originally posted in World Leasing Yearbook 2025
