The Problem With Legacy Accounting Systems and What to Do About Them

Legacy accounting systems and a growing deficit in the number of accountants are problematic, even for brands like Tupperware, which blames “significant attrition” for delaying its annual results. 

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While newer technology solutions are helping ease the talent shortage and provide businesses with a competitive advantage, businesses around the world, including many government agencies, rely on systems from decades past. They often view it as “cheaper” to continue updating these systems — when possible — than it is to transfer all of the data to new solutions.

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Meanwhile, a survey found that 57% of CTOs believe legacy systems are both too costly and inadequate for modern applications.

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The tension between perceived short-term savings and the larger realities of aging systems ultimately puts accounting teams at risk of being unable to meet modern demands and remain competitive in a rapidly evolving marketplace. Thus, transformation is necessary. 

The Problem with Legacy Accounting Systems

Legacy systems “work” to an extent, as accounting teams rely on legacy platforms for day-to-day activities, and everyone is accustomed to the quirks of each system and how they function. However, major problems exist when you look at:

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• Communication between systems. Modern systems communicate together and integrate neatly to provide robust solutions for departments. Older systems suffer from a lack of data integration, increasing the risk of errors and reducing the support they offer to accounting teams.
• Inefficiencies: Markets are shifting, and with fewer accountants and growing compliance demands, the impact of legacy accounting systems is continuing to amplify. Teams can no longer hide the inefficiencies of these systems when newer solutions provide auditable results.
• Support: Outdated systems lack the support to keep them updated. Many of these systems run on old programming languages that fewer developers use today, causing support to dwindle and security risks to rise.

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Remaining competitive in the market is no longer about hiring more. Talent shortages have made hiring a long, costly endeavor — if you can find more team members to add. Departments that want to remain competitive must do more with less and find a way to turn preparers into reviewers. 

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Legacy systems lack the support to remain cutting-edge and the insights you need to stay competitive in an AI-driven landscape.

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Leveraging AI and AI agents aids decision-making, audit and fraud protection, forecasting, reporting, and big data analysis in ways that legacy solutions cannot. Doing more with less means squeezing every bit of efficiency out of the tools available, and there’s little left in legacy systems.

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AI systems are also leading to higher industry standards, such as ISO 42001, to maintain greater ethical standards and compliance.

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Accounting is evolving at such a rapid pace that 31% of CFOs believe that they’ll use AI in the future, according to FloQast’s 2024 Financial Transformation Survey. Departments will struggle to adopt AI solutions if they don’t know what to do with their legacy counterparts.

What to Do About Legacy Systems – Adopting a New Solution in 5 Steps

Change is necessary, even when it’s challenging. Starting to adopt new solutions now is better than waiting another three, four, or five years while your team loses even more efficiency.

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Here are five strategic steps to get started:

1. Evaluate and Assess

You have systems and processes in place. Some are efficient, but others could benefit from an overhaul when they’re riddled with bottlenecks. Your first foray into new technologies should focus on:

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• Friction in your processes
• Bottlenecks that impact the department most

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Every department has its own processes that need assessment and optimization. Your focus should be on how to do more with less, which comes down to exploring your options.

2. Explore New Solutions

Now that you’ve evaluated and optimized your processes, you can start exploring new platforms.

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Look for solutions that are:

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• Cloud-based for easy accessibility
• All-in-one to avoid having a disjointed workflow 
• Easy to integrate with your other services 
• Leveraging the power of AI

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Cloud-based, AI-powered solutions can automate time-consuming processes, reduce the risk of inaccuracies, and make it easy to scale as needed.

3. Create a Plan for the Transition

Once you’ve identified a solution, the next step is to create a plan for the transition. You want everyone on your team to adopt the new system and realize the benefits it offers.

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But to do that, you need to transition to your new system gradually. The larger the team, often the more complex the move will be, so having a plan will be crucial.

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When creating your plan, don’t forget to consider how you’ll handle data migration and system integration, which requires you to: 

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• Assess and clean up your data before the migration to ensure accuracy
• Test integrated systems thoroughly to find and resolve issues before full implementation

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Having a solid plan will ensure a smooth transition and help you address problems more quickly as you move through the implementation process. 

4. Implement, Train, and Support

Now it’s time to put your plan into action and start implementing your new system. Remember that adopting a new system and changing your processes can be complicated. Be mindful of this when it comes to your team.

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Make sure you’re providing them with the training and ongoing support they need to successfully adopt your system.

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Having a support structure in place will help your team leverage the power and advantages of your new platform.

5. Monitor, Improve, and Update 

You’ve implemented your new solution. You’ve gone through the training process, but your work isn’t finished. 

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The final step is to create and implement a system to monitor the success of your new platform. Over time, you may need to make improvements or update your system to stay aligned with your goals.

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Start by implementing a feedback loop. Gather insights from your team. Listen carefully to their concerns and feedback, and implement changes if needed.

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Remember that this stage of the process is ongoing. Make sure that you’re continually monitoring and refining your technology and workflows to keep your team agile and efficient.

The Takeaway

Many departments still rely on legacy systems that are inefficient, prone to security risks, and diminish competitive advantage. Transitioning to a modern, AI-driven solution can save your team time, improve productivity, reduce errors, and deliver real-time insights. However, you must approach this change carefully and with intention. 

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Success depends on a structured rollout, which includes establishing a clear transition plan, offering thorough training and support, and closely monitoring results to improve processes over time as needed. 

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By carefully following these steps, your department will be better positioned to adapt, innovate, and outperform competitors in a rapidly evolving landscape.

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