Barnaby Nelson

Welcome to the latest in our vxInsight podcast series designed to help you make the case for meaningful transformation across your business today. So this episode is focused on legacy tech transformation.

Now this isn't a big theme that steals many headlines. And yet, it's on the critical path pretty much all of the major trends that are shaping the industry today. So DLT, T+1, even ESG, all of them have legacy technology on a critical path basically towards the realization of all of our digitization and transformation.

So a few months ago, we set out to understand really the details and the real story behind legacy tech transformation. So working with S&P Global and with the support of Digital Asset and The Network Forum, we reached out to about 100 organizations to understand exactly how, where and why legacy tech is really impacting their businesses.

And so it's a pleasure today to have Richard Wilson from S&P Global and Tracy Moors from Digital Asset to be able to talk through exactly what we've learned so far and, ultimately, where the conversation goes. So Richard, Tracy, thank you very, very much for joining us.

Richard Wilson

Thank you, Barnaby. It's a pleasure to be here.

Barnaby Nelson

So just to jump in, before we open with the questions, I would underline that anyone who wants to see the key findings, they are available at www.thevx.io. And we'll be adding more and more resources to that page as we go if you want to keep up on the conversation.

Barnaby Nelson

So to jump in, so Richie, let's just frame the conversation properly in terms of how do you define legacy tech in terms of looking at it from a bank or a broker or an investor's perspective. Where does it sit in the priority list today and kind of what's driving that?

Richard Wilson

I think there's probably a number of things driving that, Barnaby, from our perspective. Certainly, over the last while, what we've seen for a lot of firms that's driving it, to me, there's three main ones. You've got the economic regulation, but it also had the pandemic effect, which you've hopefully seen in the back of -- I mean if you look at it from an economic perspective, there's been a lot of cost pressures.

You see a lot of focus on strategic cost reduction over to them, Firms, they are looking at cloud, trying to get the higher levels of efficiency, service standardization, particularly in an industry that's just become very concentrated. So there's been a lot of competition, consolidation.

And really I think trying to apply new tech and really is now about delivering new products, trying to exceed client expectations, particularly with a lot of competition out there across from these new fintech firms coming in. Also, if you look at the regs, I mean, you have so many regulations over the last recent years.

And certainly, they bring their own challenges. We had recently the SRD II regulation. We've got the CSDR I coming up now at the start of Feb. And now you've got the US T+1. So certainly, firms are certainly being impacted. You've got a lot of this reg coming in, just higher capital requirements, higher reporting requirements.

So certainly investing in new tech certainly to comply with those regulations is going to bring out a lot of challenges to the firms, but also, they introduce a lot of opportunities potentially to their upcoming services.

And then the last one I kind of think about is always the pandemic effect. So what that's really done is highlight the importance of technology. I mean firms have to kind of learn to function anew. It's highlighted a lot of weaknesses and inefficiencies in infrastructure, particularly a lot of other firms.

And as you mentioned, we've seen Bloom's now also with ESG securities, effectively, how are people are going to be able to manage them. People are looking at those global challenges. And the other one that's kind of catching on, too, is also the digital assets.

So traditional assets and digital assets now being looked to save, kept in the same environment and the same platform. So certainly, there are some of the firms -- some of the key things that we are certainly seeing with some of the firms we are dealing with really as people kind of look to see how did they'd deal with this legacy tech issue.

Barnaby Nelson

Yes. So pretty much everything really. I mean it's funny. It basically sits underneath everything, doesn't it, really? As you said, every -- I'm just picturing the Board level meeting in any organization, that's pretty much every action point on their list is basically how is the legacy tech standing behind it.

I mean, Tracy, from your perspective, obviously, from Digital Asset, you guys are at the forefront of kind of driving the change in the next generation. How do you see the legacy piece kind of coming up in terms that you're speaking with?

Tracy Moors

No, I think it's a great question. And Richard really touched on the key themes that we're also seeing from our side. I guess I would expand on a couple of those. The competitive landscape that you're seeing and the focus on client experience.

I think we -- speaking towards some of maybe the buy side, the cost pressures are real. And they're constantly being pushed by their clients to get new products to market faster as well as maintaining operational costs. So operational efficiency is certainly driving a lot and customer experience.

I think what -- the key theme that we're really seeing when you think about replacement of technology in the past was the focus has traditionally been on how can we lower our costs, how can we help you save money.

I think a theme that we're seeing that's growing, that we certainly embrace is that you want technology that can lower your costs, decrease risks, but also help you generate new revenues. So we talked about new products to market. So how can that technology help you evolve and differentiate yourself in the marketplace.

Barnaby Nelson

Yes. And I think this is -- it's great opening from both of you, really, because I think for me, when I -- historically, when I heard the word legacy technologies, exactly as you said, you think about basically cost avoidance and basically throwing old stuff in the bin. You don't really think about actually the customer experience and the revenue facilitation angle, which I really want to come back to later on.

So thank you for framing it. So just to walk through first part of, I suppose this conversation is really, is just mapping out where is the legacy technology today. And then we can go through the case of transformation and then what the journey looks like around transformation. The 3 key stats, I think, for me from our research in terms of where the legacy is -- where the legacy technology is holding us back today.

So first of all, a major imbalance between the buy side and the sell side. So about 27% -- or up to 27% of sell-side systems being older than 20 years old. So systems aging every year. 97% of listed derivative systems still being a single-asset class. So essentially, some very, very acute siloing and legacy technology showing through across the asset class spectrum.

And then ultimately, across the different access geographically, 84% of broker systems being run either on a local basis and country level or on a regional basis. So there's a lot of pockets of transformation here -- sorry, there's a lot of pockets of legacy technology here. And Richard, where do you see -- across all of those, where do you see the real hotspots in terms of the most acute manifestations of legacy?

Richard Wilson

I think it's an interesting one, Barnaby. I think if you look at over the years, focus has always been in the front office. Right now, we're kind of -- as we move into what is the back office piece, effectively what people call as the plumbing.

And just like -- I think the plumbing in your house, most firms don't spend money on post-trade plumbing, really unless there's a serious problem. A lot of times, I would say, budgets are very conservatives, wherever possible. But now we're starting to see a lot more interest in those areas. I mean a lot of that's been driven by the reg and the regulation and the change that's happened.

But also, I guess a lot of the volumes and they're putting a lot of these older systems certainly under a lot more pressure. And if you look at in the corporate action space, you have a lot of manual bespoke systems really that need digitalized. And certainly, those reg techs have also pushed CSDR to put settlement position, keeping systems that are much more into focus, a really firm thing to implement those technology changes to support those regulation changes.

And these systems won't be able to support at that level of efficiency and volumes in the future, certainly not to meet the level of the client expectations to very cemented area, which is continuing to grow. And a lot of times, I think clients have the expectation that technology should be meeting up with their current needs as they push their iPhone and push their buttons. But unfortunately, financial firms kind of don't really keep up with people's expectations.

Barnaby Nelson

So thanks for that. So Tracy, from your perspective, I mean, again, as you were saying, you've got a whole spectrum of kind of costs and then basically -- and then future-proofing client's experience, revenue generation. Where across all the industry you've seen the kind of the absolute the hotspots?

Tracy Moors

Well, I think when we talk about technology as a whole and the way our industry has been able to grow and evolve with the help of technology, it's actually, I think, starting to become a bit of a burden for some of these institutions. Because as you mentioned, you have the single asset systems, you have particular pieces of technology that are only focused on one part of the business.

So as you start to expand your technology use, you've now created a problem of disparate systems, very disconnected data models. So ultimately, we're looking for solutions here, and we're technically creating more problems for the organizations.

As Richard said, the plumbing is only getting worse. The front of the house may look beautiful, but I think we need to get back to focusing on the plumbing, really getting these systems -- getting more -- updating your infrastructure to account for multiple uses and in getting away from the single use case systems.

Barnaby Nelson

Yes, yes. And just in terms of actually when -- in your -- both of your conversations with clients, I mean how would you characterize the kind of the symptoms of legacy tech? I mean we've covered many areas. And as you said, Richard, people don't spend on post-trade unless they absolutely have to.

How has the legacy tech conversation kind of coming through? Is it in a kind of firefighting mode? Are people discussing it? Is it coming through in more of a future planning mode? And ultimately, what are the -- I suppose, what are the red flags that people are citing in terms of, do you know what, this is it, this is basically -- this is the end of the road for this system. We've got to move on from here.

Richard Wilson

I think it's been a bit of a mixture, Barnaby, to be honest, which I think some firms are trying to hit the issue is around scalability and where the [ defined level ] of volumes over the last number of months and number of years really have put them under a lot of pressure. And that does effectively hinder any competitive advantage and market differentiation that they have.

And I've certainly seen [ other services exceeding ] 51% or a bit more firms were saying that. And their biggest challenge is really around legacy tech. They just can't scale the company to volumes. There's just massive cost pressures.

And it's not able to reap the benefit or utilize any level of standardization to improve their services. They're really going to struggle to compete. So I think there's a big push on that to kind of make sure that the scalability element is there to kind of help them succeed.

Barnaby Nelson

Yes. So basically, this idea of it really being more of a future-looking conversation rather than a backward-looking conversation is coming through quite clearly. I mean, Tracy, do you find -- your point around data models, and just ultimately, this race, particularly on the buy-side, that people or fund managers are having to do ultimately to deliver cheaper, better products.

I mean how do you find that this is kind of -- that legacy is turning up on that critical path in terms of in that race to scalability and things? Are you finding, anecdotally, people turning up and saying, do you know what, we're just spending way too much time connecting up the data or spending way too much time managing this or managing that.

Tracy Moors

I think the time and resources are key, and I know we'll get into that. But time to market, I think if you spoke to anyone on any side of the business and they're finding ways of replacing legacy technology, how can they do that in the most time and cost-effective manner. I think many of these projects that people want to engage in, once they get it all on paper, it looks to be a 2-, 3-year project.

And I think that in itself is a risk as technology continues to evolve. So we are seeing -- we like to say, we know this is a revolution in terms of technology, but this needs to be an evolutionary move where you start replacing and start working piece-by-piece where you can get value today versus looking at an entire rip-and-replace in the future.

Barnaby Nelson

Yes, yes. And just thinking about that then, the time to market, the revenue facilitation, the client experience, if we were having this conversation 5, 10 years ago, do you think it would have been meaningfully different in terms of the drivers that people are facing then and now?

Tracy Moors

I think the reliance on third-party vendor technology 5 years ago and that outsourcing model, I think, was what consumed a lot of approach to technology and replacing that. I think some today would argue that maybe that got a little too ahead of itself, and we talked about the multiple, duplicative systems that people have deployed over time.

So I think the difference today is you're seeing a little bit more that firms are trying to bring a little bit more in-house to maybe get that competitive advantage, their own secret sauce on it, and again, bring, and we talked about it, their own version of client experience to their technology systems.

Barnaby Nelson

Absolutely, yes. Richie, do you think we've moved on much in terms of how we describe and how we see the legacy problem in the last 5 years?

Richard Wilson

Yes, I think we have, Barnaby. I think a lot of firms now are much more open towards the newer technologies and the next-gen solutions that are really coming in place. I think 5 years ago, certainly from our experience, a lot of firms would have been very much having applications maybe on-site or in-house.

But now you're seeing the cloud. The cloud is just kind of -- it's given now where people are kind of looking to reduce their total cost of ownership, effectively having managed services, having outsourcing and certainly to various different vendors. So I think the concept has certainly moved forward.

And I think firms are certainly looking for a lot more now. They look for a much more component-based, more systems that can effectively integrate easier with each other through APIs, et cetera. So I certainly think the landscape has changed and firms are certainly much more open to technologies.

Barnaby Nelson

Yes, it's very interesting really that the -- yes, this -- Tracy, your point about in-sourcing ultimately is increase the focus on your technology platform is really interesting kind of. And the idea that now that the kind of the menu of options is much, much bigger than it was ultimately. It's meaningfully different from me if we were having this conversation several years ago.

So then in terms of what do we do about it? So the case for change, if we talked about basically that the inputs to this discussion are manyfold in terms of revenue facilitation, client experience, all the way through to the old -- good old cost management. What's fueling the cost for change based on the research as far as we can tell is, is interestingly, it reconciles and tell you what you're saying, it's not system end of life.

So we're not dealing with legacy because basically, it has to go in the bin. We're dealing with it even because, as you said, Richie, regulations, cost, risk management, those are all the major drivers that are actually that are fueling the business case today. But really echoing your point, for me, it's stand out stat is that the average P&L of the legacy project, legacy transformation project is about $1.5 million, of which about 40%, 45% is new revenue facilitation.

So for me, it's part of this whole discussion is very critical to remind ourselves that it's not about cost. It's not just about shutting down. It's about growth and facilitating time to market, new assets, new growth, as you've been saying. But ultimately, on the challenges that we have to address in the business case, resourcing stands out as being the biggest problem.

So Tracy, you touched on it. How do you resource up for a multiyear project? Basically, just how do you get this stuff done in an area where, obviously, our return on investment time frames are quite short. Especially over the last couple of years, there's been a lot of firefighting. So 13% of respondents citing resourcing as being its biggest challenge.

So in the context of all of that, when you guys think of the business case, as you're obviously intricately involved in those transformation discussions, what are the actual -- the trigger points that are making people cross the line, if you like, in terms of taking something from like a frog boiling in water, taking them from, yes, this is a problem too, yes, this is something we're actually going to do about it. Richie, have you got a view there?

Richard Wilson

Yes, I think certainly from our perspective, again, right, I think operational efficiency is a key. People really are looking to achieve that STP as much as possible. Certainly, I've seen over, and particularly during the pandemic, there's been a lot of inefficiency around paper-based process, proxy voting, account opening. And that was all amplified during the pandemic.

Firms really, they tried to pivot. And certainly, they've adjusted. And -- but some of that stuff has been temporary, and it's not really sustainable long-term process. So I think they definitely need to move off those more tactical solutions that they've put in place.

Also then, as I mentioned, I can go back to the reg and it's just so prevalent at the moment. Your firms need to look at that kind of a holistic approach, how they're going to deal with best practices across the middle and back office. A lot of times, you need to simplify and rationalize these systems in light of what these global regulations are doing.

And it's different if it's more in jurisdiction, you can probably look at putting in a service in place. But certainly if it's larger, industry-wide regulations, you certainly need to have that right approach. And then the other ones are going to see this as a trigger, like you mentioned, ESG and digital assets.

Digital assets really is an interesting one that we're seeing. Firms really need to understand how they're going to join up the dots there, how effectively they're going to be able to manage custody from a safety perspective for digital assets alongside traditional assets, how are all these systems going to be able to intertwine and talk to each other, particularly from an API perspective and how do you go to market with a solution like that.

Barnaby Nelson

Yes, absolutely. What are you seeing, Tracy, on that in terms of the triggers that are getting these business cases funded?

Tracy Moors

Yes. I think many of those same key themes. I guess I would highlight regulatory is always, I think, at the top in the path of where we've seen those transformational changes in technology that are driven by regulatory change, market infrastructure change, something we're seeing coming down the pipe, and as you mentioned, a T+1 potential.

So certainly, that gets the attention of these operational efficiency executives and how those systems could potentially handle something like that. I think -- I would go back to an original point that I said, where we think about new revenue. So there is that healthy competition amongst market participants.

So if market participant A is innovating and launching new products via new technology, I think others take notice. And as that gains steam and as you see some adoption growing in the market, I think that fear of falling too far behind also is a trigger for them to maybe reallocate some resources and prioritize that.

Barnaby Nelson

Yes. It's so interesting, that ultimately, the narrative that comes through, from what you're saying, is ultimately a lot of people talk about, as I said, legacy as being, okay, we've got a COBOL system that we need to throw in the bin or whatever. But ultimately, really what we're saying is the catalyst for change are basically all the kind of the straws that break the camel's back.

That, ultimately, it's suddenly that crypto assets turning up in the portfolio, that ESG data now has to be a prism through which we see everything. Or as you said, that basically that your peers have run ahead and you need to keep up. All of those are kind of things that ultimately you're only as good as -- I mean any of those could land tomorrow is what I'm thinking about.

And so there's a real future proof in case that, ultimately, if we've gone back even 3, 4 years and said, right, huge numbers of portfolios are going to include a digital asset. Ultimately, very few people would have said, well, that means we've got to change now. And suddenly, on a dime, we're all having to face that.

So for me, there's a really interesting conversation here around basically the fact that it's "you're only as good as tomorrow's problem" kind of thing. To your point, do you think that we are -- when we're having these conversations and we're taking these investment proposals for approval in terms of getting the spend, do you think that the conversations are centered on the whole P&L, the end-to-end P&L sufficiently?

Because we're saying really that there's a massive revenue piece in this, and the stats basically say that, as I said, more than 40% of the P&L of the project is revenue facilitation. Do you feel that, that comes through adequately in conversations today?

Richard Wilson

I think it all comes down to really an institution's appetite for a change and the capacity to change, Barnaby. I think you've got a cultural aspect and you've got a financial aspect. And a lot of times do firms have the staff and the talent to implement such a program. So a lot of these programs require skill to manage and prioritization and going on that journey.

Because -- I think a lot of times, these transformations or legacy tech changes, they really are a marathon, not a sprint. And oftentimes, internal costs running these digital programs could easily be 2 to 3x the cost of implementing a new solution from a vendor because there's a lot of internal stuff that needs to be kind of sorted from retiring systems, integration, development, et cetera, to support a new vendor.

So I never underestimate that. I think just certainly a long journey, and I think there needs to be a very good, strong talent pool within any firm that's on a standout journey to kind of get involved on how they bring forward their legacy technology.

Barnaby Nelson

Yes. And look, that frames up the next part perfectly. So the whole question that you're leading on to, really of managing and executing on the change, for me, the stats from the research that came out really clearly is that basically everyone is looking at this. So 83% of firms that we spoke to are either planning or executing projects in 2022, 2023.

So pretty much a significant minority of people are not actually making a major change in this area. And where that change is happening ultimately is in the equity space and predominantly in the corporate action space. 48% of firms in the equity space are actually replacing their legacy tech right now.

But ultimately, there's a big red flag in here, which comes back to, I think, many of the dependencies that you're just highlighting. This whole idea of incremental versus transformative change. It's about 50-50 between, basically, getting in a real system, driving real change that's actually going to do more than just fix the last problem.

But half the market is still basically looking at just adding a new data layer, adding a bit here and there and kind of just basically getting past CSDR and getting past digital assets and surviving kind of things. So for me, there's a real question about, as I said, transformation versus kind of tinkering. So I mean how do you see that playing out?

I mean, Richie, you mentioned that the tip of the iceberg piece that you've got 2/3 of the cost being the kind of -- the cost of essentially the organization being ready to execute, and then about 1/3 of the cost being the vendor solution, just picking rough numbers. I mean how do you find that, that impacts people's ability to change and then ultimately -- and then the change that they're actually up for in terms of their ambition?

Richard Wilson

I think a lot of times, Barnaby, it comes down to really having the clarity of business case of what you're trying to achieve. A lot of times, I think the firms probably underestimate the level of change that's involved. You really need to understand the scope, the landscape of the change program really before they frame it.

I think the survey really, I had 3 main ones, which is reg, risk and data. But to me, I'd also add in today talent, having experience and having the know-how to implement such a program. And having the will and desire to change is one thing, having the ability to implement it and deliver on it is a completely different thing. A lot of times, that comes down to having the experience and having that staff and that talent to be able to do such a program.

Barnaby Nelson

Yes, yes. What's to be done on that, just out of interest? I mean from a talent perspective, if what we're saying is part of the problem is that you don't really know these things until they suddenly hit you. It means that basically you've got to be grooming your talent well, well in advance, and you've got to be writing and framing your business case as well in advance of the next big thing hitting you. How does that actually show up just in terms of best practice, if you like?

Richard Wilson

I think it's about having change management programs in place. There's no easy way, I think, for it to just open a firm. I think firms have got to have the focus and have got to be always forward thinking. And certainly, ones that stand still inevitably will get left behind.

I mean the reason to change the technology today is unprecedented. I mean we've seen pandemic, which I come back to refer to, we've seen changes in firms over the last 2 years that probably traditionally would have taken 5, 10 years to have actually happen.

So I think being on that journey now, I think it started with the pandemic. But I think now people are much more open to understanding the technologies that are out there. People are much more technology-aware. So I think you just have to embrace it and kind of start to see it as a positive thing that helps firms to move forward.

Barnaby Nelson

I think your point about, yes, change management is a fundamental discipline, as a BAU, I think for me that, that's such a core piece that ultimately, as I said, it's not a question of survival, it's about embedding change management as a core function within the organization just to deal with the constant level of change that we're facing. That really resonates for me.

And I mean, Tracy, from your perspective, you're obviously -- you're on the transformational end of this very much from a digital asset perspective in terms of restructuring really not only the way we work, but the mindset we bring to that. How do you find the whole incremental versus transformational change piece in terms of when you're speaking to people, what's pulling them forward across that line from tinkering to transformation?

Tracy Moors

Yes. I think to double down a bit on Richard's point on -- certainly firms need to have those resources. They need to be forward-thinking. But how those -- I think from an order of change management perspective, how that organization is thinking. And I'll give you a client anecdote.

I think some of the clients that we've seen that have embraced this change, that have really hired talented people or at least started to cultivate that culture within, they can begin and commit, I think, to these transformational changes.

And through our experience and what we're seeing, those particular large customers that embrace it, that hire and really move things forward, it's actually proven a direct result for shorter time to market, accelerated projects for many of their peers across the industry.

So it is a cultural change. But I think many organizations that have embraced that culture, others that are now starting that movement can really leverage a lot of the lessons learned from those that have really moved with a proper plan.

Barnaby Nelson

Yes, absolutely. So I think the linkage between legacy tech related transformation and the cultural trends that you guys are talking about in terms of actually bedding in certain talent pools into the organization as a necessary first step, personally, I don't feel that, that necessarily comes through enough in people's organizations. As I said, it's too easy to just deal with the latest challenge and not really take the bigger cultural change piece into account.

But if we look at the overall market, I mean, there are different speeds of legacy transformation based on different pressures that we've talked about in terms of growth and so on and so forth. The survey highlighted equities and particularly the corporate action space as being a real standout. Does that resonate with you? And I suppose, Richie, from your perspective, what's behind that in terms of what makes that space so uniquely suited to what we've been discussing?

Richard Wilson

Yes. I think corporate actions has always been a hot topic, I think, Barnaby, particularly, over the last 10, 15 years. I think traditionally, you can see a lot of operational teams seem to manage it through the wonderful world of Excel or a lot of manual touch points. And I think what's happened is that now effectively people are looking to automate both from an announcement capture perspective and certainly the downstream processing.

And again, there's multiple options out there around from a announcement capture perspective and managing the clean messages, you can have managed services effectively, you can outsource and get very clean data from multiple vendors. But I think it's been such a manual process, there's so many manual touch points in it that certainly a lot of firms now are looking to reduce the risk around this, reduce the complexity.

Some of the events are very, very highly complex and need a lot of manpower on it. So I think corporate actions is one that's always being to the front of the fore in the last few years that people have probably not had the investment and certainly now just seeing such a risk area that they want to get it down to a highly streamlined and highly effective process going forward.

Barnaby Nelson

Tracy, from your perspective, just thinking about what we opened with in terms of where the biggest areas of challenge are. You talked about local systems, regional systems, siloed asset classes. What do you feel we're overlooking? Are there any areas where you feel that there's -- that we continue with a risk in terms of some of the silos that we talked about at the beginning that aren't being dealt with?

Tracy Moors

I think siloed systems are certainly a risk to a company's technology infrastructure. I think we're -- as an industry, we're only going to try to increase the products that we're getting out to clients and as you've well noted on the evolution of the digital products. So I think siloed systems, we can't continue to just put an additional system within our infrastructure.

So how do we -- I think Richard mentioned this, how do we work on better integrations? How do we kind of bring these technologies to handle new issuances? But I would go back to the corporate actions. I think it's something we certainly see a lot. But I think you can take the scenario around what's pushing corporate actions and apply it to other parts of the organization.

Because really it's the risk around human capital and a focus on even Excel spreadsheets in a process. The pandemic certainly brought to the forefront that people need to be able to work within a much more sophisticated, integrated system across the organizations without that human capital risk.

So those are really single siloed systems. And I think having too much -- because certainly, these corporate action teams are fantastic. They're very good at what they do, but I think there is that risk of the human capital. There is an area that we can bring together, technology and the oversight of these very experienced people to make that -- significantly derisk a system like that.

Barnaby Nelson

Yes, absolutely, yes. And so I suppose on the negative side, let's think fast forward, we're saying the conversation would have been very different 5, 10 years ago. Fast forward 5 years, why and where is legacy just going to carry on surviving? I mean there's many, many reasons that are helping us to push across the threshold. Why are certain areas of legacy technology just going to hang on, do you think, Richard?

Richard Wilson

I think it's an interesting one, Barnaby. Ultimately, there's still lots legacy systems out there, you can see that from the survey. I think they survived because a lot of tactical solutions, [indiscernible] sticking plasters are put in place and also give a lot of support by experienced staff.

But I'll be honest, I don't think that's sustainable, certainly not in the long term. At some stage, those plasters will need to come off and there's going to be a major issue there. I think you need to have that level of continuity planning.

You need to have system upgrades, rather than these minimum efforts, to keep systems running. You need to have sound practice. But I think in order for the firms really to move and move forward from that, they need the right people, they need talent. I know we went back to that point earlier.

But that's what's going to be needed to help these systems and these firms move forward. Because that experienced staff that they've been relying on for the last 10, 15, 20 years, effectively those people are going to retire and there's going to be a serious problem with some of these institutions on how to support those platforms.

Barnaby Nelson

I mean it does feel like we are loosely -- we are starting to get to the point where this -- the burden is untenable almost. As you say, it just can't -- we can't carry on as we have. Tracy, does that resonate from your perspective? I mean do you feel that, ultimately, that you fast forward 5 years and the tolerance for legacy is so diminished that ultimately we really are going to do something about them? Or do you think certain parts will all resist the change?

Tracy Moors

Yes. I think certain parts will continue to resist the change. Do nothing is the biggest risk, I think, in these organizations. And unfortunately, sometimes it takes an event to force that change, whether it's global pandemic, whether it's the change in regulatory initiatives.

But I think, to Richard's point, hiring and at least managing the staff, like you said, that's been working the same system and they will retire, then bringing in the innovation and start to cultivate that culture will help organizations identify the areas to prioritize over time.

Because I don't think we've touched on that. To run out and try to play catch-up on some of these things is not the best business model. But creating that culture to replace things over time the right way, with the right future technologies is what companies will need to do.

Barnaby Nelson

Yes, absolutely, brilliant. So thank you for that, because I think the idea, it takes an event to force the change, really resonates. The key is that ultimately, if that can -- if we can get ahead of that, then ultimately, as you said, we're not going to find ourselves on the back foot and struggling to keep up.

So the last question then for both of you really is, okay, so how do we wrap all this together. If you are sitting there with somebody who is kind of running an operation of varying degrees, what are the 3, 4 steps that we need to be taking from a kind of standing start to feeling like we've really got this one down in terms of managing the legacy tech agenda? Richie, you've got a view on that?

Richard Wilson

Yes. I think regularly, Barnaby, I think there's probably a number of points that they need to be kind of looking at regularly. You need to be [ set up ] assessing your tech stack, is it fit for purpose. I mean it's a really obvious thing to say, you need to be looking at what percentage of your tech spend is keeping the lights on rather than investing in new systems.

You need to be very aggressive on what's happening in the industry, like what systems are available that best serve your needs, how you're implementing the right systems that can potentially save you money in the long term, particularly if there's possible options around managed services out there.

You could have providers that effectively add new features that could enhance your business that you're not even aware of. And then I think you just -- you need to be planning for the future, is it better to continue to invest small amount on latest technology rather than having a system, issue that you can't service clients in the future.

I think ultimately then, those 3 steps, it's almost rinse-and-repeat every year. You need to continually refresh this and be on top of it and keep looking at it to see where you're positioned from a technology point of view. Because the one thing about technology is it's not slowing down. I mean if anything, it's going to pick up further over the next few years as newer and newer technologies come on stream.

Barnaby Nelson

Yes, absolutely. Yes, yes. I think that rinse-and-repeat piece really stands out for me. The idea that it's not -- you don't just have a look and then realize that you're comfortable. It's this constant questioning and constant recycling of the question. Absolutely.

Tracy, from your perspective, what do you think has really stood out as key success drivers for the projects that you've seen?

Tracy Moors

I think to be proactive rather than reactive. I think this industry, at times, has been resistant to change. I think over the years, technology has proven to be very helpful to organizations. And I think they need to continue to innovate, continue to hire and be proactive on evaluating what is important to their business, and therefore, prioritizing their technology spend with that.

I think seeing organizations not necessarily take a crazy risk, but to step out and test the market with new products and new innovations, I think that's where we will take those steps. But having the staff, having the talent within your organization to support that and be effective of that is going to be key going forward.

Barnaby Nelson

Brilliant. And look, thank you for that. So I think for me the consistent theme of everything we've talked about is that, I think -- as I said at the beginning, to oversimplify legacy technology historically has just been a kind of a firefighting job that is very, very tactical. But what we're saying is that there's a much more fundamental and constant approach that needs to be taken to this.

I think that the proactive versus reactive, keeping up with industry solutions and ultimately just constantly building and maintaining the talent pool that's going to facilitate all of this, they're all, I don't think, factors that automatically come into the whole legacy tech conversations. So thank you very, very much for drawing it all together as clearly as you have.

So as I said at the beginning, anyone who wants to be able to download the key findings, they're available at vx.io. But Richie, Tracy, thank you so much for running through this. And yes, I'm sure anyone who wants to be able to reach out will be pinging you with questions about how to manage the next legacy problem that they've got and how to make the most of it. So thank you.