UK firms warned of risks in relying on outdated technology
Business transformation specialists Essenkay have issued a warning that UK companies relying on legacy systems may be exposing themselves to significant security threats and operational inefficiencies.
Industry sectors including manufacturing, engineering, logistics, and professional services are increasingly under scrutiny as they continue to depend on older technology despite the availability of modern cloud-based solutions.
A recent study by the Financial Conduct Authority (FCA) highlighted the scale of the issue within the financial sector, revealing that 92% of financial services firms remain dependent on legacy technology with 78% of data still stored on on-premise systems. Essenkay contends that this is a widespread challenge not limited to financial services and becomes particularly pertinent as economic pressures mount on UK businesses.
Simon Langdown, Co-founder and Senior Financial Consultant at Essenkay, expressed concern at the ongoing reliance on outdated systems. "Legacy systems may seem to 'just work', but over time they quietly restrict business productivity, create blind spots in operations, and even open up cybersecurity vulnerabilities," Langdown explained. "As economic conditions tighten, continuing to operate this way isn't just inefficient, it's risky."
Operational inefficiencies
Langdown points out that one of the main issues with legacy systems is hidden operational inefficiency. In manufacturing, this can lead to inaccurate stock records. In logistics, companies may be hampered by fragmented supplier data. Legacy systems often force employees to use manual workarounds, which can cost time, introduce human error, and reduce overall productivity.
Cloud-based platforms such as Microsoft Dynamics 365 Supply Chain Management offer real-time departmental visibility, improved stock management, and reduce the need for manual intervention, according to Essenkay.
Data silos and reporting delays
Essenkay has also raised concerns about the risks of data silos developing in companies without a modern Enterprise Resource Planning (ERP) system. Critical business information can become dispersed across spreadsheets, local servers, and ageing software platforms, impeding consistent reporting and slowing decision-making.
"In contrast, Dynamics 365 centralises data access, helping leadership teams base decisions on a single version of the truth. Whether it's cash flow forecasting for professional services firms or production scheduling for manufacturers, centralising operational data can drive measurable gains in responsiveness and efficiency," Langdown added.
Cybersecurity concerns
The frequency of cyberattacks has increased, with 50% of UK businesses reporting security breaches annually according to government data. The recent breach at Marks & Spencer has reinforced awareness of these risks, especially in organisations still running legacy infrastructure. Technologies such as older barcode scanners, industrial IoT devices, and outdated financial platforms represent potential weak spots.
"Microsoft Dynamics 365, built within Microsoft Azure's secure cloud infrastructure, helps close these gaps through features like multi-factor authentication and automatic updates that keep defences current without increasing IT burden."
Missed business opportunities
Essenkay cautions that the use of obsolescent systems not only affects day-to-day operations but also results in missed opportunities for business growth. Access to advanced analytics and data forecasting tools is limited under legacy platforms, which means companies could be overlooking key patterns in customer behaviour or operational efficiency improvements.
Modern solutions, such as the AI-driven forecasting and predictive analytics available in Dynamics 365, help manufacturers lower inventory waste and support logistics providers in anticipating changes in demand across different seasons.
Essenkay claims that while writing off old systems can be perceived as a difficult and potentially costly process, the combined impact of hidden inefficiencies, fragmented data, and mounting security concerns can outweigh the investments required for transition.
Langdown said, "Legacy systems may seem to 'just work', but over time they quietly restrict business productivity, create blind spots in operations, and even open up cybersecurity vulnerabilities. As economic conditions tighten, continuing to operate this way isn't just inefficient, it's risky."
The consultancy further notes that the risks are compounded in organisations where digital maturity is low or IT resources are stretched thin, making the shift to secure cloud infrastructure increasingly relevant for business continuity and operational resilience.
