APIs: A Bridge to the New Decade
Although digital transformation efforts are well underway and SaaS is a proven paradigm, legacy solutions are still among us. They manifest via mainframes, older versions of ERP systems and internally developed core platforms. These systems seem to survive many rounds of digital transformation efforts and maintain a persistent following. Although there are often solid reasons for their retention, it can create problems for some departments as they try to modernize their processes and leverage new capabilities.
Artificial intelligence and machine learning (AI/ML)-enabled features are gaining traction and real-time processes are here to stay. Unfortunately, many legacy systems do not support or even have a notion of capabilities that are needed in 2022.
Legacy Systems Persist
Legacy systems are not unique to a handful of companies or a segment; they are commonplace in many mid- to enterprise-level companies. Allied Market Research found that the mainframe market is experiencing moderate growth, while 92% of BMC survey respondents see mainframes as a platform of long-term growth.
On other hand, ERP systems that have been released more than two decades ago are also quite present. SAP has extended support of its Business Suite 7 until 2027 with optional extension until 2030. And the announcement from SAP is telling as that can be used as an approximation to just how prevalent similar systems are.
That may seem like bad news for some departments. The finance or BI team might be hoping for a new core platform and shed the many issues of legacy systems. Or the change may be coming, but not until 2024/2025.
Unleashing API Capabilities
The good news is that there is a path forward for shared services—especially finance teams—in the form of APIs. As the old adage goes, “What is the best way to eat an elephant? One bite at a time!”. Instead of a core replacement, the other way around is to find new bolt-on technology that replaces and enhances the capability. Although legacy systems may not have the latest AI-enabled feature, speed, or user friendliness, they do possess troves of data that can be piped into new services. One of the most efficient ways of doing this is through API-enabled service.
Legacy systems may already have features in place that enhance the user experience, but they usually require a manual step to connect multiple workflows. Or, at the very least, the user has to have two screens open to complete the action. Using API connectivity between the two systems can close that gap, automate the data exchange and pass on key actions that both systems need to be aware of.
An example of this could be supply chain finance. Although the core system may know a lot about accounts receivable (AR) and accounts payable (AP), it probably doesn’t know about reverse factoring or dynamic discounting. The core system can pass the AR and AP data to the provider, and the provider system can complete all the necessary actions and return necessary information to close out the right accounts. The legacy system does not actually have the capability, but it has been integrated with an outside system that does. Although this process can occur manually, APIs can take that one step further and complete the right actions programmatically. Similar examples can be extended to forecasting and reporting tools. Yes, it could be done manually, with exports and uploads. But the API connectivity simply extends it.
This capability extension provides a large quality of life improvement and lets the company realize the value of those tools. It also reduces pressure on replacing the core system and extends its lifespan by a bit. This is true for legacy systems, as well as new systems. If the missing capability can be patched with an external solution, it is considered a win. API connectivity simply allows the extension another step forward by automating it.
Building a Bridge to APIs
Most treasury and finance departments are still using file transfer protocol (FTP), given its compatibility with ERP systems. But APIs can also work with legacy systems. In some cases, middleware might be needed to bridge the gap, but the old system can remain in place; there is no need to move to a new one. That’s the beauty of APIs; regardless of the age of your system, they can provide modern, real-time connectivity.
And for those treasury departments that want to continue using FTP alongside APIs, that’s totally feasible, as Kyriba supports both technologies incredibly well and connects to nearly 1,000 banks. APIs may replace FTP in some areas, but it can also enhance and augment it in others.