Legacy systems rank among the top constraints on transformation, often on par with security or lack of strategy. They are systems that have endured over time but are marked by outdated architecture, inefficiencies, security vulnerabilities, and escalating maintenance costs. Organizations will spend as much as 40%of their IT budgets merely maintaining those burdensome systems. This is precisely the challenge John McNamara confronts in his work: balancing what must stay stable with what must evolve.
McNamara’s perspective is shaped by experience in both entrepreneurial and regulatory environments. As CMO of San Francisco-based cloud startup LiveVox, he helped steer a lean startup through the financial crisis by building revenue faster than the company burned cash. At the Consumer Financial Protection Bureau (CFPB), he guided teams through multiple existential challenges, including attempts to shut the agency down. “Whether in government or a startup, the task is the same,” he says. “You have to find ways to adapt systems and people to meet changing demands without losing sight of the mission.”
The Legacy System Trap
Many executives wrestle with the fundamental challenge of maintaining the reliability of legacy systems while embracing digital transformation. Reflecting back on the ‘Midnight Blizzard’ attack on Microsoft, McNamara understands the risks of clinging too tightly to outdated infrastructure.
“I have been punished and imprisoned by legacy systems to the point that I’m suspicious of them,” he says.
Legacy systems were often designed to execute one function extremely well, such as ensuring accurate balances in banking. Over time, however, they became gatekeepers for other processes, creating dependencies that can stifle innovation. “Even very sophisticated institutions allow their core processors to dictate how the rest of the business evolves. That’s where growth gets trapped.”
In contrast to the plug-and-play model common in consumer technology, the lack of flexibility found in enterprise systems risks locking organizations into rigid structures, slowing innovation. This rigidity is exactly what leaders must challenge if they want growth that is both sustainable and adaptable. “When I was CMO at LiveVox in 2008, I needed marketing automation. I just pulled out my credit card, signed up for HubSpot, and we were running. I never had to touch the core financial systems. That’s how it should work.” Just as iPhones now serve as hubs for thousands of interchangeable applications, McNamara believes enterprise systems should allow seamless integration of best-in-class tools with low/no barriers to entry and exit.
Three Strategies for Sustainable Growth
If the benefits of modernizing are clear, why do so many leaders hesitate? McNamara points to fear. “These systems own the most core functions of a business, and they’ve survived countless audits. Throwing that up in the air is one of the scariest things a leader can imagine.” However, change is coming even for the most entrenched systems. In financial services, core processors are starting to introduce cloud abstractions that make it easier to layer new services on top of old ones. “It’s an early step,” McNamara says, “but it’s moving us toward a future where the core function remains intact while everything else plays nicely with it.”
McNamara distills his experience into three strategies that help organizations modernize without jeopardizing stability.
- Roll before you roll: Test new systems in controlled environments rather than rip-and-replace. At LiveVox, McNamara coined “rust and retire,” running new tools alongside existing ones before scaling. “If a systems conversion feels existential to the business, something is already wrong,” he says.
- Scenario planning: Prepare for multiple outcomes—best, worst, and most likely—and always ask, “is the juice worth the squeeze?”
- Challenge the status quo: Comfort can hide risk, which is why McNamara cautions against betting on hype, pointing to AI as an example. “AI is the star of the party right now, but in time it will just be infrastructure, like cloud computing. Leaders must distinguish between incremental and transformative change.”
Lessons from Both Sides
Legacy systems should enable, not inhibit, progress. Sustainable growth comes from thoughtful experimentation, planning, and a willingness to challenge outdated assumptions. From his time LiveVox to his leadership at the CFPB, he has seen how organizations succeed, or falter, when confronting technological and structural change. “People are risking the farm when they don’t have to. Growth doesn’t mean reckless bets – it means building resilience by knowing when to hold on and when to let go.”
Follow John McNamara on LinkedIn for more insights or visit his website to learn more about this current work.
