The Hidden Tax on Your Business
Every manufacturing SME has them: systems that "work" but haven't been updated in years. Spreadsheets tracking production. Paper-based quality records. Software that runs on a single ageing computer. Machines that can't connect to anything.
These legacy systems extract a daily tax from your business in ways that don't show up on any financial statement. According to research from Make UK and PwC, 85% of manufacturing SMEs recognise they need digital skills investment—but many struggle to make the business case or find the resources.
Where Legacy Systems Cost You
Time Lost to Workarounds
Think about how often your team:
- Re-types data from one system to another
- Hunts for information in filing cabinets
- Waits for the "one person who knows the system"
- Creates reports manually from scattered sources
- Corrects errors from manual data entry
Each instance takes time. Multiply by frequency, and you're looking at significant hidden costs.
Quality and Traceability Problems
Modern customers—especially automotive and aerospace—demand traceability:
- Where did materials come from?
- What process parameters were used?
- Who worked on it and when?
- What quality checks were performed?
Paper records and disconnected systems make answering these questions slow and uncertain.
Decision-Making Delays
When your data lives in different places and formats:
- Reports take days instead of minutes
- You discover problems after the fact, not in real-time
- Planning relies on guesswork and gut feel
- Opportunities slip by while you gather information
Vulnerability to People Changes
Legacy systems often depend on specific individuals:
- The person who built the spreadsheet
- The operator who knows the quirks of the old machine
- The office manager who remembers the filing system
When these people leave—and they will—knowledge walks out the door.
The true cost of legacy systems isn't the systems themselves—it's the opportunity cost of everything you can't do because of them.
Building the Business Case
Getting investment for "digital transformation" can be difficult. Here's how to make a compelling case:
Quantify Current Costs
Estimate conservatively and document your assumptions:
| Activity | Time/Week | Hourly Cost | Annual Cost |
|---|---|---|---|
| Manual data entry | 5 hours | £15 | £3,900 |
| Report creation | 3 hours | £25 | £3,900 |
| Information hunting | 4 hours | £18 | £3,744 |
| Error correction | 2 hours | £20 | £2,080 |
| Total | 14 hours | £13,624 |
Your numbers will vary—use this as a framework
Identify Quality Costs
Quality failures have hard costs:
- Scrap and rework
- Customer returns
- Sorting costs
- Lost customer relationships
- Audit failures and corrective actions
Even rough estimates can be substantial.
Calculate Opportunity Value
What could you do with better information?
- Respond to quotes faster (win more work)
- Identify problems earlier (reduce waste)
- Make better scheduling decisions (improve delivery)
- Understand profitability by product/customer (focus on what works)
Frame It Right
Different audiences need different messages:
For Finance: Focus on cost savings and ROI For Operations: Emphasise efficiency and reduced frustration For Quality: Highlight traceability and compliance For Sales: Show faster response and better customer service
Accessing Funding Support
You don't have to fund digital transformation entirely from your own resources.
Made Smarter
The Made Smarter programme offers:
- Free digital roadmap development
- Grants covering up to 50% of technology costs
- Leadership development programmes
- Intern funding for implementation support
Available in North West, North East, Yorkshire, West Midlands, and expanding.
Digital Skills Bootcamps
Government-funded bootcamps offer free or subsidised training:
- Manufacturing-specific digital skills
- Data analysis and visualisation
- Automation and programming basics
- Cloud systems and integration
Find providers through the National Careers Service.
Apprenticeship Levy
If you pay the apprenticeship levy (or can access levy transfers):
- Higher and degree apprenticeships in digital manufacturing
- Data analysis and business intelligence programmes
- Software development apprenticeships
Local Enterprise Partnership Funding
Many LEPs offer business support grants:
- Growth grants for capital investment
- Skills grants for training
- Innovation grants for technology development
Check your local LEP website for current programmes.
Funding programmes can help, but don't let the pursuit of perfect funding delay action. Sometimes doing something smaller, sooner, with your own money is better than waiting for the ideal grant.
Practical Digital Transformation Steps
Phase 1: Connect and Collect
Before replacing systems, focus on getting data flowing:
Quick Wins:
- Move spreadsheets to cloud (Google Sheets, Microsoft 365)
- Digitise paper records going forward (even photos of forms help)
- Connect systems using simple integrations (Zapier, Make.com)
- Install basic data capture on key machines
Investment Level: Minimal to low Timeline: 1-3 months
Phase 2: Centralise and Visualise
Once data is flowing, bring it together:
Actions:
- Implement central database for key information
- Create dashboards for production monitoring
- Build automated reports
- Establish single source of truth for critical data
Investment Level: Moderate Timeline: 3-6 months
Phase 3: Analyse and Optimise
With good data infrastructure, start deriving value:
Actions:
- Analyse production data for improvement opportunities
- Implement predictive maintenance basics
- Optimise scheduling based on actual data
- Develop customer and product profitability insights
Investment Level: Moderate to significant Timeline: 6-12 months
Phase 4: Automate and Integrate
With solid foundations, tackle deeper integration:
Actions:
- Full ERP integration if needed
- Automated quality systems
- Connected supply chain visibility
- Advanced analytics and AI applications
Investment Level: Significant Timeline: 12+ months
Skills Development Strategy
Technology without skills is useless. Develop your team alongside your systems:
Identify Champions
Find the people who:
- Show curiosity about technology
- Already create spreadsheets and workarounds
- Ask "why do we do it this way?"
- Enjoy learning new things
These are your transformation champions.
Invest in Their Development
Provide:
- Time for learning (not just expectations)
- Access to training resources
- Authority to experiment
- Recognition for progress
Spread Knowledge
Champions shouldn't hoard expertise:
- Pair training on new systems
- Documentation requirements for new tools
- Regular knowledge-sharing sessions
- Handover planning for critical capabilities
Plan for the Future
As your digital capability grows:
- Consider new roles (data analyst, automation technician)
- Update job descriptions to reflect digital expectations
- Include digital skills in recruitment criteria
- Build continuous learning into the culture
Avoiding Common Pitfalls
Buying Technology Without Clear Purpose
Don't buy software because it looks impressive or a salesperson is persuasive. Every investment should solve a specific problem or enable a clear opportunity.
Trying to Change Everything at Once
Transformation is a journey, not an event. Attempting too much simultaneously overwhelms people and systems.
Underestimating Change Management
Technology is often the easy part. Getting people to actually use new systems and abandon familiar workarounds requires sustained effort.
Expecting Immediate Results
Benefits from digital transformation accumulate over time. Set realistic expectations and measure progress, not just outcomes.
Ready to move past legacy systems? We help manufacturing SMEs plan and implement practical digital transformations that deliver real results.
Book a consultation to discuss your specific challenges and opportunities.
