The costs of legacy systems, $370 million lost annually

The global enterprise landscape is fraught with the escalating costs of outdated systems, leading to substantial financial wastage. An insightful study by Pegasystems Inc., often branded as the Enterprise Transformation Company™, reveals startling statistics: approximately $370 million is lost annually across enterprises due to inefficiencies in modernising legacy systems.

A detailed survey conducted by Savanta involving over 500 IT decision-makers worldwide sheds light on these challenges. It was found that nearly $134 million is wasted annually on legacy transformation projects hindered by outdated methodologies. This highlights one of the major contributors to financial losses stemming from technical debt.

The analysis noted other significant expenses, including $58 million spent on transformation initiatives that failed due to obsolete systems and $56 million on maintenance and integration with legacy technology.

The research also gathered opinions on technical debt management and dependency on legacy structures:

• Seventy-eight percent of respondents agreed that resources spent on older systems could be better allocated to projects enhancing business effectiveness.
• A significant number found removing legacy support too time-consuming and not prioritised by management.
• The dependence on legacy applications remains strong, with 63% relying extensively on outdated systems daily.

Interestingly, only 9% of surveyed enterprises believe they have successfully replaced or retired a substantial number of legacy applications, indicating the persistence of technical debt issues.

Pega's insights are further enriched by examining intangible costs, often overlooked in standard assessments. Leveraging its experience, Pega assigned estimated values to various legacy transformation challenges, providing an average financial impact estimate based on industry benchmarks and revenue scales.