Five Hidden Costs of Legacy Systems

CIOs and tech leaders are faced with a constant battle between old and new. Technologies, and the processes which they serve, need to deliver what the business needs now and in the future, whilst driving efficiency. 

What is a legacy system?

A legacy system is more than just that which is no longer the newest or the best, but when a technology approaches official ‘end of life’ and the provider ceases to provide functional upgrades then it can be considered a legacy system. However, just because a technology is no longer being upgraded does not necessarily mean that it is no longer viable; what really matters is whether a legacy system can deliver on cost, security, agility, reliability and performance efficiency as well as a newer system or technology. To make a valid comparison, tech leaders need to understand the hidden costs of legacy systems and how they can be barriers to transformation.

1. Maintenance costs

Not necessarily a hidden cost, but the longer a legacy system has been in its end of life phase, the more expensive spare parts will become as they cease to be manufactured and stock dries up. Moving to cloud-based infrastructure removes the cost of maintaining and upgrading physical infrastructure, as the cloud provider takes it on as a cost of business. With cloud, you pay for what you consume and this variable cost model can significantly cut costs.

2. Environmental costs

Like upgrading to a new car, moving to new technologies (like the cloud) can open up significant efficiencies, both for your organisation and for the environment. Newer technologies will consume less power and generate less heat than a legacy system to do the same amount of work. In addition, modernising from legacy to cloud-based systems helps leaders to buy into environmental economies of scale. According to AWS, organisations running in the cloud generally use 77% fewer servers, 84% less power and run on a renewable electricity supply that’s 28% cleaner. 

3. Staff costs

Legacy systems also come with a shrinking pool of knowledge and skills, making it expensive to retain the staff and skills to maintain them and could lead to a larger staff base than you actually need. Engineering skills are always in high demand, so you may also find it difficult to recruit new staff to train up on legacy platforms as they are unlikely to want to invest time in picking up skills at the trailing end of the technology curve. 

4. Technical debt

Not being able to maintain staff skilled in legacy system operations leads to technical debt, as the skills gap in your organisation widens. This poses security risks, compliance issues and limits the agility of staff to respond to incidents when they inevitably occur. Moving to modern, cloud-based infrastructure, allows you to eliminate this technical debt and close the gaps in security and reliability with a resilient, modernised application. 

5. Opportunity costs

Maintaining legacy systems also limits your ability to take advantage of emerging technologies like machine learning, AI and IoT. Opportunity costs are hard to define, but if your competitors are providing better services to customers by grasping emerging technologies with both hands and you’re providing rigid, unreliable services by clinging to legacy systems then the long-term costs could be huge. 

There’s an opportunity cost for staff too - skills development and career advancement is often cited as the top reason for high turnover rates for Software Engineering roles, with “too much legacy stuff’ frequently brought up in exit surveys. Embracing modern, cloud-based systems which can support emerging technologies helps to create a culture of skills development and innovation that keeps your talented developers happy.

Overcoming barriers to transformation

Of course, there will always be a role for legacy systems particularly within highly regulated industries. However, with so many hidden costs and barriers to transformation it is essential that legacy systems are frequently audited, their hidden costs identified and decisions taken as to whether the system not only delivers the value you need it to now but how capable it is of delivering that value well into the future. 

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