With technology moving at a rapid pace, you would be forgiven for thinking that many organisations are adapting their IT processes at a similar rate. However, many large businesses still operate on what would be deemed legacy systems; this covers any outdated computing system, hardware or software that is still in use.
This is more widespread than you’d think. If you work within an enterprise organisation, it’s highly likely you will have legacy applications somewhere running essential business processes. In fact, a 2024 study by the Financial Conduct Authority revealed that 92% of financial services surveyed still rely on legacy technology.
Many businesses are tethered to legacy applications that only run on obsolete versions of Windows. If you’re running day-to-day business-critical operations on these applications, the thought of upgrading or modernising them can be daunting. In many instances, organisations simply sidestep the problem or allow it to keep them awake at night.
Yet there is another way, one that empowers businesses to maintain their legacy applications and transport apps to the cloud without the apps even knowing it’s happened. It’s all about making old applications stable in modern operating system environments, akin to changing the rug under your feet without it even registering.
But by overlooking legacy systems entirely, organisations are at risk of racking up ‘hidden’ costs. These include growing technical debt, fines for non-compliance, and increased security risks. As hidden costs build, there is a consistent outlay of funds and potential for lasting damage to brand reputation and shareholder value.
These hidden costs illustrate why maintaining and optimising your legacy system is vital for your business-critical apps. Organisations can keep the value of their legacy, they just need to give it a lifeline.
Accruing technical debt
The more debt you accrue, the harder it is to pay off. It’s the same with technical debt: the more legacy systems are left to their own devices, the more outdated they become and the more costly they are to maintain – as these systems are often more inefficient and less reliable, they require frequent repairs. McKinsey labels technical debt as the “tax” an organisation pays to rectify existing issues, and its research says this tax amounts to a massive 40 percent of IT balance sheets.
For example, some organisations have a large number of Windows 2008 or 2012 servers running critical business applications, including multi-tier applications running a web server, app server and database server. These Windows 2008 and 2012 servers are out of support, raising operational resilience concerns, enhancing security risks and significantly increasing maintenance costs.
In the US, a 2020 report revealed that technical debt had “ballooned to over $2 trillion every year”, with inefficiencies also contributing to 23-42 percent of development time being wasted “because of that tech debt”. Crucially, these costs divert resources from more strategic investments.
Non-compliance and reputational damage
You might think you run a tight ship when it comes to compliance and regulatory processes. But if legacy systems are not maintained, then you may unwittingly be failing to comply with current data protection and privacy regulations. GDPR is a prime example of how legislation can significantly alter a firm’s technical requirements, and obsolete software might not support necessary encryption or data handling practices. By risking non-compliance, you could face fines and legal issues that impact your business operations and balance sheet.
But it’s not just a monetary cost on the line. Many firms are tied to sustainability goals and ESG programmes. As the climate crisis deepens, greener IT policies have become increasingly vital. Allowing your technical debt to grow and relying on older hardware can be less energy-efficient and increase your carbon footprint.
When software is more inefficient, performance can also be impacted. If systems are running slowly, customer satisfaction – especially with increased expectations in today’s digital world – can be dented and business lost. Technical debt can also limit the company’s ability to offer modern and customer-facing services and apps, contributing to possible revenue loss.
All of these consequences can damage an organisation’s reputation and directly impact business success and shareholder confidence.
Security vulnerabilities
It was only in July that a cyberattack caused a global outage for some of Microsoft’s services and products. This was actually an instance of a flawed update gone wrong by its cybersecurity firm CrowdStrike, showing the extra diligence required when upgrading systems. Yet with cybercrime dramatically increasing year-on-year and ransomware attacks a constant threat, obsolete systems present major security vulnerabilities.
As they lack the latest security patches and updates, they are at risk of cyberattacks and ransomware. And as these outdated servers might not be able to integrate modern security tools, technical debt also increases the risk of breaches.
Cloud infrastructure is also seen as a key security requirement in today’s business environment – software providers can make any security updates and patches remotely whenever they are needed. But technical debt can mean your applications are not cloud-compatible, resulting in a reliance on on-premise infrastructure that is harder and more costly to maintain and less scalable to suit business needs.
Don’t forget about your legacy
The fact something is a legacy system means it works. Legacy systems are not the problem – it’s how they are maintained and optimised. It’s possible to migrate old applications and systems on-premise and in the cloud without needing to alter the actual system. But the maintenance of legacy infrastructure is crucial to avoiding technical debt.
If technical debt builds, maintenance costs rise substantially and inefficient systems hamper productivity. Neglecting this software also means you could be falling foul of compliance requirements, failing to achieve ESG goals and failing to deliver against customer expectations, impacting your company’s bottom line and reputation. And in a world of surging cybercrime activity, obsolete systems can leave you vulnerable to far greater threats.
So, if you procrastinate on your technical debt, you could end up footing a bill with much higher hidden costs than you think.
Jon has been involved in software for over 20 years starting as a developer in the first versions of .NET through leading a development team, into performing business analysis, before moving into pre-sales activities. He has a focused understanding of Governance Risk and Compliance issues, particularly in heavily-regulated industries and working closely with customers to help them achieve the best results from their solutions. He joined Cloudhouse in 2022 to head up the pre-sales activities and provide support across the customer-facing departments. Outside of the office, Jon is interested in anything with an engine and wheels from motor-racing to tinkering with his cars and motorbike.