Your CFO just asked a simple question: “What’s our annual spend on maintaining those legacy applications?”
The number you provide will only tell part of the story. Because like an iceberg, the true cost of maintaining legacy applications hides beneath the surface, and industry research reveals it’s far larger than most executives realize.
According to research, organizations spend between 60-80% of their IT budgets on maintaining existing systems, leaving only 20-40% for innovation and growth initiatives. This isn’t just a technology problem; it’s a business crisis that compounds every year you delay addressing it.
The Trillion Dollar Maintenance Trap
Researchers forecast worldwide IT spending will total $5.7 trillion by the end of 2025, with a staggering portion consumed by maintaining aging infrastructure. But the real shock comes when you analyze where that money actually goes.
The Visible Costs Everyone Tracks:
- Hardware refresh cycles: Legacy hardware maintenance costs increase 10-15% annually after warranty expiration
- Specialized support contracts: Premium support for end-of-life systems can cost 50-200% more than standard support
The Hidden Costs Destroying Your Bottom Line:
The Stripe Developer Coefficient Report revealed a shocking statistic: For an organization with 25 developers earning an average of $120,000 annually, that’s $990,000 in lost productivity every single year.
But it gets worse. McKinsey’s research on developer productivity shows that developers working with legacy applications are less productive than those using modern platforms.
This isn’t just about coding speed, it’s about:
- Longer testing cycles due to complex dependencies
- Extended debugging time in poorly documented systems
- Inability to use modern development tools and practices
- Mental fatigue from working with outdated technology
The Talent Crisis Multiplier Effect
The scarcity of legacy system expertise creates a vicious economic cycle. Recruiters and salary data sources in 2025 report that specialized legacy developers can command salary premiums, especially in regions or industries where legacy skills are scarce. Consider these talent-related costs:
The Aging Workforce Reality:
- The average COBOL programmer is now 58 years old
- According to industry estimates, the typical RPG programmer will be around 70 years old by 2025, with nearly all RPG talent expected to retire by 2030.
- Due to most universities dropping COBOL from curricula, estimates suggest that fewer than 2,000 COBOL programmers graduated worldwide in 2024, reflecting the severe decline in formal academic output for this skill.
The Knowledge Transfer Crisis: 42% of critical business knowledge is at risk when key personnel retire. But for legacy systems, this number jumps:
- A large majority of legacy applications lack adequate documentation
- Most systems only have 1-2 people who truly understand them
- Institutional knowledge accumulated over decades can’t be easily transferred
Security: Where Legacy Costs Become Existential Risks
IBM’s Cost of a Data Breach Report delivered a sobering finding: organizations with extensive legacy infrastructure experience breach costs higher than those with modern systems. With average breach costs now at $4.4 million.
The true cost of legacy system compliance extends far beyond maintenance. According to PwC, financial institutions spend 75% of their IT budget maintaining existing systems. Gartner reports that companies using legacy systems are 40% more likely to experience compliance failures.
Meanwhile, organizations that invest proactively in compliance and automation save millions annually in avoided fines and legal costs, with PwC noting that even modest automation improvements can reduce compliance costs by 10%.
The Compound Effect: How Delay Multiplies Costs
Technical debt isn’t static, it compounds. Technical debt grows at approximately 20% annually if left unaddressed. This means:
- A system with $1 million in technical debt today will have $2 million in less than 4 years
- Integration complexity increases exponentially, not linearly
- Each year of delay increases eventual modernization costs by 20-25%
Market Impact: The Competitive Spiral
Digital transformation research reveals the growing competitive gap:
- Customer acquisition costs have increased by 60% over five years, with companies investing in digital sales achieving 30% higher acquisition efficiency.
- Product launch delays can be devastating – a 9-12 month delay can cost 50% of anticipated revenues in electronics, while even 6-month delays give competitors crucial time to capture market share.
- Digital transformation leaders achieve 55% higher productivity and can reduce operational costs by 20-30%.
- A single 12-month automotive launch delay can cost up to $200 million
- Partner ecosystem participation and integration capabilities increasingly determine competitive advantage
- Companies delaying digital transformation face compounding disadvantages as the gap between digital leaders and laggards continues to widen.
Industry-Specific Legacy Burden
Financial Services: Industry research shows banks spend 70-75% of their IT budget on maintaining legacy systems. The opportunity cost is significant: 43% of banks still rely on COBOL technology a language that was introduced in 1959, while 75% of banks struggle to implement new digital solutions due to legacy infrastructure. This prevents them from meeting customer expectations – over 40% of customers expect instant account opening, yet only 37-40% of banks can deliver this basic service.
Healthcare: Industry research shows healthcare organizations spend almost half of IT budgets on maintaining legacy systems. Patient care delays attributed to legacy systems cost the industry billions annually in lost productivity, with clinicians wasting 45 minutes daily on outdated communication systems. Additionally, 73% of healthcare providers still operate legacy information systems.
Manufacturing: Unplanned downtime costs manufacturers up to $260,000 per hour, with 82% of companies experiencing such disruptions in the past three years. In automotive manufacturing, downtime can cost between $22,000 and $50,000 per minute. A global survey of 3,200+ plant maintenance leaders revealed two-thirds experience unplanned outages at least monthly, costing an average of $125,000 per hour worldwide. Deloitte case studies confirm the opportunity: predictive maintenance initiatives cut unplanned downtime by 80%, saving approximately $300,000 per asset.
The Path Forward: From Cost Center to Value Driver
The evidence is overwhelming: maintaining legacy applications isn’t just expensive—it’s economically unsustainable. IDC warns that by 2026, more than 90% of organizations will be adversely affected by IT skills shortages, resulting in approximately $5.5 trillion in cumulative losses due to delayed products, diminished competitiveness, and lost business.
But here’s what forward-thinking organizations have discovered: futurization doesn’t mean starting over. With the right approach and technology partner, you can:
- Preserve decades of embedded business logic
- Maintain operational continuity during transformation
- Leverage existing IT investments while building for the future
- Transform incrementally without “big bang” risks
The question isn’t whether you can afford to futurize your legacy applications, it’s whether you can afford not to. Every month of delay adds compound interest to your technical debt, widens the talent gap, and hands competitive advantage to more agile competitors.
Let’s Calculate Your True Legacy Costs
The first step in breaking free from the legacy cost spiral is understanding your true maintenance burden. This includes not just the obvious line items in your IT budget, but the hidden costs in productivity, opportunity, and competitive position.
We specialize in helping organizations futurize their IBM i applications while preserving their valuable business logic and maintaining operational continuity. Profound AppEvo has helped many organizations reduce maintenance costs while accelerating innovation.
Ready to discover the true cost of your legacy applications and explore a path to futurization? Contact our experts at futurization@ProfoundLogic.com to dive into your futurization opportunities.
About the Analysis: This industry analysis aggregates research from leading technology advisory firms, industry analysts, and academic institutions to provide a comprehensive view of legacy application maintenance costs. All statistics and findings are based on published research and industry reports from 2021-2024.