Keep or Upgrade? The Hidden Cost of Legacy System Maintenance

In 2021, T-Mobile suffered a crippling data breach in which data of over 76 million customers was compromised. The telecom company paid a $31.5 million fine last year for neglecting the security measures. Although T-Mobile has paid its settlement amount and invested in cybersecurity, its reputation remains has yet to recover. More importantly, the damage it caused to the users for exposing their personal information is irreparable.

According to experts, the leak happened largely because of weak infrastructure and was completely preventable. The incident underlined one of the more pervasive issues in modern IT: the risks associated with relying on outdated systems.

Legacy systems are old software and hardware platforms still in use today. These systems have served organizations well for many years but are becoming increasingly difficult to maintain and adapt to today’s digital environment.

Despite all these issues, there are several reasons why such systems remain popular:

Reliability: They’ve been battle-tested over time and trusted for stability.

Familiarity: Employees know how to work with them; thus, no additional training is required.

Sunk Cost Fallacy: Companies have invested years in building and customizing them; replacement seems expensive and complicated.

In other words, companies hold onto old software for the same reasons that people stay in unsatisfying relationships or hang onto a toxic workplace: they ignore the costs they pay for holding onto what doesn’t serve them anymore.

As it shows in the example of T-Mobile, such systems’ hidden costs most often outweigh the benefits.

The True Cost of Legacy System Maintenance

Let’s take a closer look at these expenses, so you can decide whether it’s time to let your legacy system go or if it can continue to serve you with some minor changes.

1. Financial Burdens: The Direct and Indirect Costs

To begin with the obvious, maintaining legacy systems can burn a significant hole in your balance sheet. These systems require constant upgrades, patches, and fixes, which accumulate substantial costs over time. Legacy systems are less automated and less efficient compared to modern alternatives, leading to higher operational expenses. Companies often find themselves trapped in a cycle of pouring money into outdated technology just to “keep the lights on.”

Another major expense is the human resource requirement for maintaining such systems. These systems often rely on outdated programming languages and architectures that few professionals are trained to manage today. This scarcity of expertise drives up hiring and consulting costs. Additionally, as experienced specialists retire, companies face further expenses in finding or training replacements to keep these systems operational.

As a result, U.S. companies spend an estimated $85 billion annually just to keep outdated tech running. While the upfront cost of upgrading may seem daunting, the hidden expenses of maintaining legacy systems often make modernization the smarter financial choice in the long run.

Read our guide on legacy transformation to learn about the possible alternatives.

2. Productivity Drag

Legacy systems don’t integrate with many of today’s widely used tools and work frames. Most of them require manual workarounds or custom solutions to support basic tasks, which slows down processes and creates bottlenecks. These systems weren’t built for the level of cross-functionality that today’s businesses demand, making it difficult to streamline operations or add new features.

This lack of integration directly impacts employee productivity. Teams spend more time navigating clunky interfaces, dealing with downtime, or finding ways to bridge gaps between systems. All the time spent on these glitchy systems is most certainly not spent on developing new ideas, creating enjoyable customer experience or decreasing operational downtime.

3. Security Risks

As noted earlier, legacy systems are a significant organizational security threat. Most of them do not have the necessary updates and patches to protect against current cyber threats. Hackers usually target vulnerabilities in legacy software, knowing full well that the systems are less likely to be effectively defended. The longer a system goes without updating, the more vulnerable it becomes to being exploited, as in the case of high-profile breaches such as T-Mobile’s, in which decaying infrastructure contributed to the security failure.

Apart from the direct security risks, legacy systems create massive compliance issues. Many sectors are highly regulated by rules that demand up-to-date technology be used in the protection of sensitive data. Unfortunately, these are often not satisfied by legacy systems, and thus businesses are exposed to heavy fines and lawsuits. Further, non-compliance could lead to reputational damage as customers start to lose confidence in a business’s ability to secure their data.

Cyberattacks, along with regulatory penalties, may drain companies of millions.

4. Opportunity Costs

Opportunity cost means losing other opportunities when one alternative is chosen. When you choose to let the things be while they’re not broken, your opportunity cost looks like this:

Missing on higher ROI:
Spending resources to fix and maintain outdated systems means less money/time for things that could make more profit, like new products or services. For example, instead of patching old software, a company could invest in AI tools that cut operational costs. Fixing old systems costs a lot but doesn’t add value.

Losing the chance to become industry leader:
Your competitors with newer systems will provide faster, better customer experiences and services that your system can’t handle. The longer you’ll wait, the longer(and harder) it will take to catch up with them.

Making it harder to scale:
For example, if your system can’t manage more online orders there’s no point in investing in marketing and attracting more clients.

5. Customer and Employee Experience

Customers expect fast, seamless, and personalized experiences. There’s plenty of research online showing how many factors impact one’s decision to make a purchase. Another second on loading time can be the reason behind a qualified lead changing their mind and shopping somewhere else instead. Poor responsiveness, decreased functionality, and fractured services will inevitably frustrate customers. We have all been there.

The same is true for the employees. Clunky interfaces, frequent crashes, and inefficient processes weigh on productivity and overall job satisfaction. Career-oriented people also want to make sure they have experience with the newest tech to stay relevant on the job market. Since job satisfaction translates into loyalty and productivity, legacy systems might translate into poor results and quiet quitting.

What Does This Mean for You?

When deciding whether to maintain or upgrade your legacy systems, the first step is to assess the Return on Investment (ROI) of modernization. Start by comparing the ongoing costs of maintaining outdated systems—such as repairs, needed manpower, and inefficiencies—with the potential savings from upgrading.

A full system replacement can feel overwhelming and too costly, but it doesn’t have to happen all at once. There’re many ways that allow for gradual upgrades while minimizing operations downtime. You might consider consulting to see what’s the best thing to do in your situation.

IT consultants can provide valuable insights into your current systems, recommend cost-effective upgrades, and guide the migration process.