The true cost of the old system is not just a single line item labelled ‘IT maintenance’ in the budget. According to analyses by Gartner and McKinsey, simply ‘keeping the lights on’ accounts for between 40 and as much as 80 per cent of the total IT budget; on top of this comes a technology debt that grows every year, higher incident costs and – increasingly – a bottleneck in AI deployments. For CFOs, this means that the right question is not ‘can we afford to modernise?’, but ‘how much does failing to do so cost?’. Below, we show how to calculate this cost and build a business case that is backed by figures, not intuition.
Why is the bill usually undercharged?
The biggest problem with the cost of legacy systems is that it is spread across numerous budget lines and is therefore consistently underestimated – often by 40 to 60 per cent. The budget shows the direct costs: licences, infrastructure and support contracts. However, it does not show the indirect costs, which can be even higher: lost productivity, downtime and missed opportunities. It is precisely these hidden items that mean the old system is more expensive than the spreadsheet suggests.
Four components that do not appear in the ‘maintenance’ line
Team productivity. Developers spend a significant proportion of their time patching up old code rather than creating value. According to McKinsey, the technology backlog accounts for around 40 per cent of IT budgets – money that is not being spent on development, but on maintaining the status quo.
A technological debt that is growing exponentially. If left unaddressed, this technical debt increases by around 20 per cent each year. Every year of delay increases the subsequent cost of modernisation, as every makeshift fix creates further points of friction.
The risk and cost of incidents. Systems no longer supported by the manufacturer accumulate vulnerabilities, and the cost of breaches can be significantly higher than for modern architectures. Added to this is regulatory pressure, including DORA, whose requirements simply cannot be easily demonstrated on an undocumented, legacy stack.
The cost of missed opportunities. This is the most difficult to measure, but often the largest item. Legacy systems slow down time-to-market and, increasingly, outright block AI deployments – a problem reported by most organisations with fragmented, outdated infrastructure.
Banking: operating costs versus scope for growth
In the financial sector, the impact is particularly severe. Industry data for 2025 indicates that in banking, around 43 per cent of the IT budget is absorbed by the maintenance of legacy systems, whilst only a smaller proportion is left for transformative technologies. In other words, the more an organisation spends on keeping its old system alive, the less it has left for what builds its competitive advantage – and the harder it is to meet new regulatory requirements without incurring additional costs.
How to build a business case for modernisation
A good business case for a CFO is based on four steps.
First, calculate the total cost of ownership (TCO), including hidden costs. This cannot be done without visibility—and that is provided by system inventory and documentation restoration (S*.doc). Without a system map, any estimate is just a guess.
Secondly, show the trend over time: maintenance costs are rising, whilst the value of the system is falling. This perspective is more compelling to the board than a one-off figure.
Thirdly, compare this not with a ‘major rewrite’, but with the cost and risks of a gradual modernisation, which spreads the effort over time and delivers value incrementally.
Fourthly, take into account the cost of inaction – lost opportunities and regulatory risks. This is what most often tips the balance, as it increases precisely when we do nothing.
Modernisation is a financial decision, not a technical one
The key shift in perspective is this: modernizing an old system is not an “IT project,” but a decision regarding capital allocation. A phased migration allows you to spread out the costs, deliver value in stages, and avoid the risks associated with a single major switchover. We usually start with an IT architecture audit, which provides a solid foundation for TCO, and then we design the modernization as a custom solution, tailored to the client’s risk profile and budget constraints.
