The Real Cost of Aging IT Systems, Part One: How Outdated IT Burdens Budgets
IT leaders know aging technology systems eat away budgets, but what are the real and hidden costs to keep these critical systems going? How do you account for the budget impact of aging IT?
In this article, part one of our two-part series, The Real Cost of Aging IT Systems, we highlight the budgetary impact of aging systems. In part two, we lay out the specific costs (clear and hidden) incurred by organizations that maintain these systems.
Technology is evolving faster than ever; meanwhile many organizations still rely on aging core systems to support their needs.
Older IT systems, also known as legacy systems, are not merely defined by their age. Legacy IT systems are business-critical software or application systems that “significantly resist modification,” and in which any “failure can have a significant impact on the business.”
Like an antique car, systems 20, 30, or 40 years old may continue to run, but are fragile and expensive to keep. Tried and true can provide value, but modern needs are rarely supported by aging technology.
More than more 10 years ago Gartner reported that 60-80% of IT budgets were spent simply “keeping the lights on.” We know these operations and maintenance costs provide a lower return on investment than executives and shareholders would like, but even today’s CIOs struggle to allocate budget to new initiatives due to high O&M costs.
A recent American Council for Technology (ACT) and Industry Advisory Council (IAC) report found legacy systems across federal agencies consume around 75% of operations and maintenance funding, and as much as 90% at certain agencies. While the commercial sector has outpaced government in technology innovation, the sheer pace of innovation and explosion of data in the last five to 10 years may mean that fast is not fast enough.
Data creation is exploding, but legacy systems remain ubiquitous and continue to power the business world. It is estimated that close to $3 trillion in daily commerce continues to run through 60-plus year old COBOL systems.
