In 2025 legacy systems can quickly become a liability rather than an asset. They’re often slow, lack the necessary agility and scalability and can pose a challenge when companies experience market disruptions and increasing cyberthreats. In this sense, legacy system modernisation services have emerged as critical business initiatives for enterprises seeking to remain competitive, agile, and secure in an increasingly digital world. But how do you know when it's the right time to invest in modernising your legacy IT system?
This article explores the five key indicators that signal it's time to prioritise legacy system modernisation for your business. Understanding these signs can help you make timely decisions that prevent costly disruptions while positioning your organisation for future growth.
What are legacy system modernisation services?
Before diving into the warning signs, let's clarify what we mean by legacy system modernisation services. This process involves transforming outdated software systems into modern ones that leverage current technologies, architectures, and computing capabilities. The goal is to preserve valuable business logic while managing technical debt and enabling new capabilities.
According to recent industry reports, over 65% of enterprise organisations still rely on legacy systems for critical business functions, with many applications dating back 10-15 years or more. These legacy applications often become increasingly problematic as businesses evolve.
In case you want to explore the best practices for migrating applications to the cloud, read here.
Knowing when to invest in legacy system modernisation services is crucial for maintaining competitiveness and avoiding operational risks. Telltale signs that indicate it's the right time to undertake such modernisation include frequent system outages, high maintenance costs, difficulty integrating new technologies such as AI, and a noticeable decline in system performance. Recognising these indicators early can help organisations make timely decisions to modernise their systems and secure their technology infrastructure for future growth.
Let’s explore the top seven signs it’s time for you to invest in legacy system modernisation services.
Sign #1: Escalating maintenance costs
One of the most telling signs it's time to invest in legacy system modernisation is when maintenance costs begin to consume an increasingly disproportionate share of your IT budget. According to a report by Flexera, organisations spend up to 70% of their IT budgets on maintaining legacy systems, far exceeding the costs associated with modernisation efforts. This trend indicates that legacy systems are becoming more resource-intensive and less cost-effective over time, often resulting in longer downtimes and delayed innovations. As maintenance costs continue to rise, they divert funds from strategic initiatives, underscoring the urgency for modernisation to improve efficiency and reduce unnecessary expenditures. (Source: Flexera 2023 State of the IT Modernization Report)
The growing financial burden
Legacy systems typically require specialised knowledge to maintain and become more expensive over time as:
- Hardware replacement parts become scarce and expensive
- Vendor support for older technologies becomes premium-priced or discontinued
- Workarounds and patches accumulate, creating complex dependencies
- Troubleshooting takes longer due to poor documentation and complex code
As our Dreamix CEO Stoyan Mitov noted in a recent CIO article:
Legacy systems create performance bottlenecks that reduce engineering efficiency and slow service delivery. As Mitov points out, teams lose productivity to workarounds when infrastructure can't meet today's requirements for scale and speed.
Hidden costs beyond the budget
Oftentimes, the financial impact extends beyond direct maintenance costs. Legacy systems often necessitate manual processes to compensate for limitations, consuming valuable staff time that could be better dedicated to strategic initiatives. These hidden operational costs can go far beyond just maintenance invoices.
Manual processes, workarounds, and downtime not only drain staff valuable time and resources but also increase the risk of errors and security vulnerabilities. However, by investing in legacy system modernisation, companies can unlock savings beyond the visible budget, streamline operations, and free up personnel to focus on innovation and growth.
Read next: A PTV API integration into a road logistics TMS: challenges and opportunities
Sign #3: Security vulnerabilities and compliance risks
In 2024, the global average cost of a data breach was $4.88 million, which is a 10% increase over the previous year. Outdated legacy systems often lack the advanced security features found in modern platforms, making them more vulnerable to breaches. Because these systems are frequently exposed to outdated protocols and are not regularly updated, they present significant security risks. According to IBM Security's "Cost of a Data Breach Report 2023" the global average time to identify a breach is approximately 210 days, and to contain the breach is around 74 days, totaling about 284 days.
As cybersecurity threats evolve and regulatory requirements become more stringent, legacy systems increasingly pose significant risks to organisations.
Growing security concerns
Legacy applications often suffer from fundamental security weaknesses:
- Outdated security protocols and encryption methods
- Limited ability to implement modern authentication mechanisms
- Lack of regular security updates and patches
- Poor logging and monitoring capabilities
- Incompatibility with current security tools
A concerning statistic reveals that systems over ten years old are 3x more likely to experience a security breach compared to modern applications. So, when your security team expresses concerns about your cyber vulnerabilities, it might be high time to consider legacy system modernisation services.
Compliance challenges
Regulatory compliance presents another critical challenge for organisations with legacy systems. New regulations like GDPR and industry-specific requirements often demand capabilities that legacy applications simply weren't designed to provide:
- Granular data privacy controls
- Comprehensive audit trails
- Data portability features
- Right-to-be-forgotten capabilities
When compliance workarounds become increasingly complex or when you're unable to fully comply with certain regulations due to system limitations, legacy system modernisation becomes a necessity rather than an option.
Sign #4: Declining performance and scalability limitations
When your legacy systems struggle to maintain acceptable performance levels despite hardware upgrades, it signals fundamental architectural limitations.
Performance bottlenecks
Legacy applications often demonstrate these performance challenges:
- Steadily increasing response times
- Regular system timeouts during peak usage
- Growing database query execution times
- Batch processes that take longer to complete
- Inability to handle concurrent users efficiently
These issues typically stem from architectural approaches that predate modern computing paradigms. Many legacy systems were designed when processing power and storage were expensive, leading to optimisation decisions that don't align with today's computing environments.
Scalability constraints
Perhaps more concerning than current performance issues is the inability to scale effectively as your business grows. Legacy applications frequently hit hard limits in their ability to:
- Handle increased transaction volumes
- Store and process growing data volumes
- Support expanding user bases
- Extend to new business locations or channels
A manufacturing company discovered this limitation when their legacy inventory management system couldn't handle their expanding product lines and new distribution centers. Despite hardware upgrades, the system continued to slow down and occasionally crash during peak operations. Through application modernisation services, they implemented a cloud-native solution that automatically scaled with demand, eliminating performance bottlenecks and supporting their growth plans.
Sign #5: Talent shortages for legacy technologies
The human factor often becomes the ultimate tipping point in the decision to modernise legacy systems. Many legacy systems still rely on outdated programming languages like COBOL, which, despite their proven reliability, pose significant risks due to diminishing talent pools.
This talent shortage also creates an economic challenge: as skilled resources become scarce, they become increasingly expensive. Organisations find themselves paying premium rates for contractors or consultants with specialised knowledge of outdated technologies, further increasing the total cost of ownership for legacy systems.
Read next: Migrating the COBOL Legacy to Modern Systems and Their Challenges
The disappearing knowledge base
As technologies age, the pool of skilled developers and administrators familiar with them steadily shrinks:
- Experienced staff retire or leave the organisation
- Universities no longer teach older programming languages and systems
- Younger IT professionals focus on building skills in modern technologies
- Training resources for legacy technologies become scarce
Knowledge transfer risks
Perhaps most concerning is the concentrated risk when knowledge of critical systems resides with a small number of individuals. When these key team members leave, they take irreplaceable institutional knowledge with them, creating significant business continuity risks.
Legacy IT system modernisation services help address this challenge by transitioning systems to modern technologies with larger talent pools, reducing dependency on scarce technical skills and mitigating knowledge transfer risks.
Sign #6: Complex workarounds just to connect modern technologies
The engineering overhead required to maintain digital functionality becomes a clear modernisation signal when teams spend more time building workarounds than implementing actual business solutions. It’s usual for organisations with legacy systems to find themselves trapped in cycles of temporary fixes that become permanent infrastructure, consuming valuable technical resources and creating maintenance burdens that compound over time.
The workaround engineering burden
When legacy systems cannot connect to modern technologies, technical teams must create workarounds including:
- Data export workarounds: Nightly batch jobs that export legacy data as CSV files for manual import into modern applications
- Data translation solutions: Custom middleware platforms that translate between outdated data formats like EBCDIC and contemporary JSON structures
- Interface automation: Screen scraping applications that automatically read legacy terminal interfaces to extract information for modern systems
- Duplicate data entry: Dual system operations requiring staff to enter identical data into both legacy and modern platforms
- Authentication bridges: Homegrown single sign-on solutions because legacy systems cannot support modern authentication protocols
When organisations consistently dedicate significant engineering effort to building custom integrations, developing offline synchronisation capabilities for systems that cannot support real-time access, or creating external audit trail systems because legacy applications lack proper logging, the underlying infrastructure has clearly become a competitive liability rather than a business enabler.
This is precisely when legacy system modernisation services become essential - eliminating these costly workarounds by providing systems designed for contemporary connectivity requirements, enabling straightforward technology adoption without the engineering overhead that temporary solutions inevitably create.
For organisations seeking to make informed decisions about their modernisation journey, our comprehensive guide examines the seven primary legacy system transformation strategies: rehosting, refactoring, replatforming, rearchitecting, replacement, retirement, and retention, available for review here.
Sign #7: AI and digital Transformation readiness gap
Organizations worldwide are rapidly embracing artificial intelligence and digital transformation initiatives, with research showing that nearly two-thirds of companies now regularly utilise generative AI technologies.
However, many businesses discover that their legacy systems create insurmountable barriers to implementing these competitive advantages. When outdated applications lack the fundamental architecture required for modern digital tools, companies find themselves watching competitors leverage automation, machine learning, and real-time analytics while they remain stuck with systems that cannot support such innovations.
The AI Integration challenge
Legacy systems present fundamental obstacles to artificial intelligence implementation that extend far beyond simple compatibility issues. These outdated platforms were designed decades before cloud computing, machine learning, or real-time data processing became business necessities. Their monolithic architectures, proprietary data formats, and limited connectivity options make them incompatible with contemporary AI platforms that require flexible, API-driven environments for effective deployment.
Missing modern capabilities
Legacy systems often lack essential modern capabilities including:
- No RESTful APIs for real-time data exchange with AI platforms
- Incompatible data structures that cannot support machine learning algorithms
- Limited cloud connectivity preventing modern analytics integration
- Insufficient processing power for large-scale data analysis and AI/ML development
- Rigid architectures incompatible with microservices requirements
Legacy system modernisation addresses these challenges by providing cloud-native, API-first architectures specifically designed to support AI integration, enabling organisations to implement digital transformation initiatives without the technological barriers that outdated infrastructure inevitably creates.
Legacy system modernisation: Taking the first steps
If you've recognised several of the signs discussed in this article, it's likely time to seriously consider investing in legacy system modernisation services. The longer you delay, the more your organisation risks falling behind competitors who have embraced modern technologies.
The modernisation journey begins with a comprehensive assessment of your application portfolio to identify:
- Which applications deliver the most business value?
- Which systems pose the greatest risks?
- Which modernisation approach makes sense for each application?
- How to prioritise modernisation efforts for maximum impact?
By taking a strategic approach to legacy system modernisation, you can reduce costs, improve security, enhance performance, and position your organisation for future growth. The key is recognising the signs early and taking proactive steps before legacy systems become a critical business limitation.
Our comprehensive legacy system modernisation services transform outdated infrastructure into modern, secure, and scalable solutions
