Technical debt has been a long-running problem for enterprise IT leaders, and new research shows it’s costing hundreds of millions of dollars each year.
A study from Pegasystems, conducted by research firm Savanta, found an array of challenges caused by technical debt is severely hampering IT modernization efforts.
Legacy transformation projects account for the largest financial hit recorded by enterprises, the study found, equivalent to nearly $134 million globally each year.
These projects are a laborious process, Pegasystems noted, requiring IT teams to overhaul outdated and often resource-intensive systems.
The time-related costs associated with legacy transformation projects was also a major factor in financial losses. Many of these projects fail, the study said, costing around $58 million a year on average.
Meanwhile, simply maintaining legacy systems costs an estimated $56 million a year.
Don Schuerman, chief technology officer at Pegasystems, said the study highlights the steep costs enterprises face if they fail to modernize systems.
“Too few enterprises today consider the hundreds of millions of dollars they hemorrhage every year because of both the direct and indirect financial impact of inefficiencies caused by legacy technologies and technical debt,” he said.
“It’s no longer acceptable to depend on systems that are no longer fit for purpose, take valuable resources to replace, and which could be the difference between your organization’s success or failure.”
A “waste of time, effort, and money”
IT leaders are going to great lengths to both cut down on and simply maintain technical debt, according to Pegasystems, and it’s draining resources.
Indeed, 78% of respondents described the process as a “waste of time, effort, and money,” noting that resources could be better spent on other projects that make the business more effective and efficient.
When asked why they haven’t already scrapped support for legacy systems, more than one-third (36%) said it was too time-consuming to do so. Similarly, more than a quarter (29%) of respondents said they were too busy “fire-fighting” problems caused by these systems to address the root causes.
Notably, one-quarter said executives at their company did not view the issue of technical debt as a priority.
Dangerous dependencies
Another key finding from the Pegasystems survey centered around continued dependency on legacy systems. Simply put, many businesses just can’t afford to modernize.
Around two-thirds (63%) of respondents said they rely on anywhere between one and 10 legacy applications in both the front and back end every day.
More than one-quarter (29%) also depend on anywhere up to 20 legacy applications. This the acute challenges faced when moving to more modern tech stacks, given many business-critical applications rely on these outdated systems.
These difficulties are backed by the growing number of failed transformation projects, the study noted. Fewer than one-in-ten said their efforts to overhaul legacy systems have even put them in a position to retire or replace these applications.
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