Last update: 24 Jul 2025
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2025 Legacy Code Stats:
Costs, Risks & Modernization
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Key Legacy Code Stats
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~70% of software in Fortune 500 companies is over two decades old (McKinsey)
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U.S. accumulated technical debt has reached $1.52 trillion in 2022 (IT-CISQ 2022 Report)
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70% of banks globally still rely on legacy systems as of 2025 (Avato)
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Over 60% of U.S. hospitals operate critical applications on legacy software (HIMSS Analytics)
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95% of ATM swipes are processed using COBOL-based systems (Reuters)
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Just ten critical federal legacy systems cost $337 million annually to operate, consuming roughly 80% of those agencies' IT budgets (GAO Report)
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Healthcare data breaches cost $9.77 million on average, highest across all industries (HIPAA Journal)
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60% of organizations using COBOL report that finding skilled developers is their biggest challenge (MoldStud)
Executive Summary
Legacy systems continue to plague organizations across critical sectors, creating a cascade of challenges that extend far beyond simple maintenance costs. From financial institutions processing billions in daily transactions on decades-old COBOL systems to hospitals managing patient care with outdated software, the pervasive nature of this challenge demands immediate attention.
This comprehensive analysis examines the scope, impact, and consequences of legacy system dependence across finance, healthcare, government, and enterprise sectors. Drawing from recent industry reports, government assessments, and real-world case studies, we present a clear picture of both the risks of inaction and the proven benefits of strategic modernization.
Key Points
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Financial Drain: Legacy system maintenance creates a significant financial drain, consuming up to 80% of IT budgets in some sectors and stifling innovation.
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Amplified Security Risks: Outdated systems present a critical security risk, with legacy infrastructure being a prime target for costly cyberattacks.
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Growing Talent Gap: A shrinking talent pool for legacy languages like COBOL threatens the long-term sustainability of critical systems.
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Operational Drag: Reliance on old technology hinders efficiency, slows innovation, and complicates regulatory compliance.
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Risk-first modernization. Address security, performance, and cost blockers before they escalate.
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Clear results. Measurable progress and open communication every step of the way.
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The Pervasive Challenge of Legacy Systems
Defining the Problem
Legacy systems are broadly defined as outdated computing software or hardware that remains in use despite its age. These systems often form the backbone of critical operations in many organizations, having been implemented years or even decades ago.
Their enduring presence is typically due to their deep integration into business processes, the high cost and risk associated with replacement, and the "if it ain't broke, don't fix it" mentality. However, these systems often lack modern features, are difficult to maintain, and may no longer be supported by vendors.
Impact
U.S. poor software quality cost (2022)
$2.41 trillion
U.S. accumulated technical debt
$1.52 trillion
U.S. Federal IT budgets on maintenance
Roughly 80%
Sources: IT-CISQ 2022 Report, GAO Report
"The cost of poor software quality in the US has grown to at least $2.41 trillion in 2022, with accumulated software Technical Debt reaching ~$1.52 trillion. Technical Debt has become the biggest obstacle to making any changes to existing code bases."
— IT-CISQ, The Cost of Poor Software Quality in the US: A 2022 ReportCase Study: U.S. Navy's Windows XP Reality
When critical defense systems depend on aging software, delaying migration can get expensive. In 2015, the U.S. Navy's Space and Naval Warfare Systems Command (SPAWAR) awarded Microsoft a $9.1M contract for Premier + Custom Support covering approximately 100,000 systems running Windows XP, Office 2003, Exchange 2003, and Server 2003 through July 12, 2016.
The Navy planned to complete migrations by mid-2016, but included contract options to extend support through June 2017 in case the schedule slipped—bringing the potential contract ceiling to approximately $30.8M if fully exercised.
$9.1M
Base contract (custom security support for XP & other legacy MS products, through Jul 12 2016)
Contract ceiling ~$30.8M if options exercised through Jun 2017
Sources: Computerworld, Defense One
Enterprise Application Complexity
897
Average applications per organization
28%
Applications actually integrated
55%
Organizations find integration difficult
Organizations struggle with application sprawl and integration challenges, creating data silos and operational complexity
Legacy Systems in the Financial Services Industry
Prevalence in Global Banking
Legacy technology remains deeply entrenched in the global banking sector. As of 2025, a striking 70% of banks globally continue to rely on legacy banking systems. Over 43% of global banking systems continue to utilize COBOL, a programming language developed in the late 1950s.
COBOL's Enduring Presence
- 95% of ATM swipes processed using COBOL-based systems
- 220 billion lines of COBOL code still in operation
- Powers majority of daily financial transactions worldwide
Sources: Reuters, TechChannel, Avato
70%
Banks reliant on legacy systems
43%
Using COBOL systems
95%
ATM transactions on COBOL
Financial Burden
70%
IT budgets on legacy maintenance
Banks spend the majority of their IT budgets on keeping outdated systems running
$36.7B
Global payment systems spending (2022)
Projected 2028: $57B
Sources: The Fintech Times, The Fintech Times
European Banking: A Regional Focus
60% of European firms indicated an increase in labor costs in the first quarter of 2025, reflecting growing cost pressures that underscore the urgent need for more efficient operations.
The EU's Instant Payments Regulation mandated that euro area payment service providers be able to receive instant payments as of January 9, 2025, with sending capabilities required by April 2027—capabilities often beyond legacy infrastructures.
58%
Developers considering quitting due to inadequate legacy tech stacks
50%
Reduction in routine tasks through CI/CD automation
Sources: ECB Survey, ECB Instant Payments, Storyblok Developer Survey, IJCET CI/CD Study
Banking Modernization: Industry Performance Benchmarks
30-40%
Reduction in IT maintenance costs after modernization
50%
Faster time-to-market for new digital products
2.5x
Higher revenue growth after modernization
Industry benchmarks show consistent modernization benefits across European banking institutions
Sources: Aspire Systems, Thoughtworks Xapo Bank Case Study, Accenture
Legacy Systems in the Healthcare Sector
Extent of Legacy Usage
The healthcare sector in the United States continues to grapple with significant reliance on legacy software. A 2021 HIMSS survey indicates that over 60% of U.S. hospitals still operate at least one critical application on legacy software.
Critical Gaps
- • Lack of cloud-readiness
- • Limited or no robust APIs
- • Poor interoperability (non-FHIR compliant)
- • Inability to support modern clinical decision support tools
Source: HIMSS Cybersecurity Survey
60%
U.S. hospitals with legacy systems
Cybersecurity Crisis
83%
Healthcare cyberattacks financially motivated
54%
Cybersecurity incidents attributed to ransomware
71%
Patient care affected by ransomware attacks
Sources: ENISA, Industrial Cyber
Financial Impact
$9.77M
Average healthcare data breach cost
Highest across all industries (2024)
Average hospital IT expenses (2023)
$9.51M
Hospitals with end-of-life IT systems
96%
Sources: Definitive Healthcare, HIPAA Journal, Oliver Wyman
Impact on Patient Care
2.2x
More medication errors
Legacy systems vs. modern EMRs
Higher risk of adverse drug reactions
50%
Lower clinical guideline adherence
25%
European Healthcare Evolution
Cloud Computing Market Growth
2024 Market Size:
$10.58B
2029 Projection:
$23.39B
CAGR:
17.19%
EU Cybersecurity Initiatives
€30M
Dedicated healthcare cybersecurity funding (part of €145.5M total EU investment)
Sources: Copper Digital, Industrial Cyber
Legacy Systems in Government and Other Sectors
U.S. Federal Government
The United States federal government faces significant challenges and costs associated with maintaining legacy IT systems. A GAO report found that the ten legacy systems most in need of modernization cost approximately $337 million a year to operate and maintain.
Critical Functions Affected
- Defense systems
- Social security administration
- Taxation and revenue collection
Risks Identified by GAO
- • Increased vulnerability to cyberattacks
- • Difficulties finding qualified maintenance personnel
- • Inability to integrate with modern technologies
- • Failure to meet evolving mission needs
$337M
Annual maintenance cost
For just 10 critical legacy systems
Thousands
Other outdated systems in federal portfolio
The Human Element: Talent Shortage and Skills Gap
The Shrinking COBOL Workforce
A critical challenge compounding legacy system issues is the shrinking pool of developers proficient in older programming languages, particularly COBOL. While specific data varies, 60% of organizations using COBOL report that finding skilled developers is their biggest challenge, with 46% of IT professionals already noticing a COBOL programmer shortage.
Demographic Crisis
As legacy systems age, the workforce familiar with them is also aging. The average COBOL programmer is now 55 years old, with 10% of the workforce retiring annually. Meanwhile, fewer new programmers are learning COBOL, creating a structural talent shortage.
55
Average COBOL Dev Age
10%
Annual Retirement
Sources: MoldStud, FireHire, Systems Journal
Salary Comparison: Modern Stack vs. COBOL (2025)
United States
COBOL Developer Average
$130,000
Modern Stack Average
$91,488
COBOL Range: $104K–$156K
Modern Range: $80K–$150K
European Union
COBOL Developer Average
$59K–$70K
Modern Stack Average
$95,000
Premium Markets: Switzerland COBOL: $102K–$106K • London COBOL Senior: up to $108K
Sources: Talent.com, Coursera, BeInCrypto, MoldStud
The acute shortage of COBOL developers has created a premium market where organizations pay significantly higher rates to secure specialized talent, especially for critical legacy system maintenance.
COBOL Developer Challenges
Modern COBOL developers face unique obstacles that compound the workforce shortage, as they work with tools and resources that haven't kept pace with contemporary development practices.
Limited Modern Tools
Lack of modern development environments, debugging tools, and IDE support compared to contemporary programming languages
Outdated Documentation
Scarce resources and diminishing community support as industry focus shifts to newer technologies and frameworks
Training Gap
COBOL not taught in modern computer science curricula, creating significant barriers for new developers entering the field
Source: MoldStud
Impact on System Sustainability
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Extended system downtime due to fewer experts available for issue resolution
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Delayed security patches increasing vulnerability exposure
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Difficulties making enhancements to meet changing business needs
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Escalating maintenance costs as specialist rates increase
Sources: IDC Skills Research, McKinsey IT Modernization
Talent Retention Crisis
73%
Know a colleague who quit due to tech stack frustrations
62%
IT leaders report skills gaps causing missed revenue objectives
"The erosion of expertise is a key challenge in COBOL modernization, as the average age of COBOL developers increases and insufficient training opportunities are available to replenish the talent pool."
— Handelsblatt AnalysisModernization Efforts and the Path Forward
Modernization ROI: Cross-Sector Benefits
Organizations across sectors demonstrate measurable returns on investment when modernizing from legacy systems. These industry benchmarks show the tangible benefits that make the business case for digital transformation compelling.
Banking
50%
Faster time-to-market
Post-modernization
Healthcare
54%
Fewer medication errors
Modern vs legacy EMRs
Government
$337M
Annual savings potential
Just 10 systems
Enterprise
50%
Less routine tasks
CI/CD automation
Sources: Thoughtworks, NCBI, GAO Report, IJCET Study
The Modernization Imperative
The imperative for legacy system modernization is driven by a confluence of critical factors that impact an organization's financial health, operational agility, security posture, and competitive standing.
Escalating Maintenance Costs
Consuming 70-80% of IT budgets
Security Vulnerabilities
Leading to increased cyberattacks
Operational Inefficiencies
Hindering productivity and innovation
Skills Shortage
Shrinking pool of legacy developers
Sources: HIPAA Journal, Storyblok Developer Survey, GAO Report
Benefits vs. Challenges
Modernization Benefits
- • Substantial cost reductions (€23M annual savings demonstrated)
- • Enhanced operational efficiency (50% faster processing)
- • Improved security with modern protocols
- • Greater agility and innovation capacity
- • Better customer experiences
Sources: Aspire Systems, Thoughtworks, ENISA, McKinsey
Modernization Challenges
- • High upfront investment costs (~$2.9M average)
- • Complexity and risk of large-scale transformation
- • Potential for system downtime and data loss
- • Organizational resistance to change
- • Lack of internal expertise
Sources: GAO Report, Storyblok Developer Survey
Strategic Recommendations
Assess & Plan
Conduct comprehensive legacy system assessments and develop phased modernization roadmaps
Invest in Talent
Bridge skills gaps through training programs and strategic partnerships
Embrace Innovation
Leverage cloud-native architectures and modern development practices