Overhauling legacy IT: The struggle to adopt new technologies

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  Quantumrun Foresight
• January 10, 2024

Insight summary

Governments and companies are urgently addressing outdated legacy IT systems, posing security risks and operational inefficiencies. While private sectors adapt quickly, public agencies face challenges due to budget constraints and a scarcity of skilled workers. The US government, for instance, still operates several decades-old systems with high-security risks. Modernization is seen as vital for enhancing services and reducing costs, yet progress is slow. Recent shifts, however, signal a growing commitment to overhaul these systems, with potential implications like increased investment in AI, cloud computing, and cybersecurity, training for employees, and a push towards more accessible and transparent public services.

Overhauling legacy IT context

The state of legacy IT is in dire need of an overhaul to bring it up to par with current technologies; however, this process is costly and time-consuming. Private companies have been relatively quick to adapt and innovate, but the federal government has been slow to catch up. The pandemic has spurred some action in the right direction, but it remains to be seen if this momentum can be maintained. In particular, the US federal government runs three legacy technology systems dating back five decades without modernization plans, according to the Government Accountability Office (GAO). 

The Department of Education system contains student information, the Department of Health and Human Services information system supports clinical and patient administration, and the Department of the Treasury system comprises taxpayer information dating back to half a century and has moderately high-to-high security risks. GAO warns that reliance on old coding languages (e.g., COBOL) could result in higher procurement and operating costs as the number of workers with those skill sets continues to decline. Moreover, these legacy systems also increase weak links within cybersecurity. Some technology infrastructure can still function well enough, but digital transformations require billions to modernize, leaving assets vulnerable if left unchecked.

Disruptive impact

In the private sector, the COVID-19 epidemic and remote work forced many business leaders into action. According to a poll conducted by IT firm Capgemini of 1,000 CEOs in 2018, 24 percent of executives had the digital capabilities required for change, but that proportion rose to 60 percent in 2020. However, in the public sector, agencies are not taking advantage of automation solutions as much as they should. According to a study conducted by consultancy firm Accenture, government spending on legacy IT maintenance rose by 13 percent from 2014 to 2019, taking up nearly 80 percent of total IT costs. However, not all governments lag when it comes to overhauling legacy IT. In a survey conducted by Accenture of C-suite executives, including government officials, they discovered that 16 percent of global federal agency management had embraced future systems (they were categorized as “Leaders”).

In addition, the survey saw some benefits of adopting newer technologies. First, citizen satisfaction with government services was high for countries with Leaders (54 percent). Additionally, waiting time for services, user experience, and better public interface designs and systems improved significantly. Other benefits of modernizing legacy tech systems are cost savings and enhanced performance. Leaders were more likely to launch new technologies and were able to improve operating margins even with initially costly investments in new systems. Clearly, there’s no longer any room for complacency. In March 2022, the US Senate introduced a bipartisan bill requiring federal agencies to identify and replace legacy IT systems. Government departments must also submit their modernization plans within two years and give updates every five years.

Wider implications of overhauling legacy IT

Possible implications of overhauling legacy IT may include: 

• Increased investments in modernization programs greatly benefiting tech companies that specialize in artificial intelligence (AI), cloud computing, and cybersecurity.


• More employees being trained alongside improvements in software, dashboards, and equipment.


• Companies and organizations that don’t actively upgrade their IT systems will experience more data leaks and cyber-attacks.


• Businesses and agencies involved in essential services (e.g., water, electricity, and food manufacturing) aggressively investing in new technologies to prevent disruptions and downtimes.


• More governments requiring their agencies to invest in cloud-based platforms to provide more accessible and transparent public service.

Questions to comment on

• What are the other benefits of overhauling legacy IT?


• How else can better technologies improve public service?