IT catastrophe: Companies miss modernization and invest too little!

IT catastrophe: Companies miss modernization and invest too little!

In today's digital world, it is worrying to see that many companies - particularly in the banking and retail industries - are underinvesting in expanding and modernizing their IT systems. Technology expert Nigel Vaz warns: A full 80 percent of the available funds flow into large infrastructure components, while only a meager 20 percent is reserved for innovative approaches. Black Forest messenger reports that banks that rely on outdated mainframe technologies and companies with outdated ERP systems are particularly suffering from this development.

The result of this neglect is technical debt, which makes accessing important data and integrating modern technologies significantly more difficult. To address these challenges, new technologies such as artificial intelligence (AI) could be helpful. But Vaz emphasizes that these systems can only be used effectively if the core technologies are modernized. Another problem is the high complexity of dealing with so-called legacy systems in various industries such as healthcare and retail.

The financial consequences of technical debt

According to a study by Pegasystems and Savanta that surveyed over 500 IT decision-makers worldwide, companies lose an average of more than $370 million annually due to inefficient legacy technologies. A particular focus is on the time lost in these transformation projects, which cost nearly $134 million annually. AP Publishing shares that 78 percent of respondents believe that the resources needed to maintain these legacy systems would be better invested in other projects.

The study also indicates that 63 percent of respondents rely on up to ten legacy applications daily, with 29 percent using between 11 and 20 such systems. What is alarming is that only 9 percent report sufficiently effective transformation measures that would be able to switch off all outdated applications. The challenge is gigantic: the complexity of the transition to new technologies stands in the way of many companies.

Competitiveness and customer experience

Beyond the financial aspects, this also has far-reaching effects on the competitiveness of companies. 68 percent of respondents believe that outdated systems seriously hinder the use of modern technologies. Pega reports that 88 percent of respondents even have concerns about the negative impact of technical debt on competitiveness. Above 50 percent, the risk of customer satisfaction demonstrably increases.

The challenges in customer centricity are drastic: many companies prioritize profitability over customer experience. This is also reflected in the increased processing time for customer inquiries, which has increased by up to 50 percent in the last 12 months. This is an alarming development and a clear sign – companies need to rethink and urgently invest!

Overall, time is of the essence and the need for action is enormous. Only by consistently modernizing their IT systems can companies not only increase their efficiency, but also meet the challenges of the digital world. Maybe now is the right moment to break new ground and use innovative technologies.