How Much Does Legacy System Modernization Cost?

You have a system that has been running for 10 or 15 years. It works — mostly. But every change takes weeks, new employees need months to learn it, and your vendor keeps raising prices because fewer people know the old technology it runs on. The question is not whether to modernize, but how much it costs and how to plan for it.

This article gives you a realistic overview of costs. No marketing fluff — specific numbers, specific line items.

What Affects the Price

Four main factors drive the cost:

1. System Complexity

A simple web app with a few forms is a different animal than an ERP with 200 screens, custom business logic, and 15 years of patches. The more functions the system has, the more work it takes to replace.

Key indicator: the number of unique business processes the system covers. A system handling 5 processes is an order of magnitude simpler than one handling 50.

2. Data Volume and Quality

Data migration is often the most expensive part of the entire project. Old databases have duplicates, inconsistent formats, missing values, and records nobody understands. Cleaning data before migration can eat 20-30% of the total budget.

Example: A company with 500,000 records in their order management system discovered that 15% of records had incorrect supplier tax IDs. Fixing this took 3 weeks and cost around €5,000 — just this one item.

3. Integrations

Old systems rarely exist in isolation. Connections to accounting, e-commerce, warehouse management, banking APIs, government portals — each integration is a separate piece of work. Budget €1,200-6,000 per integration, depending on complexity.

4. Parallel Running Period

You cannot deploy a new system overnight. Typically, old and new systems run side by side for 1-3 months. During this time, you pay for both — licenses, infrastructure, and most importantly the time of people working in both systems simultaneously.

Typical Price Ranges

The following numbers are rough estimates based on projects in the Central European market. Your specific system may fall outside these ranges.

Small System (€8,000 - €20,000 / $9,000 - $22,000)

Internal application for 10-30 users. Record keeping, simple workflow, a few reports. Typically replacing an Access database or an old PHP system. Timeline: 2-4 months.

Example: A 25-person company had their project tracking in Excel linked to an Access database. A new web-based system with invoicing integration cost €14,000 including data migration.

Medium System (€20,000 - €80,000 / $22,000 - $88,000)

System for 30-200 users with custom business logic. Production management, custom CRM, time tracking and payroll. Multiple integrations, more complex data model. Timeline: 4-10 months.

Large System (€80,000+ / $88,000+)

ERP, complex information systems, systems with dozens of modules and hundreds of users. Often involves changing business processes, not just replacing software. Timeline: 10-24 months. Upper end can easily reach €400,000-800,000.

Hidden Costs People Forget

These items are regularly missing from budgets:

Data cleanup (10-20% of budget). See above. Data is always in worse shape than you think.

User training (5-10% of budget). New system means new habits. People need time and support. Underestimating training is the most common reason users reject a new system.

Testing (10-15% of budget). The system cannot just work under ideal conditions. It must handle real data, real scenarios, and real user mistakes. Automated tests, user acceptance testing, load testing — all of this costs time.

Productivity loss during transition. The first 1-2 months after deployment, people are slower. Expect a 20-30% productivity dip in the first weeks.

Licenses and infrastructure for the new system. Cloud hosting, SSL certificates, monitoring, backups. Monthly operating costs for the new system typically run €120-1,200 depending on size.

Documentation and handover. If an external company builds the system, you need documentation so the vendor cannot hold you hostage.

The Cost of NOT Modernizing

This is the number companies do not track, but should:

Rising maintenance costs. Old systems need specialists in old technologies. There are fewer of them every year, and they charge more. A developer on modern tech bills €50-80/hour. On legacy tech (Delphi, Visual Basic 6, old PHP frameworks), it is €60-120/hour — and harder to find.

Lost productivity. If the system has no API and employees copy data manually between systems, do the math. 10 people × 30 minutes per day × 250 working days × average salary = hundreds of thousands per year in wasted time.

Security risks. A system on Windows Server 2008 or PHP 5.6 does not receive security patches. One successful attack can cost more than the entire modernization. The average cost of a cyber incident for a small business in the EU is €50,000-200,000 (downtime, recovery, GDPR fines).

Inability to grow. The old system cannot handle a new branch, a new e-commerce channel, a new product type. The business grows, the system does not. Result: business waits for IT.

How to Budget for It

1. Start with an Audit

Before planning a budget, get a technical audit of the existing system. A good audit costs €1,200-3,200 and tells you:

• What exactly the system does (often nobody knows precisely)
• What condition it is in
• What the options are (full replacement / phased replacement / modernize in place)
• A rough cost estimate for each option

2. Break It into Phases

Do not do everything at once. A typical approach:

• Phase 1: Audit + specification (1-2 months, 5-10% of budget)
• Phase 2: Replace the most critical module (3-6 months, 40-50% of budget)
• Phase 3: Additional modules + integrations (ongoing)
• Phase 4: Decommission the old system

A phased approach reduces risk and lets you validate direction as you go.

3. Include a 20-30% Contingency

Every software project goes over budget. Not because the vendor is cheating, but because things come up that nobody predicted. An explicit contingency is better than pretending you will hit the number exactly.

When Does Modernization Pay for Itself

ROI depends on specifics, but typically:

• Reduced maintenance costs: 30-50% per year
• Employee time savings: 10-25% (eliminating manual work, better UX)
• Reduced error rates: fewer complaints, fewer corrections

Example: A company was paying €24,000/year to maintain their old system. The new system cost €72,000 to build, with €7,200/year in operating costs. Maintenance savings: €16,800/year. Payback period: just over 4 years — not counting employee time savings and new capabilities the old system could not support.

For smaller systems, payback is typically 1-2 years. For large systems, 3-5 years.

Practical First Step

Modernization is not cheap, but postponing it is more expensive. The key is preparation: get an audit, budget realistically, account for hidden costs, and work in phases.

If you are considering modernization and want a no-obligation estimate, get in touch. We will do a quick analysis and tell you what to expect.