A warning from technology consultancy Publicis Sapient, delivered at the World Economic Forum in Davos, highlights a growing problem for businesses: insufficient investment in core IT infrastructure. Nigel Vaz, CEO of Publicis Sapient, stated that approximately 80 percent of IT budgets are typically allocated to maintaining existing systems, leaving only 20 percent for innovation.
This imbalance, described as accumulating “technical debt,” is hindering companies’ ability to access data and integrate latest technologies, according to Vaz. He cautioned that tools like artificial intelligence cannot fundamentally resolve the issue if underlying systems remain outdated. “If you don’t modernize the core systems, you’re just polishing things with AI,” he said.
The issue is particularly acute in sectors reliant on legacy systems. Banks utilizing mainframes and companies operating aging Enterprise Resource Planning (ERP) systems are especially vulnerable. Modernizing these systems is complex, often involving millions of lines of code, some written in languages like Cobol, which are increasingly difficult for modern developers to understand and maintain.
Publicis Sapient is employing a platform called “Slingshot” to translate older software into contemporary languages such as Java and React, aiming to accelerate the migration process. Vaz cited an example where a project initially estimated to capture ten years was completed in under three years using AI-assisted translation. Although, the consultancy acknowledges significant hurdles beyond the technical challenges.
A critical constraint is a growing shortage of skilled professionals capable of working with legacy systems. The dwindling number of developers proficient in languages like Cobol is driving up the cost of retaining experienced teams. According to a report from Trusted Advisor, between 60-80% of IT budgets are dedicated to maintaining existing systems, leaving a limited 20-40% for innovation and growth. The same report indicates that up to 70% of applications within large enterprises are considered “legacy” systems.
The financial implications of technical debt extend beyond direct maintenance costs. According to a report from Computer Weekly, technical debt can account for up to 40 percent of a company’s IT balance sheet. Delaying modernization not only increases these costs but too represents a missed opportunity to streamline operations, improve system performance and reduce IT complexity.
The challenge is further compounded by budgetary constraints and the constant pressure to innovate. Companies are caught between the need to invest in modernization and the demands of immediate business priorities. The lack of investment is not simply a financial issue; it’s also a strategic one, potentially limiting a company’s ability to respond to market changes and maintain a competitive edge.
