UK firms extend legacy systems as AI spending rises

Ensono has found that 57% of UK organisations are extending legacy systems rather than replacing them. The study also found that 48% are actively scaling artificial intelligence across their businesses.

These figures point to a more selective approach to technology change among large companies, with older systems remaining central even as AI investment rises.

The research, based on a survey of 500 senior IT and business decision-makers in the UK and US, suggests many businesses are moving away from the idea that modernisation requires wholesale replacement of established systems. Across both markets, 78% of IT decision-makers said legacy systems play a more important role in their organisations today than they did two years ago.

In the UK, budget pressure appears to be shaping that stance. More than three-quarters of organisations, or 77%, said they had exceeded their modernisation budgets, while 67% said they had paused, scaled back or abandoned an initiative altogether.

Across the full sample, 71% of modernisation initiatives exceeded planned costs. Talent shortages were a major factor, with 97% of respondents saying labour constraints had increased modernisation costs to some degree.

Legacy focus

Rather than removing older technology entirely, many companies are adapting it. Across the UK and US, 52% of organisations said they were optimising and extending existing systems while modernising applications in place.

The findings suggest AI is increasing the strategic value of long-running platforms, particularly where those systems hold operational data and business logic built up over decades. For many companies, that makes integration with newer tools a more practical route than full replacement.

That shift comes as AI spending rises. More than half of decision-makers, or 54%, said AI is accelerating modernisation initiatives, up from 39% a year earlier. Support for AI, automation and advanced data projects is now the leading driver of modernisation work.

At the same time, businesses continue to face obstacles in turning AI investment into returns. Respondents cited workflow integration challenges as the leading barrier, at 33%, followed by infrastructure limitations at 28% and governance concerns at 25%.

These responses suggest AI investment is not removing the need for broader changes to core IT estates. Instead, it is increasing pressure on technology teams to connect older and newer systems in ways that support data use, governance and day-to-day operations.

Brian Klingbeil, Chief Strategy Officer at Ensono, said the findings showed a change in how organisations assess older platforms.

"AI is expanding the possibilities for modernization," said Klingbeil. "Enterprises are discovering that legacy systems, like the mainframe, are intensely powerful, reliable and efficient sources of computing that can now be augmented and made more agile thanks to AI. These systems contain decades of data and business logic that drive many businesses. The advantage will go to organizations that understand their environments well enough to distinguish what should be replaced vs. what should be augmented, and embrace new modernization methods that simply were not available even 18 months ago."

Signs of progress

Despite cost overruns and cancelled projects, the report points to areas where IT teams believe they are improving. Some 38% of respondents said their teams now spend most of their time innovating or adding new services, up from 25% a year earlier.

Ensono linked that increase to additional resources and a reduced focus on day-to-day issue management. The results suggest some organisations are finding more room for longer-term planning, even as large transformation programmes remain difficult to manage.

The survey also found a widening gap between organisations that see themselves as ahead in modernisation and those still trying to catch up. Nearly a third, or 31%, now consider themselves modernisation leaders, up from 21% a year earlier.

Those organisations reported stronger visibility across hybrid environments than their peers, with 77% saying they had that level of oversight compared with 39% of others. They were also far more likely to say they had structured measures of success, at 74% compared with 16%, and stronger alignment between technology work and business goals, at 64% versus 36%.

Another finding pointed to a commercial rationale for more deliberate planning. Organisations that proactively modernise applications to support future AI initiatives were nearly twice as likely to strongly agree that AI is helping unlock new revenue-generating activities, at 58%.

The figures underline the uneven nature of current IT investment. While enthusiasm for AI remains strong, many companies are confronting tight budgets, skills shortages and difficult choices about which systems to preserve, improve or retire. In that environment, older technology appears less likely to disappear than to be refitted for a different role.

Across the survey, 61% of organisations said they had paused, delayed, scaled back or fully abandoned IT modernisation initiatives in the past 24 months.