Data-driven insights on the costs, challenges, and transformative ROI of modernizing legacy infrastructure through API-led strategies
The legacy modernization market has reached $24.98 billion in 2025, yet 70% of Fortune 500 companies still operate software over two decades old, according to McKinsey. This gap between market investment and actual modernization creates significant risk—the U.S. government alone spends roughly 80% of IT budgets maintaining legacy systems, according to a GAO report, instead of building competitive capabilities. DreamFactory's automatic API generation offers a path forward, enabling enterprises to expose legacy data through modern REST APIs without replacing core systems or writing extensive code. Understanding these statistics helps enterprise architects and IT leaders build the business case for modernization initiatives that deliver measurable results.
Key Takeaways
- Legacy modernization market growing to $56.87B by 2030—The 17.92% CAGR reflects urgent enterprise demand for solutions that address aging infrastructure
- U.S. government spends 80% of IT budgets on maintenance—Legacy system maintenance consumes the vast majority of resources that could drive innovation
- 98% of organizations report modernization benefits—Security, reliability, and scalability improvements validate investment in API-led strategies
- 75%+ now use AI for modernization—Enterprises leverage AI tools alongside API generation platforms to accelerate transformation
- Cloud deployments capture 67.78% market share—Yet on-premises requirements remain critical for regulated industries requiring data sovereignty
Unpacking the Costs of Neglecting Legacy Systems
The Escalating Maintenance Burden
1. Organizations spend 60-80% of IT budgets maintaining legacy infrastructure
The U.S. government spends roughly 80% of IT budgets on maintaining legacy systems according to a GAO report, leaving minimal resources for innovation. DreamFactory's middleware rescue program helps organizations redirect these budgets toward strategic initiatives by automating API generation and eliminating custom middleware maintenance.
2. U.S. accumulated technical debt reached ~$1.52 trillion in 2022
The IT-CISQ Cost of Poor Software Quality in the US: A 2022 Report estimates accumulated software technical debt in the U.S. grew to approximately $1.52 trillion in 2022. This debt compounds annually as legacy systems require increasingly complex workarounds.
3. Ten critical federal legacy systems cost about $337 million annually
A GAO testimony (GAO-23-106821) found 10 critical federal IT legacy systems collectively cost about $337 million per year to operate and maintain.
Security Risks: A Ticking Time Bomb
4. Vulnerability exploitation as a breach “way-in” almost tripled (180% increase) year over year
Verizon’s 2024 Data Breach Investigations Report (DBIR) found attacks involving exploitation of vulnerabilities as the critical path to initiate a breach almost tripled (180% increase) from the prior year—underscoring the risk of running unpatched or unsupported legacy platforms. DreamFactory's security guide describes platform controls such as role-based access control and SQL injection protections in its SQL REST API layer.
5. Healthcare data breaches cost $9.77 million on average
IBM’s Cost of a Data Breach Report 2024 reports the average breach cost for healthcare was $9.77 million.
6. Financial data breaches cost $6.08 million on average
IBM reports that financial-industry organizations spend an average of $6.08 million dealing with data breaches.
7. 43% say security vulnerabilities are a major legacy-system concern
In a 2025 survey of 500+ U.S.-based IT professionals, 43% said security vulnerabilities are a major concern related to legacy software.
The Urgent Need for API-Led Modernization Strategies
APIs as the Bridge to Modern Infrastructure
8. Legacy modernization market valued at $24.98 billion in 2025
The current market size reflects enterprise recognition that modernization cannot wait. API-led approaches dominate because they enable incremental transformation without complete system replacement.
9. Market projected to reach $56.87 billion by 2030
The $56.87 billion projection represents 17.92% CAGR growth as organizations accelerate modernization timelines.
10. Application modernization services market valued at $24.32 billion
The services market indicates strong demand for solutions that accelerate API-led transformation.
11. Application modernization projected to reach $98.38 billion by 2034
The $98.38 billion forecast at 16.80% CAGR confirms sustained investment in modernization approaches.
Enabling Data Exchange and Innovation
12. 70% of Fortune 500 companies have software over two decades old
This McKinsey-cited statistic reveals the scope of legacy infrastructure across enterprise organizations. DreamFactory's database connectors support 20+ databases including legacy systems like IBM DB2, Oracle, and SAP HANA.
13. ~70% of banks say integrating with legacy systems is a major obstacle
The banking sector’s integration burden creates both risk and opportunity for API-led modernization. About 70% of banks say the technical challenges of integrating with legacy systems are at least “somewhat” of an obstacle, reinforcing the need for integration layers that can safely expose legacy functionality without rewriting core systems.
14. HIMSS survey: legacy software cited as a cybersecurity risk factor (15%)
Healthcare organizations continue to contend with aging platforms that are harder to secure and modernize. In the 2021 HIMSS Healthcare Cybersecurity Survey, legacy software (15%) is listed among reported risk factors, underscoring why modernization and secure API access often go hand-in-hand in healthcare environments.
15. Reuters estimate: ~95% of ATM card swipes use COBOL code
COBOL remains deeply embedded in financial infrastructure. A widely cited Reuters estimate (as quoted via secondary reporting) states that about 95% of ATM swipes use COBOL—highlighting why “replace everything” modernization strategies are often unrealistic in the near term.
16. Reuters estimate: ~220 billion lines of COBOL code remain in production
The scale of legacy code is enormous. The same Reuters estimate (as quoted via secondary reporting) puts the COBOL footprint at 220 billion lines of COBOL code still running in production—business logic that typically must be incrementally modernized and wrapped, not rewritten all at once.
Key Drivers: Why Enterprises Prioritize Legacy Modernization Now
Gaining Competitive Edge with Agility
17. 59% of modernization budgets focused on updating legacy infrastructure
Organizations allocate majority budgets to existing system updates rather than greenfield development, recognizing the value locked in current investments.
18. Core back-end applications are top priority at 41%
The Red Hat report confirms back-end systems receive primary modernization focus—exactly where API generation delivers maximum impact.
19. Data/analytics/BI applications second priority at 35%
Organizations prioritize data accessibility to enable analytics and business intelligence from legacy sources.
20. Cloud deployments captured 67.78% revenue share in 2024
The cloud-first trend drives API-led strategies that enable hybrid architectures connecting on-premises legacy systems with cloud applications.
Meeting Evolving Compliance Mandates
21. BFSI accounted for 26.79% market share in 2024
Financial services lead modernization investment due to regulatory requirements and security concerns.
22. Healthcare applications set to grow at 18.40% CAGR
The healthcare growth rate reflects interoperability mandates and patient data access requirements.
23. North America occupied 37.50% of 2024 revenue
The North American share demonstrates enterprise maturity in recognizing modernization urgency.
Measuring Success: ROI of Legacy Modernization Initiatives
Quantifying Cost Reductions and Efficiency
24. 98% of organizations experienced benefits in at least one critical area
Nearly universal positive outcomes from modernization initiatives validate investment in API-led strategies.
25. Some modernization programs report triple-digit ROI (288%–362% reported for mainframe modernization)
Kyndryl’s 2025 State of Mainframe Modernization survey reports ROI ranging from 288% (modernizing applications on the mainframe) to 362% (moving workloads off the mainframe to other platforms), illustrating how modernization can produce sizable returns when scoped and executed well. DreamFactory claims $201,783 annual developer cost savings through eliminated middleware maintenance.
26. 58% have already seen security benefits from modernization
More than half report improved security as a direct modernization outcome.
27. 52% have seen reliability benefits
Over half experience enhanced reliability through modernized infrastructure.
28. 53% have seen scalability benefits
Scalability improvements affect 53% of organizations undertaking modernization.
Boosting Innovation and Market Responsiveness
29. Banking: 30-40% infrastructure cost take-out with cloud migration
Financial institutions can unlock major cost savings through cloud-enabled modernization. Accenture cites 30-40% infrastructure cost take-out (when combined with data-center consolidation/closure) as a typical benefit of cloud migration in banking.
30. Banking: 50% faster time-to-market for new features (case study)
Modernization can materially accelerate delivery. In a published client story, Thoughtworks reports Xapo Bank achieved a 50% reduction in time to market for new features after architecture and workflow improvements.
31. 2.5x faster revenue growth with high interoperability (API-led modernization enabler)
Interoperability is strongly associated with growth. Accenture reports that companies with high interoperability grew revenue 2.5x faster than peers with low interoperability—supporting API-led modernization as a growth lever.
32. 50% reduction in unproductive “miscellaneous” work through CI/CD automation and reduced context switching
Automation and toolchain consolidation can cut time spent on low-value work. In a Forrester TEI study of GitLab Ultimate, the model assumes unproductive miscellaneous activity time falls by 50% (driven in part by reduced context switching and streamlined CI/CD workflows).
Overcoming Common Roadblocks in the Modernization Journey
Addressing Data Complexity
33. 48% identify complexity as top organizational challenge
Nearly half of organizations cite complexity as primary obstacle to modernization success.
34. In early stages, complexity challenge rises to 58%
Organizations just beginning modernization face even higher complexity barriers, making simplified approaches essential.
35. 55% cite determining the right approach as early-stage challenge
Over half struggle to identify the correct strategy when starting modernization efforts.
Navigating Integration and Skills Challenges
36. 60% of organizations using COBOL report finding skilled developers is biggest challenge
The talent shortage creates urgency for solutions that reduce dependency on legacy language expertise.
37. Average COBOL programmer is 55 years old
The aging workforce creates imminent knowledge transfer risk for organizations dependent on COBOL systems.
38. 10% of COBOL workforce retiring annually
The retirement rate accelerates the need for modernization strategies that expose legacy functionality through modern interfaces.
39. 68% rely solely on internal teams for legacy system maintenance
Organizations depending entirely internally face capacity constraints that configuration-driven platforms can address.
Configuration-Driven APIs: The Future of Database Access
From Code to Configuration: A Paradigm Shift
40. Replatforming held 32.45% market share in 2024
The replatforming approach allows organizations to modernize without complete system replacement—exactly what API generation enables.
41. Re-architecting projected to expand at 23.10% CAGR
The fastest-growing approach involves re-architecting applications around modern API-first designs.
42. 47% plan to replatform and then refactor
The staged approach validates incremental modernization strategies where API generation serves as the first step.
On-Premises and Air-Gapped Deployments: A Crucial Requirement
When Data Sovereignty is Non-Negotiable
43. Large enterprises retained 65.80% of market share in 2024
Enterprise organizations dominate modernization investment, often requiring self-hosted solutions for compliance and security.
Leveraging APIs to Unlock Siloed Legacy Data for AI/LLMs
Bridging Legacy Systems to Modern AI Pipelines
44. Over 75% of organizations using AI to support modernization
The AI adoption rate demonstrates how organizations combine automated API generation with AI capabilities to accelerate transformation. DreamFactory's AI integration positions the platform as a data access layer for AI/LLM applications.
Taking Action on These Statistics
The data presents a clear mandate: legacy systems drain resources, create security vulnerabilities, and limit competitive agility. Organizations maintaining COBOL-based systems face an aging workforce that retires 10% annually, while the U.S. government alone spends roughly 80% of IT budgets on legacy maintenance instead of innovation.
API-led modernization offers a proven path forward. DreamFactory enables organizations to:
- Generate production-ready REST APIs from 20+ database types in minutes
- Expose legacy data without replacing core systems
- Enforce enterprise security through built-in RBAC, OAuth 2.0, and LDAP integration
- Deploy on-premises or in air-gapped environments for complete data control
With 50,000+ production instances processing over 2 billion daily API calls, DreamFactory has proven its enterprise readiness across government, healthcare, manufacturing, and financial services.
For organizations ready to transform legacy infrastructure into modern API assets, request a demo to see configuration-driven API generation in action.