Technology Debt, Part 1 – The Hidden Cost of Standing Still

Technology Debt – 2 Part Series

Part 1: The Hidden Cost of Standing Still

Tony:
Hello, I’m Tony Mangino from TC2, and this is Staying Connected—where we talk about what really matters to enterprise buyers navigating today’s technology and sourcing decisions.

Today we’re talking about something that rarely shows up as a clean line item in the budget but absolutely shows up in your run-rate and your ability to compete, and that is: technology debt. We’ll focus on the hidden cost of maintaining legacy hardware, software, and wide area networks, and how that debt limits innovation and erodes competitive advantage.

To help with that, I’m joined by my colleague, Larry York, a Managing Director here at TC2. Larry spends much of his time helping large enterprises assess legacy environments, build business cases for change, and source next-generation solutions.

Larry, welcome back to Staying Connected.

Larry:
Thanks, Tony. It’s great to be here.

Tony:
We throw around the term “technology debt” a lot with clients. When we use that term in an enterprise context, what do we actually mean?

Larry:
For us, technology debt is the accumulated cost and risk of legacy technology that’s still in production because it was never fully modernized or retired. That covers legacy hardware in data centers and branch sites, older or heavily customized software platforms, and traditional WAN architectures like MPLS-heavy networks.

It also includes the contracts, support models, and operational processes wrapped around that technology. The key point is that technology debt is not just “old kit.” It’s the drag on agility, resilience, and cost efficiency that builds up after years of deferring structural change.

Tony:
So it’s the technology itself, plus the commercial and operational baggage that comes with it.

Let’s start with hardware and software. Before we even get to innovation, where do you see technology debt showing up in the day-to-day cost of running the environment?

Larry:
On the hardware side, it shows up as aging servers, storage, routers, switches, and firewalls that are well past their design lives. They still run, but they fail more often, generate more tickets, and demand more attention from operations. You layer on premium support contracts or bespoke maintenance just to keep them supported. And because the footprint is larger than it needs to be, you pay more for data center space, power, and cooling.

On the software side, technology debt looks like monolithic, heavily customized applications and homegrown tools. You’re paying significant license and maintenance fees for older versions, often with limited vendor support. Integrating those platforms with modern SaaS and cloud services can be difficult and costly. And running end-of-support operating systems or databases introduces risk that has to be managed with extra controls and effort.

Tony:
So even if nothing is visibly “on fire,” there’s a real run-rate cost to keeping legacy hardware and software alive: more incidents, more maintenance, more support, and more risk.

Let’s bring the network into the picture, because that’s often where the largest recurring spend resides. How does technology debt manifest in the WAN?

Larry:
We see it in MPLS-heavy architectures that were designed when most applications lived in your data centers and most traffic was internal. You’ve got expensive MPLS access loops into branches, older CPE, and redundancy models built for a pre-cloud era. On top of that are long-term contracts, with limited flexibility and questionable commercial constructs that discourage change.

Architecturally, a lot of Internet and cloud traffic still gets backhauled through central data centers. That adds latency, consumes bandwidth, and forces you to maintain large security stacks in a few core locations. Operationally, you’re dealing with older routing platforms, fragmented VPN solutions, and multiple firewall environments. All of that complexity requires people, tools, and time to keep running.

Tony:
So the legacy network is expensive and built for a world where most traffic stayed inside the four walls, not the cloud and SaaS-centric world we live in today.

Let’s shift from cost to innovation. If I’m a CIO trying to roll out new digital services or modernize the way employees work, how does this legacy estate get in the way?

Larry:
On the hardware side, you may not have the capacity or flexibility to spin up new workloads quickly. Standing up pilot environments or test beds requires long planning and procurement cycles.

On the software side, if your core platforms are highly customized and monolithic, every change becomes a big event. Release cycles are long, testing is complex, and the risk of unintended consequences is high. That makes organizations cautious, so innovation tends to move in small, slow steps.

From a WAN standpoint, you’re constrained in how fast you can stand up new sites, regions, or cloud endpoints. Lead times can be long, and it can be hard to support patterns like local Internet breakout or modern SASE architectures when your contracts and topology are anchored in MPLS. We see clients who want to roll out new collaboration platforms or connect to new SaaS providers globally, but everything is slowed down by older routing, firewalls, and change processes.

Tony:
So technology debt doesn’t just increase costs; it slows you down right when you need to move faster.

Let’s connect this to competitive advantage. If I’m a CFO or business leader listening, I might say, “We’re still running, so is this really a problem?” How do you tie technology debt to competitive advantage in a way that resonates outside of IT?

Larry:
There are a few clear links.

First, customer experience. If your digital channels are slower or less reliable than competitors because you’re constrained by legacy systems and networks, customers notice.

Second, time-to-market. If it takes you a year or more to launch a new product, integrate an acquisition, or enter a new market because you’re working around legacy constraints, while competitors can do it much faster, that’s a strategic disadvantage.

Third, risk and resilience. Older platforms and architectures often have higher outage risk and longer recovery times. In a world where outages are visible to customers, regulators, and the market, that’s not just an IT issue.

And finally, talent. Strong engineers increasingly want to work with modern, cloud-native technologies. If too much of your estate is anchored in outdated platforms, it becomes harder to attract and retain the people you need for transformation.

Tony:
So organizations that deliberately address technology debt are better positioned to move quickly, serve customers more effectively, and absorb shocks more gracefully than those that just keep patching the old environment.

Before we wrap Part 1, what’s the one thing you want listeners to take away from this conversation?

Larry:
I’d say: technology debt is a strategic issue, not just an IT housekeeping issue. If you don’t recognize it, measure it, and manage it, it becomes your default strategy – and that strategy is “spend more to move slower.”

Tony:
Well said.

In Part 2 of this series, we’ll look at how technology debt accumulates, why it’s so hard to escape, and some pragmatic ways to diagnose and quantify it so you can build a credible plan to retire that debt and fund transformation.

Larry, thanks for joining me today.

Larry:
Thanks, Tony. I’m looking forward to Part 2.

Tony:
To our listeners, if you would like to discuss technology debt in your hardware, software, or WAN environment, or if you’d like to discuss other technology strategy, sourcing and cost reduction needs with Larry, me, or any of our TC2 and LB3 colleagues, please give us a call or shoot us an email.
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