Last month I helped an Australian mid-market manufacturer audit their SAP R/3 system. It’s been running since 2008. The annual licence and support fees are around $380,000. That’s the number the CFO knows.

The number nobody knew? Over $1.2 million per year in hidden costs that had quietly accumulated around this system like barnacles on a hull.

The Costs Nobody Tracks

Legacy ERP systems don’t just cost you maintenance fees. They cost you in ways that rarely show up on a balance sheet.

Integration tax. Every new system your business adopts—CRM, warehouse management, e-commerce platform—needs to talk to the ERP. Modern APIs don’t exist on most legacy ERPs. So you build custom middleware. Each integration costs $30,000-$80,000 to build and $10,000-$25,000 per year to maintain. That manufacturer had seventeen custom integrations. Seventeen.

Specialist labour premiums. ABAP developers (SAP’s proprietary language) in Australia now command $180-220 per hour for contract work. There aren’t many of them left, and they know it. The same business logic built on modern platforms could be maintained by developers charging $120-150 per hour—and there are far more of them available.

Opportunity cost of frozen processes. This one’s the killer. Your ERP was configured around business processes from a decade ago. Changing those processes means changing the ERP configuration, which means engaging consultants, testing extensively, and praying nothing breaks downstream. So processes don’t change. The business calculates around the system rather than through it.

One client told me they manually re-key data from their ERP into spreadsheets because the reporting module can’t produce the views their board wants. Two full-time employees spend roughly 30% of their week on this. That’s an employee’s salary worth of workaround, every year.

The Security Problem Nobody Mentions

Legacy ERPs often run on operating systems and databases that are approaching or past end-of-life support. I’ve seen SAP instances running on Windows Server 2012 R2 in 2026. Microsoft ended mainstream support for that in 2018.

Your cybersecurity insurance provider is increasingly likely to ask about this. Several Australian insurers have started requiring detailed infrastructure audits, and running business-critical systems on unsupported platforms can affect premiums or coverage. The Australian Cyber Security Centre has been clear about patching and supported software being baseline requirements.

This isn’t theoretical. A mid-sized Australian logistics firm I advised had their cyber insurance premium increase by 40% partly because their ERP ran on an unsupported database version.

Why Companies Don’t Migrate

If the costs are so high, why do companies keep these systems running? Three reasons I see consistently.

Fear of disruption. ERP migrations are genuinely risky. Failed migrations have destroyed companies. The Revlon SAP implementation disaster is still cited in boardrooms as a cautionary tale. This fear is rational, but it shouldn’t be paralysing.

Sunk cost fallacy. “We’ve invested $4 million in this system.” Yes, and that money is gone regardless of what you do next. The question isn’t whether to protect past investment—it’s whether future spending on the legacy system delivers better returns than spending the same money on migration.

Nobody owns the decision. The CTO knows migration is needed. The CFO knows the costs are climbing. The COO is terrified of operational disruption. The CEO waits for consensus. Consensus never arrives because the incentive structures are misaligned. Nobody gets promoted for a successful ERP migration, but plenty of people have been fired for failed ones.

What a Realistic Assessment Looks Like

If you’re running a legacy ERP, start by actually quantifying your total cost of ownership. Not just licence fees. Include integration maintenance, specialist contractor costs, manual workarounds, security remediation, training costs for new staff on old systems, and the revenue you’re not generating because your processes can’t adapt quickly enough.

I’ve done this exercise with about a dozen organisations over the past two years. In every case, the true annual cost was at least double what the finance team believed. In three cases, it was more than triple.

That doesn’t automatically mean you should migrate. Sometimes the answer is a phased modernisation—replacing the worst integrations, moving reporting to a modern layer, extending the ERP’s life while reducing its footprint.

But you can’t make that decision without accurate numbers. And right now, most organisations are making the decision to stay on legacy ERP by default rather than by analysis.

The Conversation Your Board Needs

If you’re a CTO or IT director reading this, the most valuable thing you can do this quarter is build an honest total cost model for your legacy systems. Present it alongside a realistic migration timeline and budget. Not a vendor’s optimistic estimate—your own conservative assessment.

The board may still decide to wait. That’s their prerogative. But at least the decision will be informed rather than based on the comforting fiction that the ERP only costs what’s on the invoice.

The hidden costs are there whether you count them or not. They’re just easier to ignore when nobody’s written them down.