# Legacy ERP Retirement Cost and Payback Calculator

> Source: https://netray.co/tools/legacy-erp-retirement-cost-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Compare the annual run cost of a legacy IBM i ERP with a replacement, include migration and parallel run costs, and see payback and net savings.

## Category

cost-finance

## Erp

JD Edwards World / IBM i

## Audience

- CIO
- CFO
- IT manager
- ERP program manager

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Hardware and IBM i maintenance per year

**Key:** hw_maint

**Type:** number

**Default:** 60000

**Min:** 0

**Step:** 1000

**Unit:** per year

**Help:** Server, storage, OS software maintenance, backup hardware.

#### Software support and licences per year

**Key:** sw_support

**Type:** number

**Default:** 120000

**Min:** 0

**Step:** 1000

**Unit:** per year

**Help:** ERP maintenance plus third party tools that only exist for the legacy system.

#### Staff effort on legacy support

**Key:** staff_fte

**Type:** number

**Default:** 3

**Min:** 0

**Step:** 0.5

**Unit:** FTE

**Help:** Admins, RPG developers, report writers, contractors.

#### Loaded cost per FTE

**Key:** staff_cost

**Type:** number

**Default:** 95000

**Min:** 0

**Step:** 1000

**Unit:** per year

#### Facilities, power, DR and hosting per year

**Key:** facilities

**Type:** number

**Default:** 25000

**Min:** 0

**Step:** 500

**Unit:** per year

#### Replacement annual run cost

**Key:** new_run

**Type:** number

**Default:** 210000

**Min:** 0

**Step:** 1000

**Unit:** per year

**Help:** Subscription or licence support, hosting, and the staff you will still need.

#### One-time migration project cost

**Key:** onetime

**Type:** number

**Default:** 650000

**Min:** 0

**Step:** 5000

**Unit:** once

**Help:** Software, implementation, conversion, testing, training.

#### Months of parallel running

**Key:** parallel

**Type:** slider

**Default:** 3

**Min:** 0

**Max:** 12

**Step:** 1

**Unit:** months

#### Evaluation period

**Key:** horizon

**Type:** slider

**Default:** 5

**Min:** 1

**Max:** 10

**Step:** 1

**Unit:** years

**Outputs:**

#### Legacy staff cost per year

**Key:** staff_total

**Expr:** staff_fte * staff_cost

**Format:** currency

#### Legacy annual run cost

**Key:** legacy_run

**Expr:** hw_maint + sw_support + staff_total + facilities

**Format:** currency

**Primary:** true

**Description:** Everything you spend each year to keep the legacy system running.

#### Parallel run cost

**Key:** parallel_cost

**Expr:** legacy_run / 12 * parallel

**Format:** currency

**Description:** Legacy run cost continuing while the new system goes live.

#### Total one-time cost

**Key:** total_onetime

**Expr:** onetime + parallel_cost

**Format:** currency

#### Annual savings after cutover

**Key:** savings

**Expr:** legacy_run - new_run

**Format:** currency

**Description:** Negative means the new platform costs more to run each year.

#### Payback period

**Key:** payback

**Expr:** if(gt(savings, 0), total_onetime / savings * 12, 0)

**Format:** months

**Primary:** true

**Description:** Zero means there is no payback from run-cost savings alone.

#### Net position over the evaluation period

**Key:** net_horizon

**Expr:** savings * horizon - total_onetime

**Format:** currency

**Description:** Savings over the period minus one-time costs, before any benefits beyond run cost.

**Chart:**

#### Net position by evaluation period (years)

**Type:** line

**X:** horizon

**From:** 1

**To:** 10

**Steps:** 10

**Series:**

- net_horizon

**Disclaimer:** This is a simple run-cost comparison, not a full business case. It excludes business benefits, risk cost, discounting and tax. Use your own figures.

## Content

**Intro:** Retiring a legacy ERP rarely pays for itself through run-cost savings alone, but it is the number every finance team asks for first. This calculator adds up what the legacy system costs per year, compares it with the replacement, and shows payback and net position.

**Sections:**

#### How to use the calculator

**Body:** Enter annual hardware, software and facilities costs, then the share of staff time that goes to keeping the legacy system alive. Include contractors and the part-time effort of people who do other jobs. Add the replacement's annual run cost and the one-time migration cost, and set the number of months you expect to run both systems. The results show total legacy run cost, annual saving, payback in months and net position over the period you choose.

#### The formula

**Body:** Legacy run cost is hardware plus software plus staff plus facilities. Annual saving is legacy run cost minus the replacement run cost. Parallel run cost is legacy run cost divided by twelve, multiplied by the months of overlap. Payback in months is the one-time cost, including parallel run, divided by the annual saving, multiplied by twelve. Net position equals saving times years minus one-time cost. No discounting is applied, so treat results as an indication.

**Bullets:**

- Payback = (migration + parallel) / annual saving x 12
- Net = annual saving x years - one-time cost
- Zero payback means there is no run-cost saving

#### Reading the result and common mistakes

**Body:** If savings are small or negative, the case rests on risk, capability or growth, not cost. That is common, because a paid-off IBM i system can be cheap to run. A frequent mistake is counting staff savings that never happen because the same people support the new platform. Another is leaving out data archive, retained read-only access for audit, and third party interface rework. Run the calculator with pessimistic and optimistic inputs and compare the range.

**Cta:** If you want help estimating migration scope or building the non-cost side of the case, Netray can talk it through. The calculator is free and complete without contact.

**Faq:**

#### Is a legacy ERP cheaper to run than a modern one?

**Answer:** Sometimes. A paid-off IBM i system with stable support can have low run costs. The real costs are often hidden in specialist staff, missing integrations, and the risk of losing key people, which are harder to put in a spreadsheet.

#### Should I include staff in the comparison?

**Answer:** Yes, but only the effort that will actually go away. If the same team will support the new platform, do not count the full salary as saving. Use a realistic split and note it in your assumptions.

#### What payback period is typical?

**Answer:** There is no standard figure. Many replacements do not pay back through run cost alone and are justified by capability, risk or growth. Use the calculator to see what the savings contribute, not to carry the whole case.

#### What about data archive after retirement?

**Answer:** Plan for it. You may need read-only access to historic records for audit, tax or service. Include the cost of an archive or a small retained system in the replacement run cost field.

## Search terms

legacy erp retirement cost, legacy erp decommissioning cost, erp replacement payback calculator, as400 cost of ownership, jd edwards world total cost of ownership, erp migration business case, ibm i maintenance cost, legacy system retirement roi

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