Legacy ERP Retirement Cost and Payback Calculator
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.
Your numbers
Server, storage, OS software maintenance, backup hardware.
ERP maintenance plus third party tools that only exist for the legacy system.
Admins, RPG developers, report writers, contractors.
Subscription or licence support, hosting, and the staff you will still need.
Software, implementation, conversion, testing, training.
Your results
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.
Net position by evaluation period (years)
Sweeps Evaluation period from 1 to 10, holding your other inputs fixed.
Optional review of your retirement business case
Share your assumptions and we will point out costs that are commonly missed. No obligation.
Optional. The tool and every export work without this. No spam.
How to use the calculator
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
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.
- 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
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.
Frequently Asked Questions
Is a legacy ERP cheaper to run than a modern one?
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?
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?
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?
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.
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.
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