Many SMEs continue to use outdated software, often to avoid an investment they deem too high or too complex to manage. However, this inaction creates a multitude of hidden costs that ultimately weigh heavily on the company's productivity, security, and competitiveness. In this article, we'll shed light on these often-overlooked expenses and demonstrate why modernization can, in the medium and long term, prove more cost-effective than you might think.

1. What is meant by “hidden costs”?

Hidden costs are all the expenses that aren't immediately visible in your financial statements, but are a direct or indirect result of using outdated software. They can take the form of wasted time due to repetitive tasks, missed business opportunities, or even unplanned maintenance costs. On the surface, keeping an aging system may seem less expensive than investing in an overhaul. In reality, this choice generates ongoing expenses that, over time, can significantly exceed the budget for software modernization.

2. The main hidden costs

Loss of productivity

Symptoms : Employees spend a lot of time manually entering data, working around bugs, or waiting in front of a slow system.
Impact : Every minute lost represents additional labor costs and limits the time available for higher value-added tasks.
Key figure : According to some estimates, an SME can lose up to 15 to 20% of its productivity due to obsolete software.

Expensive maintenance and technical support

Symptoms : Rising bills for one-off interventions, frequent requests for specialists capable of managing “old” code, repeated breakdowns in production.
Impact : It is difficult to predict the overall budget when each incident becomes an emergency.
Example : A company with 100 users can spend between $20,000 and $40,000 annually on additional maintenance for aging software (support contracts, external interventions, etc.).

Security risks and possible penalties

Symptoms : Systems are no longer patched, leaving the door open to security breaches, ransomware, and data exfiltration.
Impact : Loss of strategic data, blackmail, and reputational damage. In certain regulated sectors, fines may apply.
Statistic : According to the Ponemon Institute, nearly 40% of successful cyberattacks target vulnerabilities in outdated and unpatched software.

Staff dissatisfaction and turnover

Symptoms : Users experience bugs or outdated usability, which leads to frustration and demotivation.
Impact : Increased turnover rates and recruitment costs. The training required to learn an outdated system can also be costly.

Missed opportunities and lack of agility

Symptoms : Unable to quickly deploy new functionality, integrate with a modern CRM, or offer advanced online services.
Impact : Dissatisfied customer, falling behind the competition, inability to meet market demand within reasonable timeframes.
Example : An online store that wants to add an e-invoicing module but encounters an incompatible system may lose sales or jeopardize its expansion.

3. How to calculate the true cost of obsolete software (TCO)

TCO (Total Cost of Ownership) covers all direct and indirect expenses related to the use of software, whether immediately visible or not. This includes:

This includes:

Direct costs : licenses, maintenance, support, etc.
Indirect costs : lost productivity, breakdowns, staff frustrations, missed business opportunities, etc.
Intangible costs : impact on the company's image, demotivation of teams, etc.

In other words, TCO helps you understand the real cost of keeping outdated software instead of upgrading it.

Detailed example with a summary table

Let's imagine ServiceCorp , a small business with 50 employees, 30 of whom use outdated software every day. In the first year, total costs (direct + indirect) are estimated at $92,400. We then apply an average increase of 5% per year to account for the progressive increase in maintenance, loss of productivity, etc.

Annual assumptions

1 breakdown per month, consultant cost: $800
1 hour of wasted time per week per employee (hourly cost $30)
1 employee leaves the company per year due to frustration with the system
2 major missed opportunities per year (e.g., impossible integrations, delayed new features)

Details of costs for the first year (calculation basis)

Cost type	Amount (Year 1)
Licenses & Support	$21,000
Maintenance & emergency interventions	$9,600
Loss of productivity (30 employees × 52 h × $30/h)	$46,800
Turnover / demotivation (1 departure = $5,000)	$5,000
Missed Opportunities (Estimated Value)	$10,000
Total Year 1	$92,400

5-year projection with an increase of 5% / year

The table below shows the estimated evolution of these costs over 5 years, considering an increase of 5% each year (increase in support prices, deterioration of the system, increase in lost time, etc.).

Cost type	Year 1	Year 2 (+5%)	Year 3 (+5%)	Year 4 (+5%)	Year 5 (+5%)
Licenses & Support	$21,000	$22,050	$23,153	$24,311	$25,526
Maintenance & interventions	$9,600	$10,080	$10,584	$11,113	$11,669
Loss of productivity	$46,800	$49,140	$51,597	$54,177	$56,886
Turnover / demotivation	$5,000	$5,250	$5,513	$5,788	$6,078
Missed Opportunities	$10,000	$10,500	$11,025	$11,576	$12,155
Annual subtotal	$92,400	$97,020	$101,872	$106,965	$112,314

Analysis :

By the second year, costs exceeded $97,000 .
After 5 years, ServiceCorp will have spent a total of approximately $510,000 , just to maintain outdated software, not to mention the negative impact on customer satisfaction or brand image.

Conclusion on long-term TCO

High cumulative cost : Failure to modernize results in increasing expenses year after year.
ROI of a modernization : Even though the redesign may cost, for example, $150,000 or $250,000, the return on investment is often achieved within 1 or 2 years and the savings (as well as productivity gains) accumulate thereafter.
Competitiveness Factor : Modern software allows for rapid addition of features, improved security and reduced staff turnover.

Quick analysis:

In a single year, the choice to keep this outdated software cost ServiceCorp more than $92,000 .
The investment for a modernization project (e.g., $120,000) would be amortized in less than two years, while improving productivity, reliability, and employee satisfaction.

TCO provides a comprehensive view of the real financial impacts of not modernizing software. Often, redesigning or upgrading becomes more cost-effective in the medium term than maintaining an outdated system.

Conclusion

Failure to modernize software isn't simply a matter of maintaining the status quo: it carries a real cost, one that's often vastly underestimated. Between lost productivity, maintenance costs, security risks, and staff frustration, the bill quickly adds up.

Rather than "making do" with an aging system, it's best to accurately calculate its total cost of ownership. You'll often find that a software overhaul delivers a significantly better ROI than expected and, at the same time, offers major benefits in terms of competitiveness and innovation.

Would you like to know more?
We invite you to contact us for a diagnosis of the hidden costs your business may be facing. Together, let's assess how software modernization can not only reduce your expenses but also boost your growth.

How Much Is Outdated Software Really Costing You? Invisible Expenses Revealed