Why legacy systems are blocking cloud value in government

UK government has spent the last decade migrating services to the cloud, often with the promise of lower costs, greater flexibility and faster delivery. But exclusive new research from Government Transformation Magazine, produced in partnership with IBM, suggests that while cloud has delivered operational gains, legacy technology remains the single biggest barrier preventing departments from unlocking real financial value.

Based on a survey of more than 100 senior public sector digital, data and technology leaders, the research paints a clear picture. Legacy systems are not just an inconvenience. They are absorbing a significant share of technology budgets and constraining the next phase of transformation.

Legacy drag is consuming budgets

Every strategic leader surveyed reported spending at least 10% of their technology budget maintaining legacy systems. Nearly half said between 26% and 50% of spend is still tied up keeping old platforms running. That level of ongoing cost has real consequences.

Respondents said legacy infrastructure is directly diverting resources away from priorities such as data integration, service improvement and operational efficiency. These are precisely the capabilities departments need to deliver joined-up public services and to prepare for more advanced uses of data and AI.

While migration programmes continue, the research highlights a structural problem. Legacy services still need to be supported during transition, slowing down reinvestment and forcing teams to run parallel environments for longer than planned.

Cloud delivering speed, not savings

Cloud adoption has not been a failure. Most organisations report clear performance benefits, including faster delivery and improved resilience. However, only around a third of respondents say they have realised tangible cost savings from cloud.

This gap between performance improvement and financial return is one of the most striking findings. In many cases, departments have lifted and shifted existing systems into cloud environments without re-architecting services or addressing data quality and duplication. The result is that costs move, rather than reduce.

Operational teams reinforce this view. Fewer than one in three say cloud has delivered strong cost and performance benefits in practice. A significant proportion report that cloud costs are higher than expected or difficult to justify once services are live.

Reinvestment depends on proof

Despite these challenges, confidence in cloud’s potential remains high. More than three quarters of leaders believe that genuine cloud efficiencies could be reinvested into better services or improved operations.

But the research is clear that intent alone is not enough. Without credible, service-level evidence of savings, departments struggle to unlock funding for further transformation. Visibility exists through dashboards and tagging, but it is not consistently translating into action.

The implication for leaders is uncomfortable but necessary. Cloud efficiency is no longer a technical issue. It is a delivery and governance challenge that requires clearer ownership, stronger business cases and a more decisive approach to retiring legacy systems.

Download the full report, Unlocking Cloud Efficiency for Smarter Government, to explore the data and recommendations in detail.