MADE IN GERMANY Modernisation of Legacy Systems

In 2025, large German organisations and SMBs across energy, wireless communication, automation, and IoT segments will be at a turning point. Legacy system modernisation is now a strategic requirement for preserving competitiveness, guaranteeing compliance, and bolstering resilience in an increasingly digital environment.

The Drivers

Regulatory Compliance

New laws, such as Germany’s Digitisation of the Energy Transition Law, mandate smart meter rollouts, dynamic tariffs, and automated energy reporting. Legacy systems simply can’t keep up with these demands. At least 20% of high-consumption households will have smart meters by the end of 2025, with a target of 95% by 2030.

Cybersecurity

Cyberattacks against antiquated infrastructure have increased, especially in the telecom and energy industries. Security is ingrained in modernisation from devices to the cloud, so protecting operations is crucial for both big businesses and small businesses.

Cost-Effectiveness

Legacy systems reduce agility and are costly to maintain. Modernisation can increase operational efficiency by 25% and lower IT expenses by up to 30%. These savings have the potential to revolutionise the way SMBs operate. 

Creativity and Expandability

Real-time analytics, predictive maintenance, and smooth integration with IoT devices are made possible by contemporary cloud-native and microservices architectures. For any business hoping to grow and innovate, this is essential.

Sector-specific Insights

Energy

Germany’s energy transition demands flexible, secure, and integrated IT and OT systems. Legacy infrastructure struggles with decentralised renewables, real-time data, and regulatory reporting. Modernisation supports grid stability, cost reduction, and compliance. IoT-enabled modernisation can improve operational efficiency by up to 25%, while cloud-based solutions reduce annual IT costs by up to 30%.

Wireless Communication

The rapid rollout of 5G and edge computing requires telecom providers to upgrade legacy networks. Modernisation reduces operational costs, improves network reliability, and enables faster deployment of new services. 5G is expected to cover 70% of the European population by 2026, driving €200 billion in related investments by 2030.

Automation & IoT

Legacy automation and IoT systems often cause data silos and limit scalability. Modern platforms provide real-time data processing, predictive analytics, and enhanced security, critical for Industry 4.0 applications. Europe has reached 5 billion connected devices in 2025, and modernised systems are required for real-time data processing and secure device management. 

The development, deployment, and maintenance of embedded systems require skills beyond simple programming. Embedded systems technology evolves at such a rapid pace that some implementations become outdated even before complete fielding. Thus, it is vital to consider integrating new developments into the design for evolution, not obsolescence and total replacement. Constantly replacing old systems with new ones becomes very costly.

Talent Shortages: A Continuous Challenge

A significant challenge facing German organisations is the shortage of skilled IT professionals. According to recent surveys, over 70% of IT leaders in Germany report difficulties in finding qualified staff. This talent gap is particularly acute in areas like cybersecurity, data analytics, and cloud computing. 

Key Statistics and Sectoral Impact

• There are currently 149,000 unfilled IT positions in Germany, a record high and an increase of 12,000 from the previous year. Projections indicate that Germany will require over 700,000 additional IT professionals by 2030 to keep up with digitalization demands.
• Approximately 66% of senior IT professionals report that talent shortages have adversely affected their companies, leading to delayed projects (39%), inability to launch new products or services (36%), increased operating costs (30%), and employee burnout (24%).
• The IT talent gap extends to wireless communication, industrial automation, and IoT, where the push for Industrie 4.0 and smart manufacturing has driven up demand for skills in AI, cybersecurity, cloud, and data analytics. The IT services sector alone is estimated to have a shortfall of over 100,000 specialists in 2025.
• Startups and established firms alike are struggling to find talent in cybersecurity, data science, and AI, which are foundational for IoT and industrial automation solution.

Needs by sector

Did you know?

• Did you know? Germany's IoT market reached €32.74 billion in revenue at the end of 2024, with an annual growth rate of 8.26% and increase to projected €44.94 revenue by 2029

• The automotive sector dominates Germany's IoT market, with a market volume of €8.25 billion

• Germany is the home of 231,000 manufacturing enterprises, employing approx. 8 million people and still a global leader in IoT innovation,  but struggling to leveraging its strong industrial base to drive adoption and integration