Introduction

Why do IT costs in operating companies keep increasing year after year? Even in weak economic conditions, new programs continue to appear under labels such as DX, AI adoption, and business reform. Each individual initiative often looks reasonable. That is exactly why this trend is hard to stop.

The core problem is structural: organizations reward adding, but rarely reward ending. As long as this structure remains, fixed costs accumulate.

This article focuses mainly on so-called JTCs (Japanese Traditional Companies), but many points also apply outside Japan.

Cultural note: In this article, JTC means Japanese Traditional Company. Ringi refers to a Japanese internal pre-approval workflow. Lifetime employment and seniority-based promotion refer to traditional Japanese employment practices. These terms do not perfectly match institutions in every country, so please interpret them by context.

First, clear up a common misunderstanding

This article does not argue that all new initiatives are bad. Many investments are necessary and rational. The issue is that painful retirement and consolidation decisions are often postponed indefinitely.

When new initiatives are easy to approve, and retirement is hard to execute, total cost keeps rising even if each project looks correct on its own.

What happens on the ground

A common pattern is:

  1. New proposals are seen as positive and future-oriented.
  2. New systems for productivity or standardization are easier to approve.
  3. In a culture that overemphasizes harmony, positive-looking proposals are hard to criticize.
  4. The number of systems increases.
  5. License, maintenance, operations, audit, and training costs increase together.
  6. Once business units depend on them, retirement becomes politically difficult.

This cycle repeats and fixed costs accumulate.

Why costs keep growing even when initiatives look correct

1. Performance management rewards launches more than retirements

Many organizations evaluate:

  • what was launched,
  • how many projects were introduced,
  • how attractive the presentation looks.

But they rarely evaluate equally:

  • what was safely retired,
  • what overlap was removed,
  • how much future fixed cost was reduced.

2. “No-conflict savings” are praised; “core savings” are avoided

Efficiency gains through adding tools are politically easy. Real savings from shutdowns are painful:

  • users lose convenience,
  • workflows must change,
  • temporary migration risk appears,
  • ownership conflicts emerge.

The most effective savings often create the most friction, so they are avoided.

3. Role confusion between business transformation and IT

Business transformation must be owned by business functions. IT can provide tools and architecture, but cannot alone redesign every process. When this boundary is unclear, organizations keep adding solutions without resolving operating design.

4. Misreading psychological safety

Psychological safety is important. But if it is interpreted as “avoid all conflict,” retirement decisions stop. Then adoption moves forward while legacy costs remain.

5. Executive evaluation drifts toward presentation value

Shiny initiatives are easy to explain in slides. Consolidation, dependency cleanup, contract rationalization, and operational standardization are less visible. When leaders prioritize what is easy to present, cost expansion is inevitable.

Why consolidation is a thorny path

Consolidation requires detailed technical and operational understanding:

  • dependency mapping (business, data, permissions, reports, integrations, audits),
  • migration risk control (parallel run, rollback, training, support),
  • post-retirement responsibility design.

Without this capability, retirement plans remain slogans.

The cost equation

A simplified equation is:

Next-year IT cost = last-year fixed cost + fixed cost added by new initiatives - cost removed by retirement/consolidation

In many enterprises, the last term is too small. That is why costs keep rising.

Root causes

  1. Evaluation systems are biased toward additions.
  2. Ownership between business and IT is blurred.
  3. Psychological safety is misapplied as conflict avoidance.
  4. Decision makers often lack direct exposure to field friction and technical debt.

What can be done

Option A: strong cost-cutting intervention

It can work in the short term, but side effects are serious. Trust and long-term capability may be damaged.

Option B: appoint leaders who can make and absorb painful decisions

This is the sustainable approach. Organizations should formally evaluate the ability to end systems, not only to launch them.

Practical actions:

  1. Assign a top-level owner for retirement and consolidation decisions.
  2. Add retirement KPIs (retired systems, overlap removal, fixed-cost reduction, dependency elimination).
  3. Give architecture leadership formal veto and consolidation authority.
  4. Ban passive “wait for EOL” behavior; require dependency-exit roadmaps.
  5. Evaluate “what was ended” with the same weight as “what was added”.
  6. Assign business-side owners to every consolidation project.
  7. Recognize and reward teams that handled unavoidable friction responsibly.

Execution reality

The real issue is not drawing pretty roadmaps. It is deciding who takes which pain, by when, and with what accountability.

Top management must:

  • take final responsibility,
  • absorb complaints as organizational cost,
  • prevent conflict from being treated as an individual’s personal failure.

Business teams must specify concrete operational impacts. IT must make dependencies and migration risk explicit. Then both sides must decide, with deadlines, what to keep and what to retire.

Responses to common objections

“But we need new initiatives”

Yes. This article does not deny new investment. It argues against avoiding retirement forever.

“Consolidation hurts operations”

Short term, yes. But postponement creates larger long-term complexity. The question is not whether pain exists, but when and how to pay it.

“We don’t have suitable leaders”

That may be the exact reason costs keep rising.

Summary

Enterprise IT costs keep rising when organizations celebrate additions but do not institutionalize endings. AI and DX initiatives may each be valid, but without retirement and consolidation, they become future maintenance debt.

The essential management capability is not only the power to add. It is the power to end—fairly, transparently, and with responsibility.

Related article

References

[1] U.S. CIO Council, Application Rationalization Playbook. https://www.cio.gov/assets/files/Application-Rationalization-Playbook.pdf