Renewal of Legacy Information Systems

The renewal of legacy information systems is the responsibility of institutions and their respective ministries. Ministry of Finance and Economic Affairs in collaboration with Digital Iceland provides guidance, standards, and support where appropriate, but the projects themselves remain the responsibility of the relevant institution and ministry.

The renewal of legacy information systems is not only about replacing outdated software. It is about improving operations, reducing risk, and ensuring that critical government systems continue to support services, data, and operations in a secure and sustainable way. The goal is for projects to be better prepared, based on shared standards, and to deliver lasting value for the government.

Legacy Systems and Systemically Important Core Systems

A legacy system is an information system whose technical condition, operational state, or vendor support has reached a point where it creates risk and/or limits future development. Such systems may still be in daily use and support critical business functions, but their condition makes it necessary to evaluate replacement or alternative modernisation approaches.

Many legacy information systems are no longer isolated tools within a single institution. They form an important part of government operations, manage data that others rely on, and support services that affect individuals, businesses, and other public entities. When such systems fall behind, this increases not only technical risk and the likelihood of poorer service, but also operational risk and cost.

The challenge is therefore not only outdated software, but also unclear ownership, limited documentation, unclear operational processes, poor data quality, and strong dependencies on legacy systems or individual vendors. The renewal of legacy systems must therefore be viewed as a digital transformation of critical infrastructure rather than as a limited software replacement project.

Modernisation of the Government’s Digital Infrastructure

The modernisation of the government’s digital infrastructure takes place through clear stages. The objective is to enable institutions and ministries to prepare projects properly, choose an appropriate approach, and ensure that new solutions are efficient, secure, and sustainable over the long term. Consideration must be given to data, ownership, operations, procurement, and development — not only technical implementation.

To support institutions and ministries, five stages have been defined, covering the process from initial assessment to operations. These stages provide a shared framework for how projects are analysed, prepared, designed, implemented, and operated. Funding is available only at two defined stages of the process: H2, for technical analysis, and H3, for project implementation.

Funding – Ministry of Finance and Economic Affairs Contribution

An investment contribution from the Ministry of Finance and Economic Affairs may be considered at two points in the legacy information system renewal process: first, when a project moves from the initial assessment phase to technical analysis, and second, in certain cases, when the technical analysis has been completed and the project is ready to proceed to the next stage.

Once the analysis and preparation have been completed, an institution may apply for funding for the next stage of the system renewal project, provided the eligibility criteria are met. Such applications apply only to larger projects where the estimated total cost exceeds ISK 100 million and the project concerns a systemically important core government system.

The Ministry of Finance and Economic Affairs may contribute up to 35% of the project's estimated total cost. The percentage may be reduced depending on the size and scope of the project, as well as the financial contribution of the institution and the responsible ministry. The contribution is available only for external or procured services. Internal work carried out by the institution may be included in the total project cost but is not eligible for funding.

Applications must include the outcome of the analysis, justification for the selected approach, a realistic plan for the next stage, a cost overview distinguishing between internal and external costs, information on the institution's matching contribution, and confirmation that implementation of the project has not yet begun.

Read more about the application process.