Feels like for institutional tools (where end users are mandated to just use that one system) it's not even the retention that is the problem.

I would generalize it (perhaps ad absurdum) instead as: do not underestimate costs of user onboarding (in whichever shape or form).

I wonder if developing a competitive replacement app actually involves replicating legacy UI. As wasteful as that may seem. And only after that hurdle is nullified, there will be a chance to gradually wean users towards a new experience pattern.