You may be in a bit of a panic if you are running legacy software. Because, when it comes to the battle for legacy vs. saas WMS solutions, legacy software takes a hit against modern software as a service. In fact, the winner will appear very clear. The legacy vs. saas WMS debate has its ups and downs. Currently, according to a Northbridge Venture Partners survey, 47% of businesses plan to or are already in the process of switching to the cloud. From the same study sum, 80% of IT budgets will be dedicated to cloud infrastructure. Many people won’t find that as a major surprise but it’s certainly something to think about.

Here we’ll focus on the differences, pros and cons and steps to take to address each situation. While cloud infrastructure gets a lot of attention, you can still find other benefits to running your own on-premise or hybrid model. I’ll run through this to understand the legacy vs. saas WMS side of things specifically. The goal is to come away with the underlying factors and what makes sense specifically addressed to wholesalers, large retail networks, and wholesale distributors.

Setting the Stage – legacy vs. saas WMS

Why write this piece? I come across this scenario a lot. The typical situation looks like this. Let’s say you’ve got most of my warehouses running their own on-premise solution, tied in with my other warehouses. They are all running the same software, but it is not easily “synced” together when it comes to the operating system.

You struggle to upgrade. The software you’re running lack the critical updates needed to move the business forward while maintaining existing workaround solutions. Meanwhile, when a problem needs to be solved, someone must physically come to my location. Or, you need to dedicate a full person at all times to understand the system to update it. Then, you end up spending hours fixing or updating the legacy system.

This story could certainly always take a dramatic but very real situation where your on-premise system in place running legacy software is flooded, damaged or burned. The benefits of the cloud do make a very real presence in these types of situations. But, at least you were syncing all the information between everything consistently, right?

All kidding aside, let’s get started.

What are the big differences?

The biggest differences come in the costs to update, modern integrations, and critical features to help move faster.

Cost Differences

Since this is a place most of the c-suite will be looking at, let’s start here.

Legacy

First of all, legacy software is almost always sold through a license. This means you pay for the software up-front, and the software is yours for the lifetime. They may also tack on “update” charges, and will not provide the hosting for you to use the software. Oftentimes you will also be paying for any kind of support or maintenance.

SaaS

In the SaaS space, the costs are spread over a longer period of time. During this time, which is typically paid monthly, but may be a yearly installment, you have all the updates, maintenance & support included. The longer-term costs may be higher here, but you are also constantly “upgraded” on functionality.

Entry LevelMid-RangeEnterprise
SaaS WMS
(per user
per month)
$75-$150$200-$350$500+
Legacy
(per facility)
$2500-$10000$10000-$50000$50000-$200000
Ideal UseCompanies with
limited
automation
and inventory
support – often
not including
methods to track
goods through
various channels
or shipping
lanes.
Growing
operations
requiring
mid-range of
services
and automation,
with degrees
of complexity &
industry
specificity
Enterprises
requiring
latest
automation
software,
integration with
suppliers,
advanced
analytics,
or integration
with specialty
assembly lines

Hosting

You’ll be running legacy systems on your own homegrown systems. You *could* actually run this on a cloud-based environment, but also this may not be possible with the configuration of the software you are using. The costs of hosting with legacy are also a separate factor for the pricing. You will also be on the hook for updating the hardware and operating system running the environment.

You can expect SaaS software to be hosted and delivered directly through the web. It enables a point of login across any computer. The costs of this are also included within the price of the SaaS monthly user costs. The actual hardware and operating systems running your software are also constantly updated here, without you ever needing to know.

Legacy vs. SaaS WMS Functionality

Here is likely where the tables will turn. For legacy software, you get the license and it contains exactly all the functionality you will get for the extended license you have. Unless you hire the company to include additional functionality, it will stay exactly as it was.

For SaaS, you can expect new features on a daily/weekly/monthly basis. This is one of the reasons why SaaS has come on so strong. In order to compete in a fast-moving environment, you have to adapt. SaaS has a clear advantage here of “shipping” new features almost instantly. For legacy systems, you will need months of time, lot’s of cost, and new training to understand the new functionality.

Here’s a table of functionality which will generally be available given the size and complexity of your system. Take a look at the dHUB system to compare everything included with all versions.

Entry LevelMid-RangeEnterprise
Inventory ManagementPicking OptimizationDynamic Slotting
Order FulfillmentCustomer User
Dashboards
Compliance Tools
Barcode ScanningFleet & Asset
Managment
IoT Automation
ReceivingReal-Time AnalyticsAdvanced Analytics
& Forecasting
ShippingCapacity PlanningPalletization
Limited IntegrationsMost IntegrationsCustom Integrations

Staff and Training Considerations for legacy vs. saas WMS

Another large difference between these two is how much personnel it will require to keep things up and running smoothly. For legacy systems, you can likely expect at least 1-2 extra employees. This is because legacy platforms still require the hosting infrastructure to be supported, maintained and updated. You will still have a staff within the warehouses as well as administration managing multiple tasks through the software.

Number of Users

It was mentioned by Explore WMS that per facility you should plan for an average of 5 users. For larger warehouses, it may be quite a bit higher. In any case, you should plan for the associated training costs of implementation. This can range from $3,000-$5,000 per location for both SaaS and legacy systems. As mentioned, you should also plan to have an extra person who will be doing the maintenance and support for infrastructure.

Keep in mind the overall staff consideration for legacy vs. SaaS WMS should be paired down by three things: employees using the software, employees overseeing the software (admin), and infrastructure engineers. In SaaS, you can likely forgo the infrastructure engineers. This is handled by your SaaS vendor.

Costs of Training & Support

On an annual perspective, the costs for legacy software can range from 10%-20% of the cost of the WMS. For SaaS, this cost is oftentimes included within the cost of the software. What you may see is the level of support change depending on which support level you are on. It may start at a Bronze level for email-only but go up to Platinum for 24/hour phone support.

Here’s a rough breakdown of what you can expect:

Entry LevelMid-RangeEnterprise
Legacy Deployments
Installation & Customization$4,000$8,000$15,000
Maintenance & Support$1,000$2,500$6,000
Total Deployment Cost$5,000$10,500$21,000
SaaS Deployment
Installation & Customization$2,000$5,000$10,000
Maintenance & Support$300$1,000$2,500
Total Deployment Cost$2,300$6,000$12,500

Upgrades and Functionality Improvements – legacy vs. saas WMS

This may be one of the biggest difference in legacy vs. SaaS WMS. Let’s break it down:

Legacy

  • Reliant on the external provider to customize your software for unique functionality
  • Limited interface upgrades for usability
  • Costly to adapt modules for the legacy system
  • New possibilities for innovation are limited by the scope of the legacy software functionalities
  • System design and functionality limited by the current hardware and operating system in place for on-premise equipment
  • Very little mobility since software is installed to the local computer
  • Cannot connect with other software systems without significant engineering investment

Saas

  • Oftentimes available to modify through API (application programming interface)
  • Expand or contract features based on tiered pricing and versions
  • Consistent upgrades to both functionality availability and interface usability
  • Pairing of hardware updates and operating system upgrades for improved performance and mobility
  • Run across a variety of devices, anywhere in the world with an internet connection
  • Option to build functionality internally or hiring the vendor
  • Connects with many different software platforms efficiently

I suppose that list should make it clear that the debate is no longer up for debate. The winner is clear. But, how to deal with the increasing complexity of transitioning your existing legacy system?

Here you really need to make sure the right backup in place. You should have in place an internal “map” of which databases need to pair up with the databases of the new system. This could be considered one of the hardest tasks, as you have a certain flow for your business that must be matched initially. Working with the vendor, such as Distribution Hub, you will be pairing up the internal structure, to have it operate in sync with the way you currently operate the data for your business.

If you found this helpful and would like to discuss your current system, reach out to a specialist@getdhub.com so we can identify and prescribe the right course of action.

Get on the dHUB Club list for insider information and innovative new insights:

You can always share too: