Modernising logistics systems: Is your legacy platform holding you back?

A legacy system in logistics feels like a supporting pillar. It's comfortable, familiar, and does the job. Replacing it seems like a big hassle, even when it starts showing cracks. After all, your entire operations depend on this platform.

However, increasing operational costs, intensifying competition and harder-to-predict consumer behavior patterns demand flexibility and efficiency. For many logistics companies, legacy systems are weighing down their operations instead of fueling their growth.

This comfort is an illusion, as outdated platforms hinder agility and growth. They often lead to inefficiencies that take up a lot of resources and often alienate clients. The infrastructure needed to innovate and adopt trends such as advanced automation with Artificial Intelligence (AI) and Machine Learning (ML) is practically non-existent in an outdated system.

So, the reluctance to make a change now could have significant ramifications in the near future. The good news is that this is all preventable.

What is the actual cost of legacy systems in logistics?

System modernisation takes time and may disrupt logisticsoperations, making it a less attractive option. So, it's easy to see why businesses adopt the "if it's not broken, then why fix it?" mentality. On the other hand, is it really not broken?

And even if there's no significant downtime, there are other hidden costs that you might not even be aware of:

Operational inefficiencies

Legacy platforms tend to be complex and suffer from feature bloat. Running on outdated technology leads to low performance, slow loading times, frequent update needs and software patches.

All of this causes frustration as issues take longer to resolve. Additionally, your processes will never rise to their full potential.

For instance, embedded analytics allow you to calculate the best routes in terms of delivery time and fuel costs, in real-time. This will enable you to significantly reducewaste and savecosts over time. Responding in such an agile manner is nearly impossible using an outdated system.

Major Security risks

You wouldn't invite clients or partners to visit a warehouse without wearing protective equipment.

Legacy systems don't pose a physical threat but they pose a significant cybersecurity risk. Hackers often target the logistics industry because of the high volume of customer and employee information needed for daily operations. But let'snot mince words—it's also because of its outdated systems.

Outdated technology leads to security breaches because it cannot handle increasingly sophisticated attacks. They also often have a single point of failure, meaning that whole partner networks can be compromised easily. Since malicious actors also use AI and other advanced technologies to strike, it only makes sense that the costs of defending against these attacks will increase.

Many hidden fees

Legacy platforms are expensive to maintain. According to a SnapLogic survey, two-thirds of businesses spend on average more than $2 million per year on maintaining and upgrading legacy systems. On top of this you have licensing, hardware, servers, staff costs, and tech support to factor in.

And this doesn't even cover technical debt. The average developer can spend up to 13.5 hours a week on tech debt and 3.8 hours on bad code. That would be around 40% of their day which could be better spent on more valuable tasks.

Sustaining Data silos

Your data is a goldmine. Every piece of information related to inventory, location, future demand and team performance helps you streamline your operations. Legacy systems act like gatekeepers,making collecting data from various sources impossible, this way you never get the complete picture to facilitate decision making.

Moreover, if your employees still use paper and spreadsheets and input data manually into the system, that means they're doing double data entry. Additionally, human error is unavoidable in manual data workflows. In this case, approximately 10-20% of their day is wasted on inefficient tasks.

Integration restrictions

It's not enough to have just one platform but an entire tech ecosystem that functions seamlessly, from Enterprise resource planning (ERP) to Warehouse management systems (WMSs). Outdated systems have many compatibility issues and slow down productivity. A lack of integration causes data silos, collaboration problems and hinders real-time visibility across the supply chain.

Opportunity costs

Around 90% of IT decision-makers think legacy systems keep their organisations from innovating or improving efficiency. In other words, they're saying no to current and future growth opportunities.

For instance, advanced projects such as implementing AI rely on good data governance. Otherwise, they cannot generate accurate results and create business value.

As a technology partner, we use synthetic data or predictive modelling to solve this issue. Still, you'll need to make significant infrastructure changes to get your legacy system ready.

A legacy system is expensive to maintain. However, decision-makers should first understand what they're losing by not implementing AI/ML, IoT and other advanced technologies. Logistics clients already using AI to automate processes, speed up invoicing or predict demand are years ahead of their competitors in terms of efficiency and productivity.

Tibor Bruncsák, CTO@Qubiz

Recommended Software Modernisation Strategies for Logistics

All in all, considering all the risks, logistics companies will lose more money and time. Also, working with legacy software is not attractive for newer employees and clients. Upgrading your technology is also a way to safeguard your reputation and show commitment to delivering the best results.

At the same time, software modernisation is not a one-size-fits-all solution. You will have to make two major choices: incremental vs. big bang.

• Big bang: as the name suggests, this approach means rolling out changes at once, completely replacing the old system
• Incremental: introducing small changes, step-by-step, in which two systems function in parallel for a while

The first option may seem like a simple solution. However, a legacy system is closely tied to your business processes. Closing shop overnight to roll out a new platform isn't an option 99% of the time.

As the Agile Manifesto says:

Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.

There's a good reason why this is the first principle. With a Big Bang model, you build from scratch. You have time to plan, design and implement a new platform. However, all of this happens outside the current reality of your day-to-day operations, leaving many untested assumptions about the final product.

A Big Bang model can be a money sink if it needs to be rewritten to comply with new requirements. Essentially, what you tried to avoid the first time.

To keep from spinning in circles, incremental changes bring minimal risks and ensure that customers and employees are satisfied with the final result. To put it this way, incremental improvements are more likely to be accepted, gradually lowering the resistance to change.

In working with logistics clients on modernisation projects, we have concluded that while replacing an entire system seems easier, incremental changes have lower risks. This option is also more cost-effective since investments are spread over time rather than having to pay for them upfront.

We've seen a lot of success with incremental changes. Our clients operate 10+ warehouses, have thousands of employees and plans for growth. To ensure their platforms are scalable and safe, we usually work in parallel, on the old system and the new one. We gather feedback, test it, and ensure the transition is as seamless as possible.

Tibor Bruncsák, CTO@Qubiz

Software modernisation options for logistics

Aside from choosing an incremental vs Big Bang approach, modernisation projects can be a simple component/framework upgrade or a complete redesign of the entire solution.

• Rehosting: migrating the on-premises application to the cloud. The effort involved is minimal, but the system won't reach maximum performance and scalability just by being rehosted
• Refactoring: restructuring code to improve its structure, such as adopting more modern frameworks. This approach doesn't change the basic functionality, but it does boost performance
• Rewriting: rewriting the code from scratch. This method is great for incorporating modern technologies but is less effective in terms of the resources used.
• Encapsulation: keeping core features but breaking them down into more units that communicate through APIs. For example, you go from a monolithic architecture to microservices. This is a popular approach since developers can work on one area, such as customer service, without disrupting other essential functions, such as inventory management.

The best approach depends on your specific business needs, time, and money. It also depends on how much pressure you feel to improve business processes or adapt to market trends. Working with an experienced technology partner can help you overcome the most common barriers to software modernisation: justifying the project ROI and finding the right talent to see it through.

Effective Software Modernisation Roadmap

At Qubiz, we don't push a certain approach. Our experience in the logistics industry allows us to understand your workflows, business processes, and goals first before recommending possible strategies. This way, your mission-critical solutions will suffer minimal disruptions, with fewer chances of errors or data loss.

1. Evaluate goals

Have your goals changed over time? Are you trying to launch into a different market and want to easily onboard new clients? Has your offer changed in the past years? Is there a new legislation rolling out soon?
We consider all factors because sometimes you don't need a major tech overhaul, especially if the platform isn't more than five years old. Alternatively, if your plans for the next two to five years involve business or strategy changes, your technology should also be able to keep up.

2. Choose the best strategies

Refactoring, rewriting, rehosting, etc., don't cancel each other out. You can move your on-premises system to a cloud-based platform while rewriting essential features. We usually conduct a cost-benefit analysis to find the best value option, taking into account finances, time, the scope of the project, risk assessment and technical debt.
For instance, a client initially complained about a lagging system, which frustrated their customers. They had a very comprehensive platform, but they were actually struggling to retain clients. So, after a few rounds of assessments, we changed the user interface and refactored the code to improve performance and maintainability. We also made recommendations to eliminate the need for additional licenses, which were costly and required extra time to manage.
The results? A user-friendly system, with 80% less downtime needed and a 30% uptick in client retention.
The bottom line is that you will have an accurate assessment of all the pros and cons as well as pricing options, so you will be able to justify the ROI and present different scenarios to stakeholders.

3. Create a roadmap

Clients are involved throughout the entire development lifecycle. In fact, developers of legacy/existing systems are valuable assets, and so are product owners and project managers. We also discuss with key users before drafting a comprehensive roadmap.
Other aspects include:

• Talent allocation: In general, we start with a core team that is increased over time based on needs and plans. It can be teams of 2-3 engineers up to 30-40 professionals, depending on the project complexity. Architects, Developers, Testers, Scrum Masters, Requirements Engineers, Project Managers, and UX Designers are typical roles involved throughout the lifecycle
• Milestones and deadlines: once the deliverables are agreed upon, we set specific and realistic deadlines for the implementation
• Performance metrics: establishing the right KPIs which will allow us to measure business impact. They can be related to system performance, sprints, resource utilisation, etc.
• Progress tracking: using analytics and dashboards to monitor these metrics and generating frequent reports
• Risk mitigation approaches: each strategy comes with risks, including system downtime. We create a contingency plan for each scenario

4. Implementation

The actual project implementation phase will be much easier once we have the fundamentals down: clarity, planning, and alignment. These will ensure not only that your whole organisation is on board but also that there won't be significant delays or challenges ahead.

5. Follow-up activities

The positive side of working with a tech partner is that you can access a wide range of services anytime you need them. Our most requested activities following up a modernisation process are:

• Ongoing support: planning and adding support activities to the roadmap ensures long-term project success. We collaborate with your team to ensure that everything goes according to plan, including setting up a service desk to register issues and track them to closure
• Maintenance: after solutions are deployed into production, we cover activities related to minor improvements, upgrades of various components, and fixing issues that appear during day-to-day use of the software

Software Modernisation with Qubiz 

At Qubiz, we understand that your legacy system is the backbone of your business. However, a legacy system shouldn't be holding you back from achieving your goals, whether it's breaking into a new market, retaining clients, automating operations or staying ahead of the competition.

Our mission is to help you achieve better performance, security, and scalability while minimising disruption to your daily operations. Our roadmap is based on finding the best-case modernisation scenario with the highest ROI and business value.

Learn more about how we help you run your day-to-day operations: