Have you heard of the term IT legacy? It may not be as prominent today as it was ten years ago. Back then, countless companies were struggling to adjust the speed and performance of their IT systems to meet the rising needs of customers and employees.

They struggled mainly because, over the many years of software use, new functions had been constantly added, and hardly anyone in the company still fully understood the system well enough to develop a clean migration plan. So consultants from the vendor had to be brought in… to help phase out the old system. SAP R/3 became known for this in the field of logistics and ERP. Lotus Notes in team communication, or so-called industry-specific solutions in areas like hospitality and gastronomy. These were undoubtedly excellent products in their time—but business needs changed. Some companies still license Lotus Notes today because they use a single feature and don’t know how to replace it.

Legacy is the great adversary of transformation. Companies that have spent large sums to build custom structures struggle to let them go—even when it’s obvious that a system change is overdue.

Legacy is also closely tied to the dreaded concept of "knowledge silos". The company becomes somewhat dependent on the administrators who are the only ones that fully understand the system. These individuals train colleagues or potential successors only to the extent they personally choose to.

There’s a temptation to label every piece of self-hosted software in a company as a potential legacy candidate. And indeed, about 20 years ago, that was the widespread belief. The "thin client" was the epitome of networked, digital work. And the concept failed spectacularly.

For instance, when it comes to editing large files within software, upload and download latency significantly hurts efficiency. If internet access drops, operations come to a standstill.

No high-level CAD designer would use AutoCAD exclusively in the cloud. Certain functions may be supported or even made possible by internet connectivity—but the core features are installed locally and maintained by the system administrator.

One of the big advantages of SaaS systems is the ease of testing. While the old system continues to run, a new product can be trialed—often free for the first month. Many experts see this not only as a transparency advantage, but also as a gain in efficiency. You can bypass lengthy alignment with stakeholders and simply try the new system in a small circle before proposing full implementation.

But that’s, of course, complete nonsense. Sure, you can safely review a software frontend in a test. But for many mission-critical cloud applications, we’re talking about software that will handle large volumes of data, sensitive customer information, and confidential employee work. Who would run serious tests on such a system without first checking it for security and GDPR compliance? And that’s exactly what those potentially “bypassed” stakeholders—IT and Legal—are responsible for.

One global corporation (which shall remain unnamed) managed to license Hubspot, Salesforce, and Adobe Marketing Cloud—all three CRM systems—simultaneously. This happened because different business units, in different countries, had the same idea at the same time: “We need a new CRM.” Worse still, these decision-makers didn’t talk to each other. It wasn’t until follow-up talks with IT that it came out that the license for the old CRM system was still valid—for another three years.

Every migration must be carefully planned—whether it's from one server to another or into the cloud. But one cannot deny that tools like Hubspot or Salesforce face fewer issues with knowledge silos. Their global relevance means there’s a huge pool of people who understand them.

Of course, this advantage disappears the moment custom extensions are built. These might be connectors to a self-developed online shop or integrations with a legacy POS system—a challenge many in the hospitality industry face.

However, this challenge has a positive flip side: custom development can represent a competitive advantage. It means that the company builds deep internal expertise about how both the SaaS product and its own custom software work. That knowledge becomes highly valuable—especially when planning future investments.

For instance, companies like Otto Group, which have built internal knowledge about data management, artificial intelligence, and programmatic advertising, are now better positioned to adapt to current industry shifts caused by browser makers and regulators. From choosing the right identity solution to building a proprietary Customer Data Platform (CDP)—the internal know-how pays off.

There’s no black-and-white answer. In general, many processes can be moved to the cloud with confidence—and often with cost advantages. But only a thorough analysis can determine the right balance between cloud and on-premise.

This analysis must consider not only current costs and the effort involved in migration but also long-term factors such as future adaptability. For instance: can your current CRM system already help you find your customers on TikTok?

In the ideal case, the entire infrastructure is designed to be modular—so that individual components can be replaced as needed. That requires a mindset shift—and it’s no trivial matter. It’s no longer about adapting software to existing processes, but rather about adapting the organization to the software.

Boris Radke, former Chief Information Officer at ProSiebenSat.1, put it this way: “Many companies place far too much importance on customizing Salesforce or SAP. That’s a system flaw. These systems work when you leave them as they are. And you have to accept that your processes may have to adapt to them.”