Software as a Service (SaaS) and cloud-based computing has made Warehouse Management Systems (WMS) affordable for many small- and medium-sized companies. Cloud computing has three categories of service:
- SaaS: multiple companies use an application system on a subscription or pay-as-you-go basis
- Platform as a service (PaaS): typically used to develop software applications.
- Infrastructure as a service (IaaS): hardware and software resources.
For our purposes today, we’re going to focus on SaaS. Here are 9 major benefits to SaaS we see in our WMS system consulting:
The application function can be developed and updated incrementally with new application functions, server version changes and database changes. It gives you the flexibility to add major subsystems, or in the worst case, change to another WMS.
Cloud infrastructure scales on demand to support fluctuating workloads or high-peak-week to average week transaction volumes.
Large hosting providers will have far more resources for monitoring security and backup than small to moderate sized businesses could ever afford and manage in house. SaaS provides 100% uptime for the WMS functionality.
In our experience SMBs often don’t have sufficient hardware configuration for backup and recovery systems and archiving large databases. Hardware failure in a hosted environment generally doesn’t result in data loss because of networked backups.
Managing IT Infrastructure
Cloud or SaaS providers are responsible for the resources and configuration required to meet peak demand and accommodate the growth of your business. This allows service organizations like third-party fulfillment (3PL) companies to be faster to market. Companies can then focus on other system development and business priorities.
Pay for Use
Pay-as-you-go may be structured in a number of ways such as by transaction or usage. This replaces large upfront hardware and implementation costs and reduces staffing needs.
What is the projected elapsed time to complete the implementation of an enterprise system? Actual experience shows that SaaS implementation times are an order of magnitude faster than on-premise installs. For some SMBs a single SaaS instance of the WMS can be installed in 60 days. Your actual standup time will be highly dependent on the number of customized integrations required. What is it worth to your business to get the new application up and running quickly versus a multi-year implementation?
Companies can access cloud services from anywhere with internet connected devices or distributed centers such as contact centers, warehouses or offices.
Total Cost of Ownership (TCO)
Our experience is that the TCO of SaaS is considerably less. The cost of on-premise vs. SaaS will vary in terms of expected investment and implementation time. The cost of server hardware and software may be paid over time as part of the transaction cost rather than upfront.
What are the major risks involved in the replacement of a WMS? We have seen companies underestimate the server configuration and have to upgrade immediately. What is the impact if you’re wrong? Considering how fast technology changes, why do you want to own equipment and software and make those decisions? Do you want to have on-staff expertise to stay current with the technology?
Here are 4 potential downsides to a SaaS WMS that you need to explore and be aware of:
Requirements and Customizations: For some SaaS application providers, all users are on the same release level or version and function. What customizations does your company absolutely need? Are you willing to create custom integrations? Be thorough with your requirements preparation.
Risks: You’re trusting two providers (application and hosting) with a major aspect of your business. Are you comfortable with this potential risk?
Training Needs: Understand the amount of training that will be provided vs. what is required. For many smaller companies, providers may not offer onsite training without additional expense. Typical training is remote over the internet which can be tedious and up to a week long. Be realistic about what is needed.
Hosting Service Competency: Understand what company is providing the hosting and the reliability of the service. What level of redundancy and backup do they have? What type of security monitoring is part of the service? Have there ever been any security failures?
SaaS services have made high-function WMS capabilities within the realm of the affordable for many SMBs. But be sure you’re performing an apples-to-apples comparison as you evaluate on-premise vs. SaaS and hosted services.
Brian Barry is President of F. Curtis Barry & Company