Software as a Service (SaaS) and Cloud based computing has made Warehouse Management Systems (WMS) affordable for many small to medium sized companies. There are nine benefits to installing SaaS versus on-premise based applications.
Cloud computing has three categories of service:
- Software as a service (SaaS), where multiple companies use an application system on a subscription or pay-as-you-go basis;
- Platform as a service (PaaS), which might typically be used to develop applications; and
- Infrastructure as a service (IaaS), where hardware and software resources are provided as a service.
For the purposes of this blog, we are referring to SaaS.
Benefits of Software As A Service (SaaS) Warehouse Management Systems
The application function can be developed and updated incrementally with new application functions, server version changes, database changes, etc. There’s also the ability to add major subsystems, or in worst case change to another WMS.
Cloud infrastructure scales on demand to support fluctuating workloads or high peak week to average week transaction volumes.
3. Data security
Large hosting providers will have far more resources for monitoring security and performing backup than small to medium sized businesses could ever afford and manage in house. They also provide 100% uptime for the WMS functionality.
In our experience, small to medium sized companies often do not have sufficient hardware configuration for backup and recovery systems and archiving of large databases. Hardware failure in a hosted environment generally does not result in data loss because of networked back-ups.
4. Managing IT infrastructure
Cloud or SaaS providers become responsible for the resources and configuration required to meet the peak and accommodate the growth of your business. This allows service organizations like third party fulfillment companies to be faster to market. Companies can then focus on other system development and business priorities.
5. Pay for use
Pay-as-you-use means companies only pay for the resources they use. This may be structured in a number of ways, such as by transaction or usage. This replaces large up front hardware and implementation costs and operations staff.
6. Implementation time
What is the projected elapsed time to complete the implementation of an enterprise system? Actual experience shows that SaaS implementation times are magnitudes faster than on-premise installs. For some small to medium sized businesses, a single incidence or copy of the WMS can be installed as SaaS in 60 days. The elapsed time will be highly dependent on how many customizations are required for integrations. What’s 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.
8. Total cost of ownership
Our experience is that total cost of ownership of SaaS systems is considerably less. On-premise versus 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 up front.
9. Risk exposure
When you look at the major risks for a total replacement of a WMS in operations, what are the major risks involved in the project? We have seen companies underestimate the server configuration and have to upgrade immediately. What is the impact if you are wrong? Considering how fast technology changes, why do you want to own equipment and software? Do you want to have on staff the expertise to stay current with the technology?
Potential Downsides of Software As A Service (SaaS) Warehouse Management Systems
Here are four downsides that you need to explore and be aware of:
1. Requirements and customizations
For some SaaS application providers, all users are on same release level or version and function. What customizations does your company absolutely need? Are they willing to create custom integrations? Be thorough with your requirements preparation.
You’re trusting two providers (application and hosting) with a major aspect of your business. Are you comfortable with this potential risk?
3. Training needs
Understand the amount of training that will be provided. For many smaller companies, providers do not offer on-site training without additional expense. Typical training is done remotely, which can be tedious and up to a week long. Be realistic about what is needed.
4. Hosting service competency
Understand what company is providing the hosting for the WMS and how reliable their service is. What level of redundancy and backup do they have? What security monitoring is part of the service? Has there ever been any security breaches?
SaaS services have made high function WMS affordable for many small to medium sized companies. Be sure you are performing an “apples to apples” comparison as you evaluate on-premise versus SaaS and hosted services.