WHY CHOOSE A CLOUD-BASED WMS?
The initial investment in a good-quality cloud-based warehouse management system, having exactly the same functions as in the on-premises version, is now becoming available to a larger group of companies, including those that do not have their own IT resources. Photo: Consafe Logistics.
It’s 2021 and cloud computing is changing virtually every branch of our lives. Easy, stable and fully secure access to computing power does not require servers anymore, but only broadband Internet connectivity. This is provided by optical fibers that gradually wrap around the country. Producers, and above all buyers of warehouse management systems, could not remain indifferent to this. There were specific expectations, and after some time a very specific response – a top class cloud-based WMS. Right after this, a new offer appeared, because not everyone wants to invest in traditional perpetual licenses today. Just like no company buys a car or a phone with cash, the financing of the IT system took the form of a subscription.
5 REASONS WHY YOU SHOULD CONSIDER CHOOSING A CLOUD-BASED WAREHOUSE MANAGEMENT SYSTEM
MUCH LOWER ENTRY THRESHOLD DUE TO THE LACK OF LICENSING COSTS, SERVER AND ITS SOFTWARE
The initial investment in a good-quality cloud-based warehouse management system, having exactly the same functions as in the on-premises version, is now becoming available to a larger group of companies, including those that do not have their own IT resources. Server, database software, operating systems – these are just some of the investments that can be crossed out of CAPEX by choosing SaaS. Moreover, most of the remaining costs are spread over time and appear when the first savings generated by the new system are already noticed.
FASTER RETURN ON INVESTMENT COMPARING TO TRADITIONAL LICENSES
From the financial perspective, we mainly have a significant transfer of the necessary funds from CAPEX to OPEX, which in itself has a positive impact on cash flow. In absolute numbers, we should focus on the TCO (Total Costs of Ownership) analysis, i.e. the total costs that the investment will generate in a given time (usually 5 or 10 years). However, the most interesting thing is to compare TCO in the SaaS model with traditional licenses and local installation on a physical server. While in the case of the service, we have only two items, i.e. the cost of implementation works and the monthly subscription multiplied by the number of months, in the on-premises version, apart from implementation, licenses and maintenance, we must add the cost of IT infrastructure, including servers, database software, operation system and IT service. When we juxtapose these costs on a timeline, we see a breakthrough, which is where SaaS begins to be “more expensive” than the classic installation. If this point is between 3 and 5 years, then considering the other benefits, it is worthwhile to solidly think over a cloud-based WMS.
SCALABILITY
An undoubted advantage of the software delivered as a service is its scalability. This is particularly important when the seasonality of our business directly affects the work force capacity needed in the warehouse. In some industries, the difference between the number of employees in the season and in the off-season is several hundred percent. For instance, if the season lasts 3 months, the purchase of perpetual licenses for seasonal workers may turn out to be too much of a financial burden and bury the ROI of the entire enterprise. In the SaaS model, we always pay only for the number of users and computing power that we need at a given moment. This also minimizes the risk of “overinvesting” in licenses, which may turn out to be unnecessary after the implementation and at the stage of its operation. After all, one of the goals of investing in a new WMS is often to reduce the number of employees in the warehouse. What’s more, we can always have the computing power that is needed today, without maintaining the infrastructure needed in reality only in high season throughout the year.
THE FULL RESPONSIBILITY OF ONE SUPPLIER FOR THE OPERATION OF THE SYSTEM
In the case of a local installation, in the event of a failure, we must first determine whether the problem is caused by WMS or maybe the database, server’s software or other element of the IT infrastructure. In the case of SaaS, we always have one point of contact in the form of a WMS provider who is responsible for everything. Such a model offers much better SLA than in the case of on-premises installations.
ACCESS TO NEW VERSIONS IS PROVIDED AS PART OF THE SUBSCRIPTION
The challenge faced by IT systems’ users today is software aging. Of course, a significant number of vendors already offer the option of upgrading the version for an additional license fee or as part of a maintenance fee, which is commonly a percentage of purchased licenses. The challenge appears most often when the system in our warehouse is “tailored” to our “specific needs”. While larger vendors are able to ensure the compatibility of our specific functionalities with new versions of the system, with less mature systems, they most often end up with a new implementation. Today, in the case of the cloud-based WMS, it is the customer who decides when he wants to upgrade the system version, and the operation itself requires customer involvement during tests but in the future, it will be an automatic process happening in the background, which means that all customers will always work on the same, latest version of the software by default.
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