BY JAMES COOKE, EDITOR AT LARGE
techwatch
on-demand WMS could rock distribution
MENTION SOFTWARE DELIVERED VIA THE “SOFTWARE AS A
service” (SaaS) model to someone working in distribution, and they’ll
probably assume you’re talking about transportation management systems (TMS). In the last couple of years, SaaS TMS offerings—which
essentially allow users to “rent” software used to manage carriers and
control freight expenses—have gained a great deal of traction with
logistics departments. But now the SaaS concept is starting to spread to
warehousing applications, and that trend could rock distribution.
The attraction of the SaaS, or “on demand,” business model is no mystery. It offers businesses a number of advantages over the traditional practice of purchasing software licenses. For starters, companies can avoid a
huge upfront capital outlay; instead, they simply pay monthly or per-transaction fees to the vendor.
Deployment is quick and easy as well. All that a user
needs to gain access to an on-demand application is a
Web browser. And unlike a traditional licensed-soft-ware installation, which can take months, SaaS software deployments typically can be completed in a
matter of weeks or even days. Yet another advantage
is that SaaS deployments require no systems integration, which means the software costs considerably less
to roll out than traditional applications.
On top of that, the software vendor usually maintains the application on the server end, a big selling
point for small or medium-sized customers that
lack in-house IT resources. And vendors usually
provide updates as part of the service. That too represents a significant
advantage over licensed applications, where the customer must buy
and install upgrades in order to obtain the newest features. Fees to keep
software current have been a sore spot for users as well as a steady
source of revenue for vendors.
Taken together, these cost advantages have made SaaS applications a
compelling alternative to buying software licenses. And that’s why so
many companies have embraced this approach when it comes to TMS
deployment. Not only is it affordable for smaller players, but many
report that they’ve received a quick payback on their modest investment from savings achieved through freight optimization.
After changing the face of the TMS market, it appears that the SaaS
delivery model is about to do the same for the other main type of supply chain execution software—the warehouse management system
( WMS). In recent years, a number of software vendors have introduced
Web-hosted versions of warehousing software.
Vendors include 7Hills Business Solutions, a Hyderabad, India-based
company whose North American headquarters are in Pittsburgh.
7Hills offers a hosted solution called eBizNet-WMS as part of its eBizNet-SC software suite.
Another is Smart Turn of San Francisco, which
offers an on-demand WMS that users can
implement in anywhere from two to 30 days.
One of SmartTurn’s customers, a first-time
WMS user, reportedly is saving $10,000 to
$15,000 a month through use of the software.
That customer, a third-party logistics service
provider called Argent Associates,
attributes the savings to higher
inventory turns, more accurate
shipping and receiving, and more
efficient tracking.
Across the Atlantic, Synergy
Logistics based in
Loughborough, England, has
taken SaaS WMS a step further
with its SnapOnDemand solution for the British market.
What’s interesting about this
offering is that the fixed monthly
“rental” fee includes the cost of
bar-code scanning and radio-frequency equipment, which the company provides. Gavin
Clark, the commercial manager for Synergy
Logistics, says the monthly fee also includes
setup, configuration, and training.
Although it’s doubtful that a hosted solution
can support a high-volume or highly automated warehouse operation, vendors have clearly
begun making inroads into the market with on-demand warehouse management systems. If the
industry’s experience with TMS provides any
guide, the SaaS delivery model should revolutionize the marketplace by making WMS accessible to small and medium-sized companies for
which the software would otherwise be out of
reach. Watch for on-demand WMS to gain a
huge share of the WMS market in the coming
year, even in a slumping economy.
