Supply Chain News: Is Cloud-Based WMS Ready for Prime Time?
A few months ago I read a great article published by SupplyChainDigest titled, ‘Is Could-Based WMS Ready for Prime Time?’ First & foremost, I am a fan of SupplyChainDigest and the topics editor Dan Gilmore covers. If you are not following this site, I highly recommend becoming a subscriber. Also, as a disclaimer, we are not a current advertiser for SupplyChainDigest, so yes, this is an ‘unpaid’ plug.
I love it whenever someone covers the topic of Cloud-Based WMS; it doesn’t matter what the opinion is about the topic. Anytime anyone writes about it, it’s good for business as a whole. When I read this article, there are a number of interesting ‘perceptions’ (you can also call them myths) that come to mind that I see in the market from time to time that you might find interesting. Generally speaking, these perceptions are not true; however, these perceptions still exist today and the saying applies that ‘perceptions are reality.’ Let’s take a look…
Cloud Based WMS is not ‘a real WMS’ – If you want a real WMS, you need to buy a software license, servers to install it on, and hire someone to implement it. We commonly see this in our larger enterprise accounts where this has been the historical status quo on how to purchase and implement software for several decades. Oh, I forgot to mention that the implementation cycle needs to be multiple months, or even years. The belief is, if the WMS does not fit this type of traditional purchasing & implementation model, then it must not be a ‘real WMS’.
As a comparative example, we all used to rent movies from Blockbuster down the street. Then came Netflix. Sure it took a few years for perceptions to change. Ask Blockbuster if they feel Netflix is ‘real’ now.
Cloud-Based WMS does not work with local devices (i.e. RF scanners) – The thought process behind this is that for an RF scanner device to work, the WMS software must be installed on site in the warehouse. Another variant of this perception is that the RF scanner will work, but not under any sort of volume.
…Yet 500 million people use Facebook every day (on their ‘local’ devices)
Cloud-Based WMS companies are a ‘new breed’ – Yes, for the most part companies that are offering cloud or Software as a Service delivery models are generally newer than the traditional, established enterprise software companies. There are some very fundamental economic reasons for this, and it all ties back to how business software has been sold for the past several decades. The status quo for purchasing software has been to purchase a software license upfront as an asset (think six or seven figures). When purchasing a cloud-based software solution, the customer is no longer making that large upfront purchase; rather, the customer is now paying to rent the solution. For the established software companies that are revenue-dependent on selling upfront software licensing deals, moving to a pay-as-you-go model is basically like eating your revenue stream alive!
Remember when you wanted that song you heard on the radio and you had to buy the entire album (or cassette) from your local record store? Now we just buy that song from iTunes for $1.29. Remember how hard the recording industry fought to protect that? Same thing applies.
So where do we go from here? I think it starts with a paradigm shift for some “old school” believers who think we need to be hardwired in order to succeed as WMS providers. Utilizing cloud-based inventory management software has a plethora of benefits. Employing a data center-free system that provides real-time answers and solutions is not the next best thing for WMS providers (remember, it’s already here!) – rather, it’s educating those to see the true value and success of these cloud-based operations.