TECHNOLOGY PRIMER: Is Software as a Service (SaaS) Right for Your Warehouse?

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1 TECHNOLOGY PRIMER: Is Software as a Service (SaaS) Right for Your Warehouse?

2 Software as a Service Is Here To Stay The Software as a Service (SaaS) model of deploying software has come of age and is gaining traction in warehouse management. Managers are adopting this Internet-centric model to offload the burden of server maintenance and data backup, while expanding access to their system and providing their employees with an intuitive user interface. While some managers might remain skeptical of new technology and question a thirdparty s ability to safeguard their data, the early challenges with SaaS have been overcome. To assess the SaaS model, it is important to first understand what it is and how it differs from traditional software deployment models. Many warehouse managers have heard of SaaS or webbased software, but few understand the differences between traditional client/server, web-enabled, web-based and SaaS systems. In this article, we will define these models and outline the advantages and potential disadvantages of each. FOUR DEPLOYMENT MODELS TO CONSIDER Client/server Web-enabled Web-based Software as a Service

3 What Is a SaaS System? SaaS refers to a type of software deployment in which all of the system s software and data is hosted and managed at a central data center operated by the software vendor. Warehouse managers simply use the system through their web browsers and a broadband Internet connection. The software vendor will manage data backups and periodic updates. The warehouse will typically pay a monthly subscription fee to use the service, rather than purchase the software up front. Examples of SaaS WMS products include Deposco ShipForce, Sterling Commerce Selling and Fulfillment Suite, and RedPrairie On-Demand Warehouse Management. YOUR OFFICE WWW DATA CENTER

4 What Is On-Premise or Client/Server Software? The alternative to SaaS is the traditional standard of client/server, on-premise software. A large number of warehouse management systems remain client/ server systems that are installed onpremise. In this model, software is installed on the server and on each computer in the office. The server hardware is located in the warehouse and is accessed on the PCs used by managers and their employees. The warehouse is also responsible for data backup and security. Typically the software is purchased upfront and there is an annual support fee to cover upgrades and customer support services. Leading products like Infor, Epicor, and Microsoft Dynamics NAV offer client/server, onpremise systems.

5 Then What Do Web-Based and Web-Enabled Mean? While SaaS and web-based have pretty much become synonymous, subtle differences can be drawn. Some systems are web-based in that users access the system through a web browser; however, the server that hosts the system is maintained on-site by the warehouse (i.e. on-premise ). Some warehouses typically very large operations prefer this model. In this scenario, web-based refers to the software architecture the system s design rather than the deployment model. VAI s S2K Warehouse Management is an example of a system with a web-based architecture that is While SaaS and web-based have pretty much become synonymous, subtle differences can be drawn. installed on-premise by larger warehouse operations. Web-enabled refers to a hybrid model in which a traditional client/server system is augmented with an added feature that allows users to connect to the system over the Internet using tools such as Citrix or a special browser-based user interface. This web-enabled option might be used as a way for the manager to access the system from home or the office. Alternatively, some warehouses choose to use the web-enabled model to offload server maintenance to a thirdparty hosting company. Many client/ server systems provide a web-enabled option.

6 In Brief: Client/Server, Web-Enabled, Web-Based, and SaaS Client/Server Web-Enabled Web-Based SaaS Server Deployment Software and data reside on a server that is located and managed in the office. Software and data may be deployed onpremise or at a third party host. Software and data reside on a central server, which may be located on-premise. Software and data reside on a central server at the software vendor s data center. User Interface Software is installed and managed on each user s PC. Users access the system using a web browser or Citrix. Users access the system through a web browser only. No software on PC. Users access the system through a web browser only. No software on PC. Pricing Model Typically an upfront perpetual license with an annual support fee. Usually a perpetual license, but could be a subscription. Pay-as-you-go subscription fees or upfront perpetual license. Primarily pay-as-yougo subscription fees, usually charged monthly. Accessibility Accessed on-site, although remote PCs could access the server through a VPN. Accessible both onsite and remotely using a web browser or Citrix. From anywhere with Internet access. Must have dependable Internet. From anywhere with Internet access. Must have dependable Internet. IT Maintenance On-site by manager s employees or an IT consultant. On-site by manager s employees, an IT consultant, or a hosting company. Can be outsourced to a third party or managed internally. Server maintained 100% by the software vendor. Warehouse maintains PC hardware.

7 What Are the Advantages of a SaaS System? Limited IT burden. A key reason why many warehouses choose the SaaS model is that their data is secured at a centralized location and monitored by IT staff experts that handle routine back-ups, upgrades, modifications, installations, security and necessary maintenance. Moreover, there s no need to buy server hardware, which is significant considering how much money is already spent on RFID equipment, barcode scanning devices, and other technologies for the warehouse. Ease-of-use. SaaS and web-based systems are often easier to use, which is a big plus for warehouse employees with little IT experience. Since the user interface is essentially a web page, the user experience is often like making a purchase online. If your employees have bought something on Amazon.com or ebay, they can probably figure out how to use a SaaS or a webbased warehouse management system. Remote access. Many managers appreciate the ability to access their warehouse management system from outside the office. Whether analyzing a recent inventory count at home or planning dock schedules while on vacation, SaaS users can access their system from any location with Internet access. Subscription pricing. Small businesses may benefit from the subscription model of SaaS. Many on-premise systems require significant, upfront capital expenditures, which puts them out of range for tighter budgets. Subscription pricing means that the upfront costs are low as the fees spread out over time. Thus, these expenses become an operational expense versus a capital expenditure. Quick implementation and ROI. On-premise systems can require six months to a year just for setup and preparation. After that, it can be another one to two years before businesses start to see a return on investment (ROI). SaaS deployments are often up and running in just one to three months, with a positive ROI arriving one to three months later in many cases.

8 When Is SaaS Not Right for a Warehouse? Unreliable Internet access. With the SaaS model, a network failure would not only impair your order and freight management processes but also prevent you from accessing your data. If the Internet goes down, the system goes down with it. Of course, on-premise systems can go down too when there are networking, electrical or hardware failures. Complex customization. Because SaaS systems are typically designed to serve numerous warehouses from a single, centralized code base, there have traditionally been fewer options for complex customization. This, of course, is changing over time as SaaS vendors build out more advanced configuration capabilities. Sensitive data. Many warehouses deal with sensitive information, whether customer or product-related. Understandably, these businesses are often wary of entrusting this information to third parties. However, these fears are usually alleviated once inquiries are made into the data control and backup policies of a given SaaS model. Fewer vendors. While there are hundreds of warehouse management systems, not all of them are SaaS. The SaaS model is still relatively young and so only a few innovative firms have come to market with feature-complete, dependable SaaS solutions. Many of the leading specialty-specific systems remain client/server. Long-term pricing parity. While the subscription pricing model reduces up-front costs, those regular fees add up over time. In the long-run, SaaS fees will typically equate to those paid up front for a perpetual license for a client/server system. Is SaaS right for your warehouse? We encourage warehouse management software buyers to consider at least one SaaS product in their short list of systems. While SaaS won t work for every operation, the benefits are compelling enough to merit serious consideration.

9 Next Steps for Your Warehouse Management Software Search Now that you understand the four primary software delivery models, you have the context you need to move to the next step. Use these criteria to define your own detailed criteria. You'll need to make some decisions, such as: Which vendors suit your specialty and size? What features and capabilities do you need? What is your software budget? With your requirements defined and these three questions answered, you'll be ready to start building a "short list" of WMS vendors and evaluate each system in-depth. MORE HELPFUL RESOURCES: Best Practices: Download our Ten Steps to Selecting the Right WMS Software Identify Top Trends: Download our Top Trends in Warehouse Management FastStart Consultation: Talk to one of our experts to build a short list of software

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