There’s an evolution taking place in the IT industry: the continuous and steady progression from traditionally installed software to cloud technology. In the cloud computing model, the vendor provides Web-based access to applications as a service, through a subscription pricing model. The vendor takes responsibility for everything, including servers, storage, backups, system updates, applications, databases, and maintenance. This eliminates the need for customers to buy, deploy, and manage IT infrastructure, saving the customer large upfront deployment costs and ongoing maintenance headaches.
Warehouse Management System Technology is now available in the cloud delivery model from some providers, offering a lower cost, reduced risk option. When evaluating WMS providers, it is imperative for every business to understand the total cost of ownership (TCO)—including both direct and indirect costs—of the technology and labor associated with adopting WMS technology. The scrutiny of new technology projects has never been higher and building a business case to justify an investment in supply chain management technology has never been more crucial. While some see cloud as being simply the next level of technology, the shift towards cloud computing also has very tangible financial benefits.
More Technology for Less Cost:
For most businesses, infrastructure, development, and IT management are not core competencies or business differentiators. The anemic economy compels businesses to look even harder at their core competencies and costs. Ask yourself: can someone else do it for you more effectively and at less cost? Take, for example, the explosive growth of 3PL/logistics services providers, hired to take on tasks manufacturers and distributors used to do themselves, because the 3PL can perform the service more efficiently and at less cost than the company can itself.
Lower Total Cost of Ownership (TCO):
Performing system upgrades is one of the most dreaded IT tasks related to traditional WMS software. Did you know there are a large number of businesses out there that have had to cough up a million dollars just to upgrade their WMS? With WMS in the cloud, your vendor performs routine software maintenance for you, including scheduled upgrades and patches. Additionally, in traditional enterprise data centers; it is fairly common to experience capacity constraints or waste caused by spikes and troughs in demand throughout the year. You either need to wait while additional server hardware is ordered, shipped, and brought into operation—which can take months and cause lost business and unfulfilled orders—or you have excess capacity, meaning wasted space and expense. The cloud is elastic and scalable, so you can access more power when you need, and scale back during slower periods.
Removes the IT Requirement, and Empowers The Supply Chain Team:
In many companies as much as 70 percent of the typical IT budget is spent just on making sure the business remains operational— tasks such as keeping servers running and performing upgrades. In the best cloud models, IT staff can devote their time to improving the business, rather than trying to solve infrastructure issues and applying software patches. IT can move from being an interchangeable commodity to a differentiator, shifting from maintenance to innovation.
When an IT team knows they need to run the underlying infrastructure, they realize there will be an inherent expectation that the business will rely on them for broader application support. Using cloud applications forces businesses to think differently about who will truly be accountable for the software and its implementation. If it is determined that the business process owners should “own” the software, the business process owners should likewise be accountable for it.
In order to make good business decisions about information technology investments, the business process owner—not the IT department must make the decision about investment and commitment to information technology. Sound business decisions about using technology cannot be made if the business owner perceives to be getting the system “for free” from IT. Similarly, a decision to invest in IT should not be limited by lack of internal IT resources or IT project prioritization. If a technology project stands on its own business merit, there should be a mechanism to execute on that project. That means that IT is freed up, and the supply chain department: