This article can help you determine which of the three warehouse management system deployment models -- cloud, edge, or on-premise -- is right for your organization.
Originally published in H1 2018 GPUG Magazine
In today’s world, a warehouse management system (WMS) is a vital piece of technology for any retailer, wholesaler, or manufacturer to grow and evolve its operation. The solution enables optimization of the supply chain, increasing margins and empowering companies to better serve Customers. Those two factors build a competitive advantage that powers a company’s lasting growth. But, with so many vendors and different deployment models to integrate with Microsoft Dynamics GP, where do you begin?
Let’s analyze the cloud, edge, and on-premise WMS approaches to determine which best fits your business.
The Cloud Evolution
There’s an evolution taking place in the IT industry: The continuous and steady transition from traditionally installed software (on-premise) to a solution deployed in the cloud. In the cloud model, the WMS vendor provides web-based access to its solutions as a service, through a subscription pricing model. The WMS vendor takes IT 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, eliminating large, upfront deployment costs and ongoing maintenance headaches.
The shift of enterprise software deployed via the cloud has intensified, driven by a perfect storm of
dramatically lowered cost of storage, increased processor speed, and the elimination of software being installed and supported by on-premise hardware.
WMS technology for Microsoft Dynamics GP is available in a cloud delivery model from WMS providers, thereby offering a lower cost and reduced risk option. When evaluating WMS providers, it is imperative to understand the total cost of ownership (TCO) – including both direct and indirect costs – of the technology and labor associated with adopting a WMS solution. The scrutiny of new technology projects has never been higher. Building a business case to justify an investment in supply chain management technology has never been more crucial. While some see the cloud as being simply the next level of technology, the shift toward cloud computing also has tangible financial benefits.
Warehouse management for Microsoft Dynamics GP, delivered via cloud technology, can have a positive financial impact on distribution logistics and internal IT spending:
ROI Considerations – More Tech for Less
For most businesses, infrastructure, development, and IT management aren’t core competencies or differentiators. The dynamic economy compels businesses to look harder at core competencies and costs. Ask yourself: Can someone else do it for you more effectively at less cost?
The cloud allows you to switch from a fixed cost capital-intensive business model to a variable cost pay-as-you-go operating expense model. By eliminating the need for approvals for a large, upfront capital investment to cover software, stepping into a cloud-based WMS solution makes it easier for many companies, especially smaller operations with less cash on hand.
In typical enterprise data centers, large initial capital outlays also make ongoing upgrades in servers, operating systems, and database software prohibitively expensive. These costs remain fixed, but so does performance. The economies of scale available with a cloud solution allow cloud providers to purchase and maintain large volumes of hardware storage at low costs. In this way, the cloud decreases costs while increasing performance and functionality steadily over time.
While a move away from capital expenses is undoubtedly attractive, it is a TCO analysis that makes the economic benefits of WMS in the cloud clear.
Lower Total Cost of Ownership
Performing system upgrades is one of the most dreaded IT tasks related to traditional WMS software. With WMS in the cloud, your vendor performs the routine software maintenance, including scheduled upgrades and patches.
Additionally, in traditional enterprise data centers, it’s fairly common to experience capacity constraints or waste caused by spikes and troughs in demand throughout the year. You must 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. You can access more power when needed, and scale back during slower periods.
Devote Time to Managing Your Business – Not the IT Department
Many businesses become distracted by their technology instead of focusing on strategic core business initiatives and goals. The resources required to maintain and grow an IT infrastructure to support the evolving needs of the business can be incremental.
Below are the distinct differences between managing your own infrastructure versus buying a managed cloud solution:
The Cloud Reduces the Risk Involved with Supply Chain Investment
Perhaps you’re intrigued by WMS capabilities to extend the power of Microsoft Dynamics GP, but think you may be rolling the dice by putting a large capital investment on the table. Will the resulting efficiencies be great enough to make the purchase worthwhile?
With cloud computing, a simplified implementation and a pay-as-you-go subscription model enable you to realize a return much more quickly than with on-premise software.
In the short-term, direct expenses are not the only factors to consider when evaluating a cloud deployed WMS solution. Enabling the organization to grow, obtaining consistency and predictability over a multiyear horizon, benefiting from WMS vendor innovation, and eliminating non-core activities that drain IT resources are all important considerations.
The Edge – The Link Between Cloud and On-Premise
The “edge” is an architecture in which computing resources in the warehouse are leveraged for functions that benefit from a closer relationship between processing and action. Voice technology is an example. Processing happens on-premise on an Android or iOS device (the edge). Delay between communication with Google Assistant or Siri, and the action is eliminated. Central management and configuration of the handheld still occur in the cloud. An edge approach, therefore, enhances performance of staff’s devices while tapping the benefits of the cloud.
A cloud-enabled WMS has many advantages at an attractive price. Cloud computing isn’t just about data center technology; it’s about streamlining processes to make organizations and people more strategic, responsive to change, and focused on their core business. When comparing the costs of on-premise WMS and WMS in the cloud, it is important to accurately assess the true costs of all options. Take a long-term view of the supply chain application footprint and understand how best to position yourself for growth.