WMSに限らず、一般的にSaaSの優位点や考慮する必要のあるポイントが整理されているので、掲載します。
Comparing SaaS to On-Premise Warehouse Management System Software
You already knew after reading the Best Practice Series for Inventory and Warehouse Management introduction that implementing a Warehouse Management System (WMS) was inevitable.
You might have already implemented one. You might even be currently editing a WMS Request for Proposal as a first step. Or, your eyes might be closed shut, hoping that WMS vendors stop calling you, and Modern Materials Handling writers stop writing glowing WMS case studies. Sorry, you can't ignore their ample benefits any longer. You really need a WMS to implement your industry's best practices. But what type?
To SaaS or not to SaaS
We're going to start our WMS conversation from the perspective of Software-as-a-Service (SaaS) vs. on-premise software. It is vital to understand their similarities and differences. The applications loaded on your laptop or desktop are examples of on-premise software. A common example is Microsoft Office. QuickBooks hosted on your network server is another. The commonality is that you own (or rather, technically license from the software vendor) the application and host it on-site at your place of work. In fact, if you read the fine-print of your on-premise license agreement, you'll discover that rarely do you actually own the software.
Defining SaaS
OK, it is growing in popularity but what exactly is SaaS? In the SaaS delivery model, software vendors host applications over the Internet and deliver them to customers for a recurring license fee. The simplest definition is software accessed via Firefox or Internet Explorer. Industry analysts Gartner Group define SaaS as "hosted software based on a single set of common code and data definitions that are consumed in a one-to-many model by all contracted customers, at any time, on a pay-for-use basis, or as a subscription based on usage metrics." One of the most common SaaS delivery models is the single instance, multi-tenant arrangement in which a common version of the software is hosted at a central location and used by many different companies.
Winds of Change
While on-premise has been the application delivery standard for decades, the Software-as-a-Service delivery model in which you access applications through a Web browser is a more recent (and increasingly popular) application delivery option. SaaS enables software companies to build powerful, highly secure, and flexible applications and then deliver them to a broad customer base.
Benefits of SaaS
There is much to love about SaaS. It is not for everyone, to be sure. But it certainly delivers technical, operational and financial flexibility that the smaller inventory and warehouse operation needs to service existing accounts and develop new revenue opportunities. Here are some of the key benefits that many SaaS users have experienced:
Reduced initial costs compared to on-premise applications
SaaS is almost always much cheaper software to both evaluate and deploy. Customers who would have previously evaluated software in-house prior to purchase can now simply visit a SaaS vendor's web site and try the software before buying.
More predictable, usage-based recurring costs
SaaS users will experience a sharp reduction in their software management costs. That's a very good thing. Configuration, maintenance, and updates/upgrades tasks disappear. You simply eliminate the need to maintain some of your infrastructure. To see what the savings might look like, do a quick "scratch-paper" cost calculation on how much you are paying to back up your current data. (You are backing up, aren't you?)
Lottery: SaaS users can redirect their scarce IT resources to strategic initiatives, such as business process improvement. Studies have shown that most IT managers spend over 85% of their time on maintenance instead of innovation.
Fast application deployment, often shortly after signing-up
Few companies use exactly the same processes. The majority of software users require changes to optimize software functionality for their own situations. On-premise vendors typically meet this optimization need by customizing their products. To do this, they write new code. Historically (in the pre-SaaS world), if you wanted a system with custom fields, custom user profiles or data access, you needed a customized system that required either extra payments to the software vendor or payments to a consultant. In contrast, customization with SaaS usually means spending time appropriately configuring the system before using it. As you can imagine, configuration is much faster and cheaper than customizing software code.
Reduced complexity
With SaaS, you don't have to buy or install additional software or hardware. You don't need to tap IT resources to deploy your new WMS. You'll avoid resource allocation issues. Reduced complexity with SaaS delivers important financial benefits in the short-term (through avoiding capital investments), as well as in the long-term (cheaper operating costs). Consider that the average on-premise deployment for a mid-sized company can take up to 12 months. An entire "plan-configure-run" cycle for a WMS SaaS system can take less than a month. Much of this faster time-to-deployment is due to eliminating complex on-premise setup planning. SaaS systems also offer the option of dynamic modification, which is especially helpful if you haven't mapped out your business processes as well as possible. Non-IT users can even make business process changes. What if one of your customers needs to have a "first expired, first-out" picking policy, or you decide to switch from LIFO to FIFO for some of your items? With SaaS, a configuration change is all it takes. To handle these types of evolving business processes, or if you have an organizational habit of making it up as you go along, SaaS is definitely the way to go.
Better support
SaaS vendors add new features and updates incrementally, delivering them to all customers at once and keeping the user interface as consistent as possible. This "common-delivery-to-all" approach eliminates the burden on each customer to test and implement software updates and changes. It's also much easier to customize the software for the customers because of the shorter development cycle. Support becomes ubiquitous because all SaaS vendors need to constantly deliver on the promise, otherwise customers can easily depart.
Thoughts: Due to the homogenous nature of SaaS software and the SaaS vendor's absolute imperative that it function as promised, the SaaS model generally provides a better user experience.
Ongoing free upgrades
SaaS vendors handle software updates, upgrades and patch management issues.
You'll have the freedom to focus on your core business. Most feature improvements happen transparently. New feature updates occur in waves of functionality, remaining hidden till you want to turn them on.
Access and scalability
SaaS offers global accessibility. Scalability is not a concern. As long as there is Internet access and a browser handy, you, your employees, your business partners and your customers can access your WMS data. A SaaS model can instantly connect multiple warehouses. All your trading partners and customers can access and manage inventory across the supply chain in real-time, modifying orders, demand-planning, ATP, CTP, safety-stock and reorder points.
In reality, though, most SaaS WMS customers first want to realize small improvements within their own warehouse. Simply migrating from a spread-sheet or legacy based system alone is a huge improvement. Extending a WMS upstream to suppliers or retail partners can follow later. These small improvements eventually aggregate into great improvements on the bottom line. If you are a 3PL or Logistics Service Provider, these issues multiply across your entire customer base. Customers want to reduce logistics costs, but they also want to maintain control of their supply chains. As a 3PL, the SaaS model delivers an infinitely better model if you have to change profiles, access, configuration, and items.
Lottery: The ability to connect with a pre-existing community of partners and provide them with inventory visibility and transparency is unique to SaaS.
Total Cost of Ownership
This is in many ways the biggest benefit. It is almost the "super benefit" in that all of the benefits cited above aggregate into a lower total cost of ownership over the lifetime of your use of a SaaS system. The lower long-term cost of ownership is not solely due to the considerably reduced up-front costs. Eliminating maintenance and upgrade costs also eliminates disruptions and downtime in operations. Upgrading to an on-premise software package can exhaust resources, a penalty that only expands in proportion to the level of required customization. With the SaaS model, users remain current with the latest version of the software.
Concerns About SaaS
As a delivery model, SaaS has been around for less than a decade. Non-users will justifiably have some concerns.
Data Control
Previously, companies exercised complete control over their data by storing it on-site. Lack of control of organizational data is perceived as the biggest downside to the SaaS model. Some SaaS proponents think this concern is actually counterintuitive, arguing that a move to a SaaS environment actually delivers more control and more value because the data remains in a high-value and highly available environment. If you've ever been at the mercy of an internal IT department that doesn't share your priorities, you probably wish you had more autonomous data access, which is what SaaS delivers.
Data Backup
With SaaS, data backup is offloaded to the SaaS provider. This might sound scary but consider that the backup and data recovery strategies for most SaaS vendors are superior to many internal IT departments. Take the time to find out what they are. SaaS can deliver more than acceptable levels of availability, scalability and reliability a faction of the cost of on-premise options.
Tip: Make sure you research backup policies for any SaaS vendor you are considering using. Find out how they protect sensitive customer, sales and other data.
Application Failure
What happens if the application goes down? Can the SaaS vendor reboot the system faster than your own internal IT department or IT service partner? Again, ask about uptime performance and ask for customer references before you commit to one SaaS vendor over another. Contact existing customers to learn about historical performance. Ask to see their performance charts.
Network Access
If your Internet access goes down, so does your access to your data. This could be as much an issue of the reliability of your network provider and your contingency plans. Realistically, if your Internet access goes down, however, you'll likely have much bigger concerns about how this connectivity issue is suddenly affecting your order management, email, accounting, and freight management systems.
Tip: Internet access provides much more than access to SaaS data. Take the time to revisit your network provider's historical uptime performance. Perhaps it is time for a change or a Plan B such as a DSL modem on standby.
Integration and security
Software-as-a-Service also conjures up security and IT management issues. As these applications are delivered by third parties, and are often championed by non-IT staff, the IT department can be worried about the extra work they perceive they may have to undertake.
Thought: Just because an application is web-based, it doesn't mean it doesn't have to adhere to a company's security, privacy, and Internet use policy requirements. If you are considering SaaS, make sure you research the vendor's security policies and practices.
As IT department become more familiar with the SaaS delivery model and SaaS vendors, IT departments will become more comfortable with integration and security issues when the data resides off-site.
Cost Issues of SaaS Options
Total cost of ownership is an issue regardless of what type of software you use. Companies pay for applications in one way or another. You either pay through purchasing and licensing, as is the case with on-premise, or you pay some manner of subscription or usage fee, which is the SaaS model. Most often, those companies are paying a monthly subscription fee; that may be a flat fee, or it may be based on the number of system users on the system or some transaction or volume estimate.
You're already paying for desktops, notebooks, and Internet access anyway. Internet access bandwidth for in-house and remote users usually carries a fairly fixed cost structure, especially due to the commodity and competitive nature of the industry.
Cost Issues of On-Premise Software
On-premise software carries a variety of additional startup costs during the first year. You'll have to budget for initial testing and evaluation of both the software and the necessary hardware to run it. You'll have to buy the appropriate number of licenses for your site(s) and budget for user training, and tech support. In year two and beyond, you'll have to pay either annual maintenance fees (usually 18-24% of the initial per-seat license fee), or just wait for the big software upgrade, which you can expect to face in year three.
Thought: Maintenance and upgrade fees don't exist in the SaaS world.
Pondering the Future
You haven't reached decision day yet but we're getting you there, aren't we? When comparing the SaaS model against the on-premise option, the big question to ask is what does the application need to do? Your decision should not just focus on the money. Certainly look at what each delivery model will cost, but also consider other factors such as is what each software option will allow your company to do now and become later. Consider the amount of evaluation, installation and implementation time you will need. Factor in cost estimates of lost time (and possibly revenue, too) from integration and, in the case of on-premise, of future upgrades. What will a couple of hours (or more) of downtime cost in the future?
Moving Forward
Gartner Group researchers predict that 25 percent of all new business software will be delivered as SaaS by 2011. That is only three years away and the WMS industry is certainly contributing to this growth rate. It is hardly surprising that SaaS has become such a disruptive force in the application delivery industry as it is particularly well suited to the needs of smaller inventory and warehouse operations. In the Gartner research, many below average performers see SaaS as a way to quickly catch up to their competitors. For WMS operations that need to improve their game (or those already operating strongly), take a serious look at the SaaS model and you'll quickly see how it will help you deliver a lot more value to your business partners and customers.
You might have already implemented one. You might even be currently editing a WMS Request for Proposal as a first step. Or, your eyes might be closed shut, hoping that WMS vendors stop calling you, and Modern Materials Handling writers stop writing glowing WMS case studies. Sorry, you can't ignore their ample benefits any longer. You really need a WMS to implement your industry's best practices. But what type?
To SaaS or not to SaaS
We're going to start our WMS conversation from the perspective of Software-as-a-Service (SaaS) vs. on-premise software. It is vital to understand their similarities and differences. The applications loaded on your laptop or desktop are examples of on-premise software. A common example is Microsoft Office. QuickBooks hosted on your network server is another. The commonality is that you own (or rather, technically license from the software vendor) the application and host it on-site at your place of work. In fact, if you read the fine-print of your on-premise license agreement, you'll discover that rarely do you actually own the software.
Defining SaaS
OK, it is growing in popularity but what exactly is SaaS? In the SaaS delivery model, software vendors host applications over the Internet and deliver them to customers for a recurring license fee. The simplest definition is software accessed via Firefox or Internet Explorer. Industry analysts Gartner Group define SaaS as "hosted software based on a single set of common code and data definitions that are consumed in a one-to-many model by all contracted customers, at any time, on a pay-for-use basis, or as a subscription based on usage metrics." One of the most common SaaS delivery models is the single instance, multi-tenant arrangement in which a common version of the software is hosted at a central location and used by many different companies.
Winds of Change
While on-premise has been the application delivery standard for decades, the Software-as-a-Service delivery model in which you access applications through a Web browser is a more recent (and increasingly popular) application delivery option. SaaS enables software companies to build powerful, highly secure, and flexible applications and then deliver them to a broad customer base.
Benefits of SaaS
There is much to love about SaaS. It is not for everyone, to be sure. But it certainly delivers technical, operational and financial flexibility that the smaller inventory and warehouse operation needs to service existing accounts and develop new revenue opportunities. Here are some of the key benefits that many SaaS users have experienced:
Reduced initial costs compared to on-premise applications
SaaS is almost always much cheaper software to both evaluate and deploy. Customers who would have previously evaluated software in-house prior to purchase can now simply visit a SaaS vendor's web site and try the software before buying.
More predictable, usage-based recurring costs
SaaS users will experience a sharp reduction in their software management costs. That's a very good thing. Configuration, maintenance, and updates/upgrades tasks disappear. You simply eliminate the need to maintain some of your infrastructure. To see what the savings might look like, do a quick "scratch-paper" cost calculation on how much you are paying to back up your current data. (You are backing up, aren't you?)
Lottery: SaaS users can redirect their scarce IT resources to strategic initiatives, such as business process improvement. Studies have shown that most IT managers spend over 85% of their time on maintenance instead of innovation.
Fast application deployment, often shortly after signing-up
Few companies use exactly the same processes. The majority of software users require changes to optimize software functionality for their own situations. On-premise vendors typically meet this optimization need by customizing their products. To do this, they write new code. Historically (in the pre-SaaS world), if you wanted a system with custom fields, custom user profiles or data access, you needed a customized system that required either extra payments to the software vendor or payments to a consultant. In contrast, customization with SaaS usually means spending time appropriately configuring the system before using it. As you can imagine, configuration is much faster and cheaper than customizing software code.
Reduced complexity
With SaaS, you don't have to buy or install additional software or hardware. You don't need to tap IT resources to deploy your new WMS. You'll avoid resource allocation issues. Reduced complexity with SaaS delivers important financial benefits in the short-term (through avoiding capital investments), as well as in the long-term (cheaper operating costs). Consider that the average on-premise deployment for a mid-sized company can take up to 12 months. An entire "plan-configure-run" cycle for a WMS SaaS system can take less than a month. Much of this faster time-to-deployment is due to eliminating complex on-premise setup planning. SaaS systems also offer the option of dynamic modification, which is especially helpful if you haven't mapped out your business processes as well as possible. Non-IT users can even make business process changes. What if one of your customers needs to have a "first expired, first-out" picking policy, or you decide to switch from LIFO to FIFO for some of your items? With SaaS, a configuration change is all it takes. To handle these types of evolving business processes, or if you have an organizational habit of making it up as you go along, SaaS is definitely the way to go.
Better support
SaaS vendors add new features and updates incrementally, delivering them to all customers at once and keeping the user interface as consistent as possible. This "common-delivery-to-all" approach eliminates the burden on each customer to test and implement software updates and changes. It's also much easier to customize the software for the customers because of the shorter development cycle. Support becomes ubiquitous because all SaaS vendors need to constantly deliver on the promise, otherwise customers can easily depart.
Thoughts: Due to the homogenous nature of SaaS software and the SaaS vendor's absolute imperative that it function as promised, the SaaS model generally provides a better user experience.
Ongoing free upgrades
SaaS vendors handle software updates, upgrades and patch management issues.
You'll have the freedom to focus on your core business. Most feature improvements happen transparently. New feature updates occur in waves of functionality, remaining hidden till you want to turn them on.
Access and scalability
SaaS offers global accessibility. Scalability is not a concern. As long as there is Internet access and a browser handy, you, your employees, your business partners and your customers can access your WMS data. A SaaS model can instantly connect multiple warehouses. All your trading partners and customers can access and manage inventory across the supply chain in real-time, modifying orders, demand-planning, ATP, CTP, safety-stock and reorder points.
In reality, though, most SaaS WMS customers first want to realize small improvements within their own warehouse. Simply migrating from a spread-sheet or legacy based system alone is a huge improvement. Extending a WMS upstream to suppliers or retail partners can follow later. These small improvements eventually aggregate into great improvements on the bottom line. If you are a 3PL or Logistics Service Provider, these issues multiply across your entire customer base. Customers want to reduce logistics costs, but they also want to maintain control of their supply chains. As a 3PL, the SaaS model delivers an infinitely better model if you have to change profiles, access, configuration, and items.
Lottery: The ability to connect with a pre-existing community of partners and provide them with inventory visibility and transparency is unique to SaaS.
Total Cost of Ownership
This is in many ways the biggest benefit. It is almost the "super benefit" in that all of the benefits cited above aggregate into a lower total cost of ownership over the lifetime of your use of a SaaS system. The lower long-term cost of ownership is not solely due to the considerably reduced up-front costs. Eliminating maintenance and upgrade costs also eliminates disruptions and downtime in operations. Upgrading to an on-premise software package can exhaust resources, a penalty that only expands in proportion to the level of required customization. With the SaaS model, users remain current with the latest version of the software.
Concerns About SaaS
As a delivery model, SaaS has been around for less than a decade. Non-users will justifiably have some concerns.
Data Control
Previously, companies exercised complete control over their data by storing it on-site. Lack of control of organizational data is perceived as the biggest downside to the SaaS model. Some SaaS proponents think this concern is actually counterintuitive, arguing that a move to a SaaS environment actually delivers more control and more value because the data remains in a high-value and highly available environment. If you've ever been at the mercy of an internal IT department that doesn't share your priorities, you probably wish you had more autonomous data access, which is what SaaS delivers.
Data Backup
With SaaS, data backup is offloaded to the SaaS provider. This might sound scary but consider that the backup and data recovery strategies for most SaaS vendors are superior to many internal IT departments. Take the time to find out what they are. SaaS can deliver more than acceptable levels of availability, scalability and reliability a faction of the cost of on-premise options.
Tip: Make sure you research backup policies for any SaaS vendor you are considering using. Find out how they protect sensitive customer, sales and other data.
Application Failure
What happens if the application goes down? Can the SaaS vendor reboot the system faster than your own internal IT department or IT service partner? Again, ask about uptime performance and ask for customer references before you commit to one SaaS vendor over another. Contact existing customers to learn about historical performance. Ask to see their performance charts.
Network Access
If your Internet access goes down, so does your access to your data. This could be as much an issue of the reliability of your network provider and your contingency plans. Realistically, if your Internet access goes down, however, you'll likely have much bigger concerns about how this connectivity issue is suddenly affecting your order management, email, accounting, and freight management systems.
Tip: Internet access provides much more than access to SaaS data. Take the time to revisit your network provider's historical uptime performance. Perhaps it is time for a change or a Plan B such as a DSL modem on standby.
Integration and security
Software-as-a-Service also conjures up security and IT management issues. As these applications are delivered by third parties, and are often championed by non-IT staff, the IT department can be worried about the extra work they perceive they may have to undertake.
Thought: Just because an application is web-based, it doesn't mean it doesn't have to adhere to a company's security, privacy, and Internet use policy requirements. If you are considering SaaS, make sure you research the vendor's security policies and practices.
As IT department become more familiar with the SaaS delivery model and SaaS vendors, IT departments will become more comfortable with integration and security issues when the data resides off-site.
Cost Issues of SaaS Options
Total cost of ownership is an issue regardless of what type of software you use. Companies pay for applications in one way or another. You either pay through purchasing and licensing, as is the case with on-premise, or you pay some manner of subscription or usage fee, which is the SaaS model. Most often, those companies are paying a monthly subscription fee; that may be a flat fee, or it may be based on the number of system users on the system or some transaction or volume estimate.
You're already paying for desktops, notebooks, and Internet access anyway. Internet access bandwidth for in-house and remote users usually carries a fairly fixed cost structure, especially due to the commodity and competitive nature of the industry.
Cost Issues of On-Premise Software
On-premise software carries a variety of additional startup costs during the first year. You'll have to budget for initial testing and evaluation of both the software and the necessary hardware to run it. You'll have to buy the appropriate number of licenses for your site(s) and budget for user training, and tech support. In year two and beyond, you'll have to pay either annual maintenance fees (usually 18-24% of the initial per-seat license fee), or just wait for the big software upgrade, which you can expect to face in year three.
Thought: Maintenance and upgrade fees don't exist in the SaaS world.
Pondering the Future
You haven't reached decision day yet but we're getting you there, aren't we? When comparing the SaaS model against the on-premise option, the big question to ask is what does the application need to do? Your decision should not just focus on the money. Certainly look at what each delivery model will cost, but also consider other factors such as is what each software option will allow your company to do now and become later. Consider the amount of evaluation, installation and implementation time you will need. Factor in cost estimates of lost time (and possibly revenue, too) from integration and, in the case of on-premise, of future upgrades. What will a couple of hours (or more) of downtime cost in the future?
Moving Forward
Gartner Group researchers predict that 25 percent of all new business software will be delivered as SaaS by 2011. That is only three years away and the WMS industry is certainly contributing to this growth rate. It is hardly surprising that SaaS has become such a disruptive force in the application delivery industry as it is particularly well suited to the needs of smaller inventory and warehouse operations. In the Gartner research, many below average performers see SaaS as a way to quickly catch up to their competitors. For WMS operations that need to improve their game (or those already operating strongly), take a serious look at the SaaS model and you'll quickly see how it will help you deliver a lot more value to your business partners and customers.
