The pros and cons of In-House and cloud hosted WMS

In the past a medium sized businesses that wanted to enhance its warehouse operations with a capable, affordable warehouse management system (WMS) faced difficult choices.

A WMS can deliver real benefits in efficiency and productivity performance by supporting better working processes, promoting accuracy, and sharing information faster. But formerly the choice was often between a simple, but inadequate control package, or an over-specified mid-level enterprise system. The latter often involved big upfront costs in software, equipment, and internal resource. But more recently, advanced cloud-based WMS applications have changed this.

In recent years, the server-based WMS has reached an advanced state of development, with high level functionality, extensively configurable options, broad modular scope, and multiple integration options. Although these are usually based on ‘standard’ software, many users consider their system a starting point, something to grow and develop with their business. So, in time if not at first, these systems are enhanced with customised extras which in effect make them semi-bespoke solutions.

For larger more mature businesses with adequate internal resources, this approach may be key to IT strategy. With ample personnel to specify development, implement changes, and manage infrastructure it is practical and desirable to have a system shaped around your business needs. But for smaller scale enterprises with fewer people and less expertise this may not be the best choice. The continued improvement of cloud hosted WMS suggests there is now a valid alternative.

What are the advantages and disadvantages of the two approaches?

There is no doubt that a system that adapts to business change provides something extra. If your challenge is to onboard new customers and products or embrace new markets, all of which need different working methods, a system that keeps pace will offer competitive advantage. This does assume any changes you need are delivered at a sensible cost in timescales that align with your business changes. An efficient in-house IT resource or external supplier who understands and responds quickly is clearly essential in achieving this.

But there are downsides. Funding an in-house IT department to develop and maintain a system is expensive. A cynical person might observe that it can be an expanding cost centre, while a truly cynical one might add that it can even start to affect the primary function of a business! There are pitfalls too with external suppliers. Not only can you become dependent on them, but sometimes on their specific employees. If your system is extensively customised this can also make regular annual support, as well as system upgrades (where possible), increasingly expensive.

An alternative option, generally but not exclusively suited to the medium-scale enterprise, is the cloud-hosted WMS. Though not always competitive on functionality with leading established WMS’, some are now developed to a level that satisfies the majority of typical user needs. In addition, they offer faster implementation, lower set up and training costs and ongoing rental that can be met from operating budgets rather than the capital investment generally used for larger systems. Inclusive support and upgrades and, particularly for web dependent enterprises, standard API connectivity, are also plus points.

Of course, there are some drawbacks. Some cloud WMS may never offer the same features and configurability you could get with your own ‘semi-bespoke’ system. This is because the more developed a system is, the more complex the underlying code. A multi tenanted system – one used in standard form by many companies – makes support more complex when reliability must be key. So, there is a trade-off between using a cost-effective system giving most of what you need and accepting that, standard upgrades aside, you will not get everything you want.

It is a decision to make based on your own business situation. There are good reasons to have a system you can adapt and for some that will be essential. That you also manage your IT infrastructure means you control your destiny in terms of both software and hardware. Those things cannot be achieved with a cloud-hosted WMS, yet as the better systems continue to improve there are sound reasons why they could be the right choice for your business. There is some compromise with the cloud but it could deliver greatly reduced cost and management time compared to the alternative.

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