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Past vs. Future: The Difference Between On-Premise and Cloud-Based WMS

Warehouse management systems (WMS) have been a nearly essential part of efficient warehousing operations for several decades now. Serving as the brains of an operation, WMS systems orchestrate all processes, from receiving to put away and picking to shipping. They provide visibility into inventory and optimize material flows and manage processes like omni-channel fulfillment to coordinate the rapid pace of today’s operations.

The traditional installation avenue for legacy or software provider models of WMS has been on your own servers, often referred to as on-premise. While these systems still have a place in some operations, today’s industry is largely migrating to a cloud-based model. If you’re considering an upgrade or buying a new WMS, you should carefully consider the pros and cons of each model, while being mindful that your future WMS will more than likely exist on the cloud.

Weighing the options

Typically, decision making on on-premise WMS or cloud-based (software-as-a-service/SaaS) WMS has fallen along the lines of a company’s size. Mid- and larger-sized companies have considered the cost of a cloud-based system well worth the investment. These organizations have their own IT departments with a good understanding of the cost that goes into maintaining a WMS. While there is no upfront investment required, maintenance for a cloud-based WMS involves security, updates and ensuring that the system is online and available around the clock.

For smaller organizations that don’t have the cash flow to pay monthly installments for a cloud-based system, on-premise WMS has been the preferred option. It’s a “one-and-done” investment that these companies can manage themselves, without having to invest in outside maintenance and security.
The downside, however, is that these companies will have to pay for upgrades or modifications as time goes on. They also don’t get scalability in on-premise systems, whereas with SaaS, scalability is quick and easy, and managed by someone else.
This picture is beginning to change, however, and even small companies are starting to appreciate the upsides to a cloud-based WMS. The vendor market is largely migrating to cloud-based systems, and smaller organizations are following.

Following the shift to SaaS

If you’re considering a cloud-based system, you’re in an increasingly bigger crowd, and the benefits are tangible. You’ll receive robust, next-generation solutions that can be implemented quickly, and as your operations expand and change, so too will your SaaS WMS solution. This will be key as your fulfillment operations continue to get faster and faster, and customer demands get bigger.

As you search for an SaaS WMS provider, it’s important to do your homework and due diligence on the providers you’re considering. Along with the SaaS model’s growth has been the appearance of many new players in the market. Put the time into learning how much cash-on-hand these potential partners have, how long they’ve been in business, and whether or not they understand your industry. If you miss the mark and select a start-up vendor that could shut down in a few years, remember that they can take your software with them—and that’s not a risk worth taking.

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