September 15, 2014
technology review | Systems Integration

Cloud-based WMS: how friendly?

Cloud-based WMS: how friendly?

Despite the hype about their user-friendliness, cloud-based warehouse management systems still may require systems integration work.

By James A. Cooke

Cloud-based software was supposed to make deployment and installation easier for the user. That's because the software provider hosts the application on its own servers instead of having the user install it on its premises. When a user wants access to the application, it's a simple matter of going to a website.

And with many cloud-based programs, it's that easy. They require little or no systems integration work because they come with a built-in application programming interface that allows for data to be exchanged in a variety of formats. Take a transportation management system (TMS), for example. With a TMS, the input is typically data on shipments for which the application must schedule a carrier. Because that information may be coming from a variety of sources, the software comes with the interfaces already in place to accept shipment information in a mix of data formats.

But with warehouse management systems (WMS), it's different. These systems typically have multiple "touch points," where the application has to interface with various pieces of material handling equipment or other types of software. And no matter where the WMS resides, that software still has to be configured to accommodate multiple data inputs and outputs.

"Moving WMS to the cloud is sometimes seen as a way to relieve the IT [information technology] burden and shorten time to value by moving the infrastructure, setup, and configuration tasks externally to the software solution provider and away from the internal IT function," says Mike Howes, vice president of software engineering at the Mason, Ohio-based consulting and systems integration firm Forte. "This approach does not necessarily take into consideration the complex tasks of extracting and manipulating the data that need to be loaded into the cloud-based WMS application."

Howes is hardly alone in his views. Most of the systems integrators interviewed for this article agreed that deployment of cloud-based WMS still requires some degree of integration—in fact, they say, the level of work needed is roughly the same as it is with an on-site WMS. Here's why integrators believe that the scope of work is essentially unchanged by a WMS user's decision to go "cloud."

Although cloud-based WMS applications have been around for nearly a decade, companies are just starting to warm to this model. A survey of DC Velocity readers conducted earlier this year found that while 64 percent of the 230 respondents had deployed a WMS, only 8 percent of those WMS deployments were cloud-based.

At first glance, that low percentage is somewhat surprising given all the trumpeted advantages of cloud computing. And those advantages can be significant. For one thing, because the software provider hosts the applications on its servers, the user avoids the expense of hardware needed to run the solution. For another, since the software can often be "rented," the user avoids a hefty upfront expenditure on licensing fees. Furthermore, because the software provider assumes responsibility for upgrades, the user avoids the costs of software updates and maintenance.

"We're seeing a lot more customers saying they're open to a cloud-based WMS," says James T. McNerney, a principal with New Course LLC, a systems integrator based in Toledo, Ohio. "They can 'buy' it on a subscription basis [instead of paying a licensing fee] and get a quicker ROI [return on investment]."

For the reasons cited above, a company that operates multiple warehouses or DCs might find it makes sense to use a single cloud-based application that can be accessed by multiple locations. But it's important to keep in mind that although one cloud-based WMS can oversee more than one warehouse, it still has to interface with the sophisticated material handling equipment used in each of those facilities. And that's the rub. Configuring the WMS to exchange information with equipment or other software programs used in the warehouse requires the involvement of an integrator to build those data connections.

"Systems integration requirements are the same regardless of whether the WMS application is installed on-premise or in the cloud," says Al Reigart, a principal at the York, Pa.-based consulting firm St. Onge and the current chair of MHI's supply chain execution systems & technologies group. "The WMS application either has the "hooks" [application programming interfaces] for the required connectivity or it does not. If it does not, the integration will require that additional implementation services be performed by the provider, a systems integrator, or the client/owner."

As for what's involved, consultant Marc Wulfraat says there are six components to any systems integration project, regardless of the type of WMS involved. First, there's the task of writing interfaces between the WMS and other software applications, such as an enterprise resource planning (ERP) system, a transportation management system, or a warehouse control system. Second, the WMS must be modified to accommodate the specifics of a particular warehouse operation. Third, a database must be set up for the WMS. Fourth, the system has to be tested and validated. Fifth, it has to be rolled out. And sixth, workers must be trained to use the system.

These steps are necessary whether the WMS is based in the cloud or installed on the company's servers, says Wulfraat, who is president of the Montreal-based consulting firm MWPVL International Inc. "None of these six components are really changed, and they make up the lion's share of work that needs to be done as part of a WMS project."

Regardless of the company's size, one of the main advantages to going the cloud-based WMS route is that the vendor handles software upgrades, Wulfraat continues. "The cloud-based benefits come in on the post go-live effort where system upgrades are performed by the vendor instead of by the client," he says.

About the Author

James A. Cooke
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP’s Supply Chain Quarterly and a staff writer for DC Velocity.

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