A key trend in inventory systems over the past 12 months has been towards Software as a Service (SaaS) web based inventory software. The general play with this model is that it provides a lower cost of ownership in comparison to traditional inventory management software.
There are a few key points to consider when choosing an inventory system of either the SaaS web based inventory software model or the 'buy licence Client server' model.
SaaS inventory management can be accessed instantly through your existing web connection, while traditional warehouse management systems are installed on the Client’s servers at their site. For both ways the Radio Frequency connection to the mobile computer is over WLAN (wireless local area network) and will work at a similar speed. The advantage of SaaS web based inventory software over Client server based system at deployment is the money it saves the customer by not requiring a technical person to be on-site for long installations or for software upgrades in the future and the speed with which it can be deployed.
For integration into an enterprise resource planning system, most web based inventory software uses web services with data encryption. More traditional implementations require complicated integration to the existing enterprise resource planner or operate as a standalone. The general rule of thumb is that as web based inventory software is newer, they tend to be more integration ready thanks to the advanced software technologies that sit behind them. This can also apply to newer Client server based inventory systems.
Features and functionality
At present the functionality of traditional inventory management systems is more advanced. However, most companies do not need a lot of the more advanced features offered and even big organisations can find the web based inventory systems to be sufficient as the legacy systems can be overkill. In terms of functionality it is fair to say that for the time being the two models will serve two different markets. The largest warehouses seeking upgrades and efficiency perfection will still need those completely re-configurable systems which only a few web based inventory software packages have cracked.
There appears to be a market for a more basic inventory management software that is quick to deploy. It is in the latter market that traditional Client server based software and SaaS inventory software models are most comparable.
For now the SaaS vendors are newer to the industry and therefore the focus has been toward getting the basic requirements right for most companies. This will be something that is rapidly changing and we may begin to see web based inventory software begin to challenge at the top-end of the marketplace.
How configurable is web based inventory software compared to traditional offerings?
Best of breed vendors operate on large project budgets and are often prepared to re-write parts of their core product so that the software fits the exact needs of the warehouse(s) or stores. SaaS systems are less able do this because they are hosting your inventory management software on the same database and servers as other Clients - again only a few have managed to make their core web based inventory management software product as configurable as possible to overcome this weakness.
Internal IT resource requirement
Hosted SaaS inventory management software requires limited internal IT resource for deployment or support. This is because the SaaS provider looks after the database and is able to constantly push updates and upgrades with ease. All that is required from the internal teams is that the computers onsite are connected to the internet plus barcode handheld terminals and printers.
The traditional model requires that Clients have to maintain and host their own servers. This can increase the upfront installation costs and may require more IT involvement overtime.
Total cost of ownership
The main difference between the web based inventory software and the traditional model is the upfront capital expenditure required. A software purchase fee is required on installation plus an annual maintenance and support fee is charged typically at 20%. The key difference being that with the SaaS model is that you are renting it. One advantage of this is that if you do not want to use it any longer or you want to change supplier you can do this relatively easily. With the traditional model you are actually buying the software. This often suits bigger companies with set IT budgets to spend, however we see a decline in this requirement as applications are available on pay monthly. With both models the hardware costs such as the label printers, wireless network and barcode scanners typically remain as an upfront cost.
For the advanced warehouse the traditional inventory management software model may cost more over its lifetime but justify this by delivering the maximum return on investment possible. For the more straightforward operations the web based inventory software can deliver the required functionality and get the maximum return on investment despite the lower cost of ownership. This is where it should be seriously considered. This is evloving as more companies are coming up with configurable systems that are SaaS.
In conclusion, when going through the process of selecting inventory management software, try web based first to see if it fits your needs. If not, go down the route of investing more money into buying the software in the Client server model.