Companies have historically licensed warehouse management system (WMS) software, with pricing based on a combination of the number of distribution center sites and user counts. WMS products were installed directly on servers located within the D.C., and managed by the company’s internal I.T. staff. Over the last decade, a marked trend toward centralized hosting of WMS in the cloud has gained footing in the market. Today, WMS subscription-based pricing is rapidly evolving and changing the customer-vendor dynamic.
WMS subscriptions have traditionally been offered by vendors catering to lower-complexity environments and smaller, e-commerce-focused customers. In 2019 and 2020, this approach expanded, and is now a standard option for almost all WMS vendors in the market. Vendors are not only offering WMS subscriptions, but are also adding order management system (OMS), transportation management system (TMS) and other modules to their software-as-a-service (SaaS)-based arrangements. Should potential buyers with moderate to complex operations embrace this model?
Some key thoughts on this trend:
In 2021, subscription-based pricing becomes even more widely proposed by vendors, and considered by prospective customers. Subscription-based WMS implementations expand into larger, more complex D.C. environments. Savvy distribution operations will recognize this move toward cloud and subscription models, and will thoroughly evaluate future options. These operations should take a fresh look at the WMS market now, to avoid hitting higher-risk “end of product life” or product-support scenarios.
Cal Petty is Vice President with Tompkins International.
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