The on-demand tipping point

Supply chain management vendors are now offering their solutions on-demand. End users just might be ready to sign up.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 6/15/2006

How do you draw attention to a new warehouse management system (WMS) in a crowded market? You might consider throwing out the traditional software licensing model and offer your software on-demand.

Just what is on-demand? Also known as Software as a Service, or SaaS, an on-demand solution is a software application designed from the ground up to be hosted from a central location and accessed by multiple users over the Internet.

Vendors like Salesforce.com have been offering on-demand software solutions for years. Now, supply chain application providers are jumping on the bandwagon. Navis (www.navis.com), for instance, recently introduced an on-demand WMS for as little as $500 a month.

It also appears the market is ready to buy, according to Beth Enslow, a senior vice president at Aberdeen Group (www.aberdeen.com) and author of The On-Demand Tipping Point in Supply Chain.

Enslow’s key findings:

• Approximately half of study participants are now using or considering the use of on-demand applications to manage select portions of their supply chains.
• While above average supply chain performers were the first to see the value in on-demand solutions, the most interest right now is from below average performers. They see on-demand as a way to quickly catch up to their competitors.
• A majority of users believe that on-demand solutions will provide a lower total cost of ownership. “One CIO at a high-tech company says that its on-demand SCM (supply chain management) system cut its TCO (total cost of ownership) by 35%,” says Enslow.