On-demand ERP meets on-demand WMS

Warehouse management system (WMS) providers have been late in offering a software-as-a-service model for their solutions. That's about to change as a WMS provider teams up with an on-demand enterprise resource (ERP) provider.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 11/16/2006

Warehouse management systems (WMS) are one of the last supply chain applications to be offered in an on-demand, software-as-a-service format. That is beginning to change now that 7Hills, a provider of licensed and on-demand WMS and supply chain execution solutions, has teamed up with NetSuite, a provider of on-demand enterprise resource planning (ERP) solutions.

Both companies bring Tier 1 functionality in a package designed for small to mid-sized businesses with 1 to 250 users. Both companies also focus on distributors.

In a traditional licensed arrangement, end users load a single instance of a software program on a server at their corporate office, warehouse or distribution center.

In an on-demand model, the software solution is offered as a service over the Internet. The software provider maintains that software on their server, which is then accessed by customers online. The advantage is that every customer is on the most current version of the software, without the need to upgrade or to pay a programmer to reconfigure the system. That is attractive to mid-sized companies without the time, staff or financial resources to purchase licenses and operate their own IT department.

Small to mid-sized companies, including distributors, have responded to on-demand ERP, transportation management (TMS), and customer relationship management (CRM) solutions. But until now, the market has not shown much interest in on-demand WMS.

Why might that change now?

“Distributors are not leading-edge technologists,” says Curt Leo, NetSuite’s senior sales manager for distribution. “They have to weigh spending money on technology versus spending it on more inventory that they can sell.”

Software as a service

But now, adds Bob Kennedy, 7Hills’ executive vice president for business development, small to mid-sized distributors are required to provide the same level of real-time service as their larger competitors.

“With software as a service, they don’t have to make a tradeoff between inventory and technology. They pay a monthly fee and the solution is managed for them,” Kennedy says.

Kennedy says that 7Hills has seen an increase in the number of inquiries from third-party logistics (3PL) providers and small distributors who are interested in the concept. But it’s still early.

“At this point, they want to know what this software-as-a-service option is all about,” says Kennedy. “Right now, it’s still an educational sell. But we think combining it with an on-demand ERP that allows you to integrate your front and back office processes is a compelling proposition.”