Supply chain software: Will we soon see an on-demand Tier 1 WMS from RedPrairie?

This week, RedPrairie and NetSuite announced an agreement that represents a potentially interesting development in the world of on-demand, or Software-as-a-Service (SaaS), solutions for supply chain execution software.

I say potentially because, according to my contact at NetSuite, the goal is for RedPrairie to eventually offer a variety of supply chain execution solutions on demand (that’s the interesting part), but this is still in the preliminary stages. RedPrairie, meanwhile, is limiting its comments for now to what was contained in the press release.

Here’s the background:

SaaS has been the hot topic in business software this year. The idea is simple. Instead of buying software and loading it on your server, the software provider hosts it on their server. The application is accessed over the Internet as needed – or on-demand. Instead of a licensing fee, customers pay a subscription fee, much like a cable bill.

NetSuite is one of the pioneers in the SaaS field. Given that the company was founded by a former Oracle executive with funding from Larry Ellison, its no surprise that NetSuite started by offering on-demand ERP. Once ERP was up and running, the company began to expand its offering to include functionality like a manufacturing planning module.

The leading Tier 1 supply chain execution providers, meanwhile, are just now coming around to embrace the SaaS model. In part that’s because there is a sense that the on-demand model may work fine in a conventional warehouse using lift trucks and manual ordering picking, but it isn’t suited to the complex order fulfillment environment you find in an automated warehouse. That’s the environment where a Tier 1 warehouse management system (WMS) provider like RedPrairie often plays. Last fall, however, RedPrairie announced that it planned to roll out SaaS for some of its supply chain execution applications, especially those like transportation or labor management that don’t have to interact in real-time with an automated materials handling system.

Fast-forward to this week. The two companies announced that RedPrairie Corporation, “will offer pre-integrated application modules for NetSuite” and that the “integration components will be provided across several RedPrairie solutions.”

“While we have successfully delivered our solutions via hosted and SaaS models for several years, we felt pre-integrated application modules on NetSuite’s SuiteCloud would provide further value for our customers,” said Jim Hoefflin, EVP of Products and Marketing at RedPrairie. “We believe our integration to NetSuite provides best of breed supply chain and store operations capabilities to mid-tier companies that have not been able to justify it through traditional deployment models.”

“Furthermore, we believe NetSuite’s SuiteCloud integration allows large manufacturers and retailers the opportunity to connect to their extended supply chain network in a cost-effective manner,” said Tom Kozenski, VP Product Strategy at RedPrairie. “Third party logistics companies can also leverage our pre-integrated components to more effectively service their customer base.”

So, is a Tier 1 on-demand WMS in the offing? My understanding from a conversation with NetSuite is that the two companies are working now on integrating RedPrairie’s applications with the NetSuite platform. Then, they will begin making those solutions available to customers in a SaaS environment. Will WMS be the first application out of the gate? Probably not, I was told, but that’s the goal. But the fact that a Tier 1 supply chain execution company is taking this step says that the SaaS model is for real.