Supply chain executives are in a full sprint toward more efficient systems and better customer service as companies around the globe implement new technologies. As supply chains leverage new resources, the demand for cloud-based software skyrockets. When selecting a warehouse management system, supply chain leaders face a decision between software-as-a-service (SaaS) or cloud-based warehouse management systems. Unfortunately, both systems have similarities that lead many to assume they are identical, and in reality, they have stark differences.

Misconceptions About Cloud-Based Warehouse Management Systems 

Cloud-based warehouse management systems leverage cloud technology for core system function, as well as the ongoing development and implementation of new resources and functionalities. At the same time, SaaS platforms may also leverage cloud-based technology, but several misconceptions still exist about these systems, including:

• Both cloud-based warehouse management systems and SaaS are the cheapest options.
• Both platforms offer the same functionality.
• Dedicated customer service is available on all cloud platforms.

These misconceptions reflect the great similarity that exists between cloud-based warehouse management systems and SaaS. Since both systems leverage cloud technology, they appear identical and offer like services. Supply chain executives need to understand the real differences to ensure the right type of system is selected.

What’s the Real Difference Between Cloud-Based and SaaS WMS?

The difference between cloud-based systems and SaaS involves both payment models and functionality. According to Datex Corporation, SaaS solutions offer a core system functionality, but these systems are designed for small and less complex operations. While a true cloud-based WMS may leverage a SaaS-based payment model, such as a subscription service, true SaaS contains some limits.  However, their smaller scale allows for faster and simpler integration and implementation.

A cloud-based warehouse management system takes the features unavailable in a SaaS solution and expands upon them. The system resides wholly in the cloud, and comparable to SaaS platforms, the software vendor manages the full scope of IT needs and updates. Cloud-based systems can be customized to suit the needs of each software vendor and supply chain, but additional modifications can dramatically increase the cost of implementation and maintaining the comprehensive nature of cloud-based warehouse management systems, notes Geoff Whiting of Explore WMS.  As a result, a cloud-based system may be more expensive and require more internal resources to deploy.

How to Choose the Type of System Right for Your Operation

Deciding to implement a cloud-based warehouse management system or SaaS solution should not be taken lightly. Both systems have lower initial investment costs compared to traditional, on-premise warehouse management systems. In some respects, the terms have become synonymous, but typical SaaS application is designed for smaller-scale operations, and companies with little resources to purchase a system. In other words, startups, and companies experiencing growth that outpaces return on investment may consider using a SaaS solution. Meanwhile, companies that need a larger, more robust platform should implement a cloud-based warehouse management system. One other factor may affect the decision as well.

The security protocols of a SaaS solution, while superior to on-premise solutions, are generally less advanced than true cloud-based systems. This poses a risk which supply chain executives should consider. Of course, the ideal solution would be a cloud-based system that leverages the subscription-based payment terms of a SaaS model. This is where companies see more of a blending between the systems.

Get the Help You Need in System Selection and Implementation

Supply chain executives make many decisions affecting the success and efficiency of their warehouses and networks. Instead of getting bogged down in the selection process for a cloud-based system or SaaS, consider partnering with an expert in WMS variations and options, such as Veridian. By understanding the differences between these systems, executives can increase visibility and reduce costs, while keeping customers happy too.

Veridian, a Manhattan Associates, HighJump, and JDA warehouse management system implementation company, can help you realize your supply chain success. Fill out the contact information below in order to schedule a consultation call with one of our supply chain professionals.