Cloud WMS vs on-premise WMS: an objective comparison

Perhaps the greatest debate going on in the warehouse management space is whether you need a cloud WMS or whether an on-premise WMS would be better for you, and it’s getting increasingly difficult to find an honest discussion. Our goal is to provide you with an objective look at local and SaaS WMS deployments, so you have some of the tools you need to make the choice.

This won’t make the final decision for you, but it can serve as proper business planning that will allow you to make a recommendation that delivers the support you need and the returns that leadership asks for to justify the spend.

Support for industry best practices

Today, there are few differences between cloud and on-premise WMS when it comes to standard industry practices. Vendors of each have noticed that supporting industry requirements is a smart practice to get customers — and keep them. This has led to both cloud WMS and on-premise systems responding to industry changes and providing updates to maintain their own business.

Adopting new technology

RF tags and gates are commonplace in today’s warehouse, so you can expect full support for this established tech in both types of warehouse management tools. However, cloud WMS deployments are typically more responsive to the newest technology, such as new IoT or initial support for BYOD. That doesn’t necessarily mean it is the best for you, as new devices often require access to and use your data.

Identify your WMS deployment requirements with this interactive WMS requirements template

So, you’ll want to balance support with security requirements, and that may be a vendor-specific evaluation.

Customization capabilities

On-premise WMS and their cloud counterparts support customization on the whole. The main difference is that SaaS deployments will keep you on the same release as others, so if you need to customize beyond your given options that often means developing a program that can work with your WMS.

On-premise WMS solutions usually are more flexible when it comes to supporting customization and working with other platforms — some will provide containers for you to develop within so that integration is simple. However, the customization development may take longer because you’re working with specific systems and equipment on your location, so you may need to tailor it to address equipment or connection limitations.

Upgrading software

One area where a cloud WMS tends to “win” is in the realm of software upgrades to the system itself. Your vendor will deliver updates to your SaaS WMS, and they typically can be installed automatically and update your software during predefined hours of downtime. Your provider also manages scalability, which is usually an easing of a burden from your staff.

On-premise solutions may or may not get consistent updates from your vendor. Receiving updates usually requires a contract that covers them for a certain period of time, while you might have to pay for updates at a specified time in the future. Other updates or upgrades you want are an internal responsibility, whether your team creates them or you work with a third party to develop them.

Upgrading hardware

A common goal of a cloud system — WMS and otherwise — is to work on as many devices as possible. This means you won’t likely need to buy a lot of new hardware if your equipment meets initial requirements. You will likely need to stay relatively up-to-date on operating systems because cloud vendors will need to continue to progress in their support in order to attract new customers.

On-premise WMS will require hardware updates when you look to expand its capabilities. Because this solution is dependent on your hardware, you will likely make more purchase decisions to use and expand your WMS. However, business needs and growth are the core factors pushing you to upgrade hardware, not vendor support.

Price

We’re not only saving the best for last, we’re saving the most subjective for last. Fees change constantly and it is hard to find a good price range for either. So, here are a few standard considerations:

• On-premise WMS tends to have a higher upfront cost because you’re buying it as an asset.
• Cloud WMS will be cheaper initially, but will likely become more expensive over the long term — this comparison requires sticking with the same service for years.
• You pay maintenance and support costs for both. SaaS WMS usually builds this into monthly charges, while on-premise WMS will have an additional support license cost of up to 25% of your annual price.

The best advice is to do your due diligence and look at what your specific needs are, plus where you think your company will grow to next. If you’re considering growth in new markets and regions, then pick a cloud or on-premise WMS that already supports that locality. If your growth pattern focuses more on new product introduction in existing markets, look for vendors who make it easy to expand SKUs and integrate more warehouse locations.