WMS IN THE CLOUD:

ROI CONSIDERATIONS
The cloud makes advanced technology accessible—and affordable—for any company.
 White Paper: WMS in the Cloud: ROI Considerations

According to Gartner’s
WMS IN THE CLOUD:
latest forecast, global
ROI CONSIDERATIONS
spending on IaaS is INTRODUCTION
There’s an evolution taking place in the IT industry: the continuous and steady
expected to reach almost progression from traditionally installed software to cloud technology. In the cloud
computing model, the vendor provides Web-based access to applications as a service,
$16.5 billion in 2015, an through a subscription pricing model. The vendor takes responsibility for everything,
including servers, storage, backups, system updates, applications, databases, and
increase of 32.8 percent maintenance. This eliminates the need for customers to buy, deploy, and manage
IT infrastructure, saving the customer large upfront deployment costs and ongoing
from 2014, with a maintenance headaches.

compound annual growth In recent years the shift of enterprise software to the cloud has intensified, driven by
a perfect storm of dramatically lowered cost of storage, increased processor speed,
rate (CAGR) from 2014 to elimination of the need for a software and hardware to be physically connected.

2019 forecast at 29.1 Warehouse management system (WMS) technology is now available in the cloud
delivery model from some providers, offering a lower cost, reduced risk option. When
percent. Secondly, evaluating WMS providers, it is imperative for every business to understand the total
cost of ownership (TCO)—including both direct and indirect costs—of the technology
Gartner’s 2015 CIO survey and labor associated with adopting WMS technology. The scrutiny of new technology
projects has never been higher, and building a business case to justify an investment
indicates that 83 percent of in supply chain management technology has never been more crucial. While some see
cloud as being simply the next level of technology, the shift towards cloud computing
CIOs consider cloud IaaS also has very tangible financial benefits.

as an infrastructure option, Read on to explore how warehouse management, delivered via cloud technology, can
have a positive financial impact not just in your distribution logistics, but on your internal
and 10 percent are already IT spending as well.

cloud-first with cloud IaaS
Component On-Premise In the Cloud
as their default infrastructure
Pricing model Perpetual software license Monthly subscription
choice. Server hardware Customer purchases Included
OS licenses Customer purchases Included
Software licenses Customer purchases Included
Maintenance fees 18-22% of software cost Included
IT operations Customer purchases Included
Operating costs Customer purchases Included

RETURN ON INVESTMENT CONSIDERATIONS FOR CLOUD

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 White Paper: WMS in the Cloud: ROI Considerations

More Technology for Less Cost

For most businesses, infrastructure, development, and
IT management are not core competencies or business
differentiators. The anemic economy compels businesses to look
even harder at their core competencies and costs. Ask yourself:
can someone else do it for you more effectively and at less cost?
Take, for example, the explosive growth of 3PL/logistics services
providers, hired to take on tasks manufacturers and distributors
used to do themselves, because the 3PL can perform the service
more efficiently and at less cost than the company can itself.

Cloud allows you to switch from a fixed cost capital-intensive

business model to a variable cost pay-as-you-go operating expense
model. Eliminating the need to gain approval for a large, up-front capital investment to cover the cost of software makes stepping
into a WMS easier for many companies, especially smaller operations with less cash on hand.

In typical enterprise data centers, large initial capital outlays also make ongoing upgrades in servers, operating systems, and
database software prohibitively expensive. Over time these costs remain fixed, but so does performance. The economies of scale
available with the cloud allow cloud providers to purchase and maintain large volumes of hardware storage at very low costs. In
this way, the cloud enables costs to decrease and performance and functionality to increase steadily over time.

While a move away from capital expenses is undoubtedly attractive to most organizations, it is in the total cost of ownership
analysis that the economic benefits of WMS in the cloud become clear.

Lower Total Cost of Ownership (TCO)

Performing system upgrades is one of the most dreaded IT tasks related to traditional WMS software. Did you know there are a
large number of businesses out there that have had to cough up a million dollars just to upgrade their WMS? With WMS in the
cloud, your vendor performs routine software maintenance for you, including scheduled upgrades and patches.

Additionally, in traditional enterprise data centers; it is fairly common to experience capacity constraints or waste caused by spikes
and troughs in demand throughout the year. You either need to wait while additional server hardware is ordered, shipped, and
brought into operation—which can take months and cause lost business and unfulfilled orders—or you have excess capacity,
meaning wasted space and expense. The cloud is elastic and scalable, so you can access more power when you need, and scale
back during slower periods.

Hidden Cost Description

Internal resources Staff required to operate and maintain on premise software,
administrative, quality assurance, end user support resources
Training cost Training for your IT and administrative users on running,
managing, and maintaining the software
Infrastructure Server hardware, software, facilities, and data center to support
WMS application
Upgrade to future functionality Adding more features in the Future to supplement your
existing solution

There are many, easy-to-overlook “hidden costs” which represent a significant component of many TCO analyses of traditional
WMS system deployments.

Without the analysis of hidden costs, it is difficult to build an accurate picture of TCO. Cloud computing removes the heavy cost
and time requirement of software and infrastructure maintenance, freeing up time for your IT staff to refocus their time and

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 White Paper: WMS in the Cloud: ROI Considerations

resources. There is no server hardware to purchase or maintain, and you are no longer required to manage vendors, support
contracts or carry insurance on your server hardware.

Removes the IT Requirement.. And Empowers The Supply Chain Team
In many companies as much as 70 percent of the typical IT budget is spent just on making sure the business remains operational—
tasks such as keeping servers running and performing upgrades. In the best cloud models, IT staff can devote their time to
improving the business, rather than trying to solve infrastructure issues and applying software patches. IT can move from being an
interchangeable commodity to a differentiator, shifting from maintenance to innovation.

When an IT team knows they need to run the underlying infrastructure, they realize there will be an inherent expectation that the
business will rely on them for broader application support. Using cloud applications forces businesses to think differently about
who will truly be accountable for the software and its implementation. If it is determined that the business process owners should
“own” the software, the business process owners should likewise be accountable for it.

In order to make good business decisions about information technology investments, the business process owner—not the IT
department—must make the decision about investment and commitment to information technology. Sound business decisions
about using technology cannot be made if the business owner perceives to be getting the system “for free” from IT. Similarly,
a decision to invest in IT should not be limited by lack of internal IT resources or IT project prioritization. If a technology project
stands on its own business merit, there should be a mechanism to execute on
that project. That means that IT is freed up, and the supply chain department is
empowered to make more rapid and informed technology decisions.

The Cloud Reduces The Risk Involved With Supply Chain Investment
Perhaps you are intrigued by WMS capabilities but you think you may be rolling
the dice by putting a large capital investment on the table and wondering if
the resulting efficiencies will be great enough to make the system purchase
worthwhile.

With cloud computing, a simplified implementation and the “pay as you go”
subscription model enable you to realize a return much more quickly than with
traditional on-premises software. According to a recent Gartner Group study, the average number of months to measure the total
value achieved from using cloud computing is 10.4 months, which is typically three months to eight months sooner than with
on-premises investments.

In the short-term, direct expenses are not the only factors to consider when evaluating a cloud-deployed WMS solution. Enabling
the organization to grow, obtaining consistency and predictability over a multi-year horizon, benefiting from WMS vendor
innovation, and eliminating non-core activities that drain IT resources are all important considerations.

Value Drivers Description

Total cost of ownership Direct and hidden costs associatedwith overall software footprint
Time to value How long will it take to be up and running, achieving business objectives?
Certainty Confidence the investment will pay-off. Over the next five years, what additional costs/risks will
be added?
Risk Chances of achieving business objectives without incurring substantial new expenses or project
delays
Innovation Pace of technology innovation – evaluate today’s capabilities and tomorrow’s opportunities for
multi-year investments

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 White Paper: WMS in the Cloud: ROI Considerations

THE CLOUD SECURITY QUESTION

Questioning the security, reliability, and availability of your data makes sense with any application you run. With cloud computing,
the risk and liability are managed by the service provider, and most cloud providers have security policies that are far more
stringent than a company’s internal IT department. The hardware and applications are hosted in a secure, state of the art data
center that is designed to ensure the privacy, integrity, and availability of customers’ systems and data. When you are a cloud
solution provider, your data center and IT infrastructure are the lifeblood of your business so you are always investing more money
in it. For most other types of businesses, it’s the opposite. Overhead and data center budgets are constantly being reduced and IT
staffs trimmed.

Most cloud solution providers will detail their security procedures and processes in the service contract, as well as offering
multi-tiered service level agreements (SLAs). These can cover security, backup and recovery, infrastructure and service reliability,
and quality of service, which can help business users become comfortable with deploying applications in the cloud

CONCLUSION
The resources required to maintain and grow an IT infrastructure to support the needs of the business can be enormous. In the
final analysis, cloud computing is not just about data center technology. It’s about streamlining business processes to make
organizations and people more strategic, more responsive to change, and more focused on core business. When comparing the
costs of on-premises WMS and WMS in the cloud, it is important to accurately assess the true costs of both options. Businesses
should take a long-term view of their supply chain application footprint and understand how best to position themselves for
efficient and cost-effective growth.

ABOUT HIGHJUMP WMS IN THE CLOUD

Full warehouse management features —lightened IT Load
Just like the installed version, HighJump WMS in the cloud provides the means to ensure fast, accurate fulfillment through
directed, optimized workflow. The HighJump warehouse management system gives companies across industries a foundation of
best practices for receiving, put-away/flow-through, inventory management, order processing, replenishment, pick/pack, loading
and shipping, as well as the ability to build their own industry-leading business processes using our adaptability tools. The only
difference is that HighJump WMS in the cloud is hosted in a secure data center instead of being installed on-site at your business.

Grow into enterprise-level WMS

Your business may not require a laundry list of complex warehouse management features right away. HighJump WMS in the cloud
delivers just the solution set you need to run your business and acclimate to a system. When you are ready, HighJump can help
you leverage more complex warehouse management capabilities such as labor management, slotting, and yard management.

ABOUT HIGHJUMP
In almost every industry, buyers are becoming THE HIGHJUMP TEAM IS HERE TO HELP!
more fickle, and more demanding. For logistics
executives, effectively meeting buyer needs has If you have any questions regarding HighJump or how our products
become a relentless quest for speed and agility. can improve your business, our passionate team is here for you.
Traditional supply chain solutions – siloed, complex
and hard-to-implement – no longer suffice, as
competitors find ways to deliver goods faster and
more profitably. Call us today at 800.328.3271

In this “now” economy, HighJump helps you or email info@highjump.com
stay agile, with adaptable, connected solutions
that harness the power of your trading partner
community. From the warehouse to the storefront,
from the desktop to the driver’s cab, we can
help you achieve new levels of supply chain
responsiveness, performance and profitability.

HighJump’s suite of warehouse management,
business integration, transportation management,
and retail/DSD solutions form a complete,
powerful and adaptable platform that allow you to
drive growth, customer satisfaction and revenue.
HighJump: supply chain accelerated.

SUPPLY CHAIN NETWORK SOLUTIONS

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