September 23, 2021
Total Cost of Ownership of a Warehouse Management System (WMS) – Part 1
Buying a warehouse management system is not a small investment, regardless of the provider you choose. It’s important to understand all of the costs involved before you sign on the dotted line. The license itself is just the tip of the iceberg – there’s even more that you may or may not be aware of — that sometimes gets hidden, depending on how an estimate is written up. Here is the first in our three-part series on the total cost of owning a warehouse management system.
License Costs
Probably the most expected cost in a software purchase is a license. It is what the provider is charging you to use the software. This might be a one-time cost or a recurring cost. It might be a cost that is hidden (i.e., SaaS) or called out. For a warehouse management system, licenses are generally sold as named users, concurrent users, or enterprise/site licenses. There are often price breaks for a higher number of users, similar to buying in bulk. Don’t forget to allow for and understand costs associated with buying additional licenses outside of your initial purchase.
Support and Maintenance Costs
Support and maintenance are essentially the costs involved in making sure the software continues to run smoothly after being implemented. It needs to be evaluated in two categories. First, there is the direct cost from the provider for support and maintenance. It’s good to find out what exactly is covered by your provider’s support and maintenance plan, i.e., is it 24×7 support and upgrades for a year or something less? Sometimes this cost is hidden (e.g., SaaS, hosting, recurring license) and sometimes this cost is called out.
Your internal costs of support and maintenance must not be overlooked.
Generally, it’s not advisable to have everyone in the warehouse calling your software provider’s support line for help, at least not when it comes to a warehouse management system. Your organization will want to have only a few select people responsible for taking questions from users and determining if they need to be escalated to vendor support. This person(s) might be absorbed by operations or might be budgeted under IT. The point here is to think in advance about how you will cover your internal “help desk” before the project starts so that those resources can be part of the project team, learn the new system, and how to support and maintain it. This might be the same person/people you choose as your WMS Super User(s).
We hope we’ve given you a good start in understanding WMS — the total cost of ownership.
Upcoming posts in this WMS Total Cost of Ownership Series:
Part 2 covers the next four types of costs:
- Replacements and consumables
- Enterprise infrastructure costs
- Facility infrastructure costs
- Education costs
Part 3 covers the final cost type:
- Implementation and integration costs
