Total Cost of Ownership of a Warehouse Management System(Part 1)
Buying a Warehouse Management System is not a small investment, regardless of the vendor you choose. It’s a good idea to understand all of the costs involved before you sign on the dotted line. The license itself is just the tip of the iceberg – and there’s even more you may or may not be aware of that sometimes get hidden depending on how an estimate is written. Here is the first in our three part series on the Total Cost of Ownership of a Warehouse Management System.
Probably the most expected cost in a software purchase, a license is what the vendor 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 (i.e., for new personnel).
Support and Maintenance Costs
Support and maintenance are essentially the costs involved in making sure the software continues to run smoothly after its implemented and it needs to be evaluated in two categories. First there is the direct cost from the vendor for support and maintenance. It’s good to find out what exactly is covered by your vendor’s support and maintenance plan (is it 24×7 support and upgrades for a year or something less?) Sometimes this cost is hidden (i.e., SaaS, Hosting, Recurring License) and sometimes this cost is called out.
The internal costs of support and maintenance must not be overlooked. Generally it’s not advisable to have everyone in the warehouse calling your software vendor’s support line for help, at least not when it comes to a Warehouse Management System. Your organization will want to have at least one person who is responsible for taking questions from users and determining if they need to be escalated to vendor support. This person 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).
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
We hope we’ve given you a good start on a foundation for understanding the total cost of ownership of a Warehouse Management System.
Interested in getting help with your Warehouse Management System implementation? Contact Open Sky today to get started.