Approval of any large-scale software solution ultimately hinges on how much it costs.
Knowing the total outlay, expected ROI, and any unexpected costs you may need to over that are not directly related to your purchase and subsequent implementation will help you to create a budget, drive the project and plan expenditure more accurately.
Before you start to consider the costs of a WMS, establish your list of operational and business objectives that will ultimately drive your business case and ROI.
Before you embark on the journey of purchasing a WMS, you should determine the key features and functions required to support your business needs and ROI goals. You should also consider the project planning, organisation, team members and optimisation requirements, and use these as a baseline when providing your requirements to your potential WMS provider.
The core cost elements include:
Software license fees usually appear as an upfront or ongoing charge, depending on your vendor’s method of subscription and are typically calculated based on your total users across all warehouses, users per site, and the modules are required to support your business.
An overview of the different approaches is as follows:
You will generally pay a license fee upfront, based on the number of users required to successfully run your WMS. You will also pay an annual maintenance fee for as long as the software is used in your business.
Software as a Service licensing usually involves regular incremental payments for a dedicated period of time, and includes license fees, annual fees, and hosting costs.
An accurate assessment of your staff per department (Warehouse, Operations, Finance, Sales, Management) is critical to receiving an appropriate licensing cost for your business.
Implementation costs will vary based on your organisation’s requirements, current systems, the scale and complexity of your business, material handling integration requirements and the modules you choose to implement.
You should receive an estimate that follows your vendor’s project methodology and is based on similar implementations, giving you the baseline project cost.
See what your implementation will require for an accurate cost here:
Once the below elements are clearly defined, you will have the most accurate indication of your implementation costs:
What functions must the WMS perform, and what are your objectives and ideal outcomes for the WMS implementation? Provide information about efficiency targets, customer interface, productivity, and profitability, so that each objective can be included within your WMS scope.
Need more clarity? See all the functions of a WMS here.
How does the WMS integrate with your existing solutions? Consider your existing ERP, your financial solutions, and operational software.
What material handling equipment is required in your warehouse? Integrating these with the WMS is a key factor in improving efficiency and reducing costs in the long-term.
Do you have the right people? Will you hire them in, or will you contract your WMS provider to bring the right personnel on board? You will need to establish a WMS team that can learn, operate, and train others to operate the system in a constructive and effective handover.
Will you need your WMS vendor to bring in the correct personnel for this purpose?
This is based on projected costs for your specific implementation and will vary based on your internal skills, existing infrastructure, and your availability for the development and implementation.
Your Internal WMS team costs should also be considered and factored in. They typically contribute 50% or more of the effort in the initial implementation of a WMS and your success is heavily dependent on their involvement and skill set.
Your vendor should be able to assist you with teams to manage the full process, or work with your teams to accommodate the testing and training on the WMS.
A qualified project management team is required to accomplish the implementation and go-live process in a controlled and practical way.
Do you have a project management team that is up to the task, or will you request these services from your WMS vendor?
As with the project team, a change management team will need to work hand-in-hand with your workforce and affected parties to ensure a smooth transition with less interruption, negative disruption, and resistance
Implementation costs are impacted by the travel required by your WMS vendor during the implementation process.
Your deployment approach will dictate the bulk of your hardware costs.
You will be required to cater for all server, infrastructure, and third-party licensing involved with your WMS.
You are responsible for recurring hosting fees and must ensure that you have sufficient bandwidth to ensure a seamless operation.
Other core hardware costs will include:
Your out-of-scope costs will be driven by outside factors, but can be mitigated by ensuring a thorough approach to your requirements and specifics during the consultation and scopour evolution: ye period.
These costs could include:
Ultimately two things are required to prepare your company for committing to a WMS that will transform your business: lots of data, and a vendor who knows what to do with it.
For a full view of your cost and return, download and work through our comprehensive guide to justifying ROI: