CRE has evolved to the point where point solutions are simply no longer adequate for supporting a centralized CRE organizational model, cost savings initiatives, benchmarking and more. That said, only 1-in-3 CRE organizations utilize an iWMS solution, and of those only 1-in-5 uses all available functionality. The reality for these organizations is that many have not realized an adequate return on investment from their iWMS technology. Incidents of iWMS underutilization are rarely a consequence of deficiencies in the technology itself. Many times, the problem can often be traced to the business model employed to deliver the technology.
iWMS implementations have been traditionally viewed as large IT projects, with all the predictable implementation risks associated with customization. There will always be a place for the traditional iWMS implementation model as some CRE organizations do have the core competency, the willingness, the unique requirements, and the budget to engage in the traditional iWMS approach. However, many do not as the iWMS deployment and success data indicate. So, the default has been either inferior point solutions that do not meet the business needs of the modern CRE organization or heavily watered-down iWMS, because there seemed to be no alternative.
A new business model for iWMS technology
The next-generation of CRE technology is one that doesn’t require a new iWMS software product, just a new business model. This new business model needs to be centered around key benefits – reduced licensing and implementation costs, improved functionality based on true CRE best practices, reduced time-to-value that aligns with typical CRE outsourcing transitions, and reduced implementation risk that minimizes the time involvement from already lean CRE teams. This business model would make iWMS more accessible to many more CRE organizations and improve their return on investment. Now, let’s focus on how a new business model could reduce iWMS licensing and implementation costs.
- Centralizing and Outsourcing hosting – By outsourcing hosting to a CRE technology solution provider, CRE organizations can leverage the economies of scale and the efficiencies of outsourcing data center management.
- Sharing Licenses – A CRE technology solution provider would purchase commercial software (non-proprietary) licenses from the iWMS software provider and allocate those licenses across many CRE organizations, as well as the service providers hired by the CRE organizations. Similar to a SaaS agreement, the CRE organizations would not own the licenses; they would pay a license fee, enabling a rapid and cost-effective increase or decrease of licenses based on usage fluctuations within the organization.
- Pre-configuring the iWMS solution – This is by far the largest cost savings opportunity in the new business model. No software, whether iWMS or point solution, will meet every need of a wide user community “out of the box”. This is one reason customization of iWMS is so prevalent, and also why it is accepted that point solutions will lack certain capabilities as a trade-off for low cost. However, what if these functionality and usability deficiencies could be overcome by a solution provider who invests in pre-configuring the commercial product based on CRE best practices prior to any one implementation? The pre-configured solution could be utilized by many CRE organizations, who would pay an annual fee and effectively share the cost thus reducing the implementation fees significantly for any one CRE organization. However, because the approach is based on an iWMS solution, each CRE organization could still have its own software instance and user set-ups, as well as the flexibility to integrate with business systems and avoid the limitations of many SaaS models.
Over time, this investment in pre-configuration can improve functionality through “crowd-sourcing”. As the client base grows, feedback from CRE organizations and service providers ensure that the next generation iWMS solution continues to evolve. Each client receives the benefit of all user and service provider feedback for a fixed annual fee.
By virtue of this pre-configuration/crowd-sourced model for functional updates and the SaaS licensing/hosting pricing model, CRE organizations would realize dramatically lower and stabilized CRE technology costs from year to year, while still enjoying the benefits of continually improving iWMS functionality.
Executive Managing Director, Technology