Magic Quadrant for Warehouse Management Systems
Published: 13 February 2017 ID: G00300345
Analyst(s): C. Dwight Klappich, Simon Tunstall
The WMS market is very mature, but differentiation continues to exist — most notably in usability, adaptability, intelligence and how well solutions orchestrate end-to-end logistics processes. Supply chain and IT leaders should use this research to understand the current state of the WMS market.
Market Definition/Description
Gartner defines a warehouse management system (WMS) as "a software application that helps manage the operations of a warehouse or distribution center (DC)." WMS applications offer capabilities such as receiving, put-away, stock locating, inventory management, cycle counting, task interleaving, wave planning, order allocation, order picking, replenishment, packing, shipping, labor management and automated materials-handling equipment interfaces. These systems incorporate mobile devices in conjunction with bar codes and, possibly, RFID to form the transactional foundation of a WMS. This enables efficiencies of directed work activity and the delivery of accurate information in near real time. Gartner includes integrated functionality — what we refer to as extended WMS capabilities — as components of a WMS evaluation. These include labor management, slotting, yard management, voice picking, parcel manifesting, value-added services, light manufacturing/kitting and third-party logistics (3PL) billing. This is because many buyers now demand that these components be included in a large number of WMS engagements.
However, we do not consider stand-alone solutions in these areas as part of this research.
The overall WMS market breaks down into five types of vendors, the first three of which are covered in this Magic Quadrant:
■ Application megasuite vendors: These vendors offer broad portfolios of applications across most application categories (for example, back-office financials, human capital management, customer relationship management, product life cycle management [PLM] and supply chain management [SCM]). Infor, Oracle and SAP are considered megasuite vendors with WMS offerings.
■ SCM suite vendors: These vendors offer a portfolio of applications focused primarily on SCM, including aspects of logistics, but not other functional areas such as financials or human capital management. While these vendors might offer a variety of SCM solutions, they do not
necessarily offer an integrated platform (although some do). Vendors in this category include JDA Software, Manhattan Associates and, to a lesser extent, HighJump.
■ Specialist WMS suite vendors: These vendors are independent software vendors (ISVs) that focus primarily or exclusively on holistic WMS suites, although they might offer some additional capabilities. Vendors in this category include Made4net, Microlistics, Reply, Softeon, Synergy Logistics, Tecsys and Vinculum.
■ Independent WMS component vendors: Not covered in this Magic Quadrant, these vendors are specialized ISVs that focus exclusively on offering stand-alone components that can be used to supplement a WMS. Examples of these components include workforce/labor management, slotting optimization, and yard management or dock/appointment scheduling (see "Warehousing and Fulfillment Applications and Technologies Vendor Guide").
■ Materials-handling equipment/automation (MHE) vendors: Not covered in this Magic Quadrant, these vendors primarily focus on providing the electro-mechanical aspects of large- scale automated warehouses. Many of these vendors also offer some WMS capabilities as part of their portfolios of products. As part of this research, we do not cover MHE or engineering firms — regardless of whether they offer a packaged WMS application. This is because these firms do not typically offer their WMSs to the market independent of their MHE solutions.
Macro Issues Influencing the WMS Market
All solutions in the WMS Magic Quadrant support basic core WMS capabilities (see "Apply an Architectural Framework to Stratifying Warehouse Management Systems"). Many also support various levels of extended WMS. Core WMS capabilities are the basic functions of receiving, put- away, storing, counting and picking, packing, and shipping goods. Extended WMS capabilities are value-added capabilities that supplement core, such as labor management, slotting, yard
management and dock scheduling. Beyond functionality, there are additional considerations that influence the positioning of WMS providers. These issues contribute to the positioning of WMS providers within the WMS Magic Quadrant (see "The Dominant Themes of WMS Vendor
Evaluation").
Supply Chain Execution Convergence
One of the most important trends in logistics management is a concept that Gartner calls "supply chain execution (SCE) convergence." This refers to the need for supply chain organizations to better orchestrate and synchronize execution processes across functional execution domains (see "Supply Chain Execution Convergence: Delivering on the End-to-End Process Promise"). In Gartner's 2016 SCM User Wants and Needs Survey, more than 48% of respondents said the inability to orchestrate and synchronize end-to-end business processes was one of the top three barriers to meeting their SCM goals and objectives. Warehousing and transportation are notable points of convergence, but they're not the only ones. True SCE convergence is when a vendor has developed multiple SCE and related functions on a common technical platform that shares a UI, data model and business logic.
This is only obtainable from a small number of WMS vendors today.
SCE convergence plays a prominent role in enhancing logistics performance. As such, we make it a central factor in the WMS Magic Quadrant in terms of Ability to Execute and Completeness of
Vision. Given the effect SCE convergence is having on the SCE application landscape, it affects the positioning of some WMS vendors. While this impacts some vendors' positions in the Magic
Quadrant, it does not affect the validity of particular WMS solutions for companies that are narrowly focusing on warehousing only.
Deployment Model
In previous years, cloud and SaaS were notable distinguishing characteristics among WMS vendor offerings. Initially, a small group of vendors supported these emerging delivery options; however, over time, the majority of vendors have unveiled cloud offerings. This has reduced the differentiating significance due strictly to deployment model. Indeed, there are still differences between vendors offering pure multitenant SaaS WMS and those offering dedicated cloud WMS (that is, a single instance of the WMS hosted in the cloud supporting an individual company). For more on this, see
"Supply Chain Management Moving to the Cloud: The Steps to Take and the Benefits You Can Expect." While there are differences between the two approaches to cloud, Gartner's research and discussions with clients find that they do not have a strong bias one way or the other. If anything, we find a slight bias to dedicated cloud, especially if the customer expects to need customization.
In Gartner's 2016 SCM User Wants and Needs study, we found that, globally, 44% of customers favored multitenant cloud while 56% favored dedicated cloud. North America and Asia were more balanced, with North America 48% multitenant versus 52% dedicated, and Asia 51% multitenant versus 49% dedicated. Europe had a stronger bias to dedicated cloud with 33% favoring
multitenant versus 67% dedicated. In the past, a vendor’s cloud strategy played a stronger role in our Completeness of Vision section. Now that the majority of WMS vendors have some form of cloud strategy, the deployment model factors more into the Ability to Execute section as we consider the vendor's ability to effectively deliver and support cloud WMS.
Global Go-to-Market
This Magic Quadrant is an analysis of global WMS solutions. To be included, vendors must demonstrate that at least 10% of their revenue is generated outside their home regions. This is because international market expansion is a growing consideration in the WMS marketplace. We see two compelling trends in globalization. First, Gartner finds that large, multinational organizations with multiple warehouses around the world are looking to standardize on a common global WMS. In the past, they might have had a variety of regional solutions. Second, Gartner finds increasing WMS demand internationally, notably in the emerging geographies of Asia, Latin America, the Middle East and Eastern Europe. Vendor abilities to enable widespread regional and global product rollouts supported by globally available customer service ranked highly on a vendor's Ability to Execute.
Consequently, vendor support for global go-to-market is a distinguishing characteristic that changed the positioning of some vendors in this year's Magic Quadrant.
User Experience
For several years, clients have told us that WMS applications have trailed other application areas in terms of enhancements to the UI and application support for more advanced and flexible decision- support capabilities. In this year's Magic Quadrant, one of the notable areas of differentiation between vendors is user experience. Given customer interest, this has received more consideration
in the evaluation of offerings. Additionally, analytics and related big data initiatives are becoming important in logistics and, especially, warehousing (see "Hype Cycle for Supply Chain Execution Technologies, 2016").
Cost of Ownership
In Gartner's SCM User Wants and Needs study, total cost of ownership (TCO) is rated as one of the top evaluation criteria for customers considering new SCM applications. Fifty-eight percent of respondents rate it as one of their top four priorities. Return on investment (ROI) is third on the list at 61%. Functionality is respondents' first priority, followed by integration. Regrettably, while TCO and ROI are at the top of customers' minds, only a few vendors have active programs to try and improve these two issues. Certain vendors are wedded to high levels of consulting services, so there is almost a disincentive to reduce cost and time to value. Others have simply not focused on these areas yet. This was one area where customer references were generally less favorable toward vendors. While some references were complimentary, more references gave unfavorable vendor reviews in this area than just about any other. Multiple TCO areas, such as software,
implementation, support and other costs, were rated by the references. Upgrades, integration and maintenance/support costs were the lowest-rated areas. The good news is that some vendors are focusing on mechanisms to accelerate time to value, in some cases dramatically reducing
implementation time, effort and cost.
Warehouse Environment
Historically, Gartner has placed high importance on a vendor's ability to support the most complex warehouse environments. This continues to be important for some companies; however, Gartner finds that, today, a high percentage of companies don't need the most advanced functionality. This is particularly true in emerging geographies, where process maturity might only require a basic set of WMS capabilities. These companies still require robust core warehouse management capabilities, even though they do not need the most advanced extended WMS capabilities. This trend is
exemplified by the growth in WMS sales exhibited by megasuite vendors that offer "good enough"
WMS capabilities for many of their current suite customers. Consequently, while we continue to assess vendors' abilities to support complex warehouse operations, we also consider how well a vendor can support less demanding operations. This can result in vendors having similar positions on the Magic Quadrant, but for different reasons.
Small and Midsize Enterprise WMS
Gartner sees two emerging growth markets for WMS — international growth in emerging economies like China, Brazil, Mexico and India; and growing demand in smaller organizations with less complex warehouse management needs. We believe there will be a bifurcation of solutions. One set will be targeted and best-suited for complex, sophisticated warehouse operations, and another oriented to less complex and resource-constrained operations. Furthermore, there could be two types of leaders in the future — complex and simple (see "Understand the 10 Dimensions of Warehouse Complexity Before Evaluating WMS Solutions"). Addressing the needs of small and midsize businesses (SMBs) is not just about price or "dumbing down" higher-end systems. It's about designing for the needs of SMB users. Most traditional WMS vendors have fallen into the trap of
adding more and more functionality to their systems, which generally equates to increased complexity. Even if some functionality can be disabled, the complexity remains, and this won't fit the needs of this market. Consequently, there is likely to be a bifurcation of the market with some vendors focusing up market for complex environments and other vendors focusing down market with more emphasis on usability and cost of ownership.
Extreme Verticalization
Even though core WMS is approaching parity across offerings, some industries and businesses require very specialized solutions. Their fundamental needs reach well beyond the basic receive, store, count, pick, pack and ship capabilities of most WMSs. This is called extreme verticalization.
For example, a company supporting project-based logistics needs a solution that drives logistics operations based on specific projects and not traditional orders and inventory. Similarly, a
healthcare independent network needs to integrate warehouse operations with the hospital to streamline supply logistics to support patient care. Some vendors demonstrate leadership in
demanding industries and offer unique solutions, as well as add-on capabilities, specifically built for these industries. Furthermore, users benefit from vendors with dedicated domain expertise that helps them understand how the WMS fits the needs of their industry.
Zero-Modification Implementations
Historically, WMSs were heavily modified, largely because the closer the applications get to the actual operational level, the more important it is that they support the most efficient execution of an activity. If modification was needed, so be it. Although the change was easy, the extent of
modifications required made WMSs among the least upgraded. This often inhibited the ability to adapt to future process needs. Consequently, users are increasingly focused on the painful costs of previous modifications to their WMS systems. They can spend more than 50% of
postimplementation TCO to support these modifications, and many are looking for ways out of this situation. Vendors are starting to meet these requirements with improved technical architectures that minimize the amount of code-level modification by leveraging configuration tools or rule engines. Also, some solutions are now built around scripting languages or model-driven process management capabilities. Given the importance of this, reviewing a vendor's technical architecture is critical during vendor evaluations. This should be second only to functionality. Users now demand that vendors have a coherent strategy for delivering a minimal or near-zero-modification
implementation. Therefore, Gartner sees this as a critical component to a vendor's success in this market. Reducing modifications will help lower initial implementation costs, reduce implementation time frames, reduce project risk and allow companies to remain on a more consistent upgrade path.
Partner Ecosystems
Along with global deployment and reducing TCO, we consider the scope of a vendor's commitment to working with and supporting partners, especially implementation partners. In addition to offering common implementation service, customers should determine their needs for business process expertise. Partners can assist customers with defining their needs to achieve certain business value.
Vendors have typically been most focused on what we euphemistically call "keyboard" consulting.
This is how to set up and configure the application to support a specific functional capability. Most
WMS vendors have not been good at clarifying and translating business goals and objectives into warehouse functional requirements beyond the initial sales cycle. For example, a company might have a goal to reduce throughput and accelerate cycle times by a certain percent. From a WMS perspective, this could affect wave planning, task interleaving, labor management, inventory slotting and in some cases even warehouse layout. The vendors are typically ill-equipped to work through these issues. However, most are competent at instantiating these needs into their software once the needs are clarified by the customer or a consulting partner. Consequently, having an established ecosystem of business consulting partners can be critical to success.
Magic Quadrant
Figure 1. Magic Quadrant for Warehouse Management Systems
Source: Gartner (February 2017)
Vendor Strengths and Cautions
HighJump
In July 2014, Accellos and HighJump merged. The vendor now has approximately 810 employees and 15,000 total customers. The vast majority of customers use HighJump's commerce network, TrueCommerce. It has more than 1,100 WMS customers spread across its three WMS offerings. The majority of the vendor's revenue comes from North America, but now close to one-third of its
revenue is generated internationally. The majority of this is in Europe, and a lesser amount in Latin America and Asia.
HighJump now offers three distinct WMSs. HighJump WMS, formerly AccellosOne WMS, is targeted specifically for SMBs, and emphasizes ease of use, rapid time to value and lower TCO.
HighJump Enterprise 3PL, formerly AccellosOne Enterprise 3PL, is specifically aimed at midsize to large 3PL providers. It was designed from the beginning to address the multitenant (customer) needs of 3PL, with specialized capabilities for things like SLAs, customer profitability and billing.
HighJump Warehouse Advantage serves the midsize to large enterprise WMS market.
Gartner estimates that there are more than 415 Warehouse Advantage customers, more than 560 HighJump WMS customers and 130 HighJump Enterprise 3PL customers. Warehouse Advantage is most often used in Level 3, but can scale from Level 2 to low Level 4 operations, with some Level 5 users. HighJump WMS is best-suited to Level 2 and low Level 3 warehouse operations, and
HighJump Enterprise 3PL warehouse management fits Level 2 to Level 3 operations.
Strengths
■ HighJump Warehouse Advantage's technical architecture allows customer-specific changes to be made at the business-logic level with no changes made to the underlying source code, which protects the customer's upgrade path. More than half of customer references cited this as one of their top three reasons for choosing this vendor. They continue to say this is the most intrinsically customizable WMS product, and they cite this as the primary reason they selected the vendor.
■ The vendor offers three distinct WMSs aimed at the explicit needs of different warehousing environment markets. These are enterprise (Levels 3, 4, 5); SMB (Level 2, low Level 3); and 3PL (Levels 2 and 3, and low Level 4).
■ The vendor pioneered App Station, a unique approach to packaging customer- and vendor- developed innovation. All new functionality is not added to the base product, but, instead, some is offered separately to those customers that wish to download it.
■ The vendor has strong and active partnerships and integrations with popular SMB ERP
solutions, with prepackaged connectors for Quickbooks, Microsoft Dynamics, NetSuite (cloud ERP/CRM), Sage and SAP Business One.
■ HighJump has a strong technology vision and is Microsoft-centric, taking advantage of contemporary Microsoft technologies. It continues to innovate, as evidenced by its Supply Chain Essentials portfolio of applications. These applications leverage open APIs to allow these
solutions to be stand-alone or substrata for other applications. This is also exemplified by most of its SCE products, including all three WMS systems, providing a common user experience.
Cautions
■ HighJump continues to invest in enhancing its service delivery capabilities as well as expanding its partner ecosystem. However, customer references rated some of its services, notably
technical support and responsiveness, behind Leaders and some other vendors in this Magic Quadrant. Some of this appears related to differences in customer expectations around the three WMS offerings. This also may be a result of the highly adaptive nature of its Warehouse Advantage product, where the inherent flexibility increases the need to support customized implementations.
■ The vendor's core WMSs are competitive, but they lack the depth and breadth of extended WMS capabilities of WMS Leaders.
■ Prior to the merger, the vendor did not have a compelling SCE convergence vision or strategy.
While Accellos added other SCE assets, such as transportation, its SCE convergence strategy is convoluted, given that it has three different WMSs.
■ The vendor's WMS business remains primarily in North America, although it is growing customers in other geographies. Companies outside North America that are considering Accellos should carefully evaluate resource availability — vendor and third party.
■ Prior to the merger, HighJump used an indirect sales model for international sales and support, as did Accellos, but these were different channels. Prospective customers will have to ensure that any channel partner under consideration has experience with the product being evaluated.
■ Because the vendor now serves two ends of the WMS markets with three different WMS
offerings, prospective customers will need to clearly define their current and future requirements to ensure they select the most suitable WMS for the long term.
Infor
Infor's SCM portfolio is composed of a number of SCM-related applications. Various degrees of SCM are also embedded in or integrated with several of its ERP solutions. Infor SCM products range from supply chain planning applications to supply chain execution, which includes
warehousing, labor management, 3PL, billing and transportation. In 2011, Infor converged its legacy WMSs and some of its transportation management system (TMS) solutions into a unified suite, Infor Supply Chain Execution (SCE). It continues to make progress selling SCE to existing and new customers. About 40% of its new WMS deals involve existing Infor ERP customers and 60% are in net-new customers. Infor has been successful selling Infor SCE, with 1,200 SCE customers within and outside North America. Roughly 65% of its total WMS deals are international (34% in Asia/
Pacific, 21% in EMEA and 10% in LATAM).
Infor continues to enhance existing functionality, such as Warehouse Resource Management and slotting. It also recently introduced new extended WMS capabilities, like multitier serialization. SCE
exploits Infor's horizontal investments in technologies, such as the Xi Platform consisting of Infor Intelligent Open Network (ION) for integration and open APIs, dashboards for performance management, and Infor Ming.le for social collaboration and contextual analytics. In August 2015, Infor acquired GT Nexus, which was then a leading provider of networked global logistics
capabilities. GT Nexus is now becoming the platform of Infor's networked SCM vision. In addition to SCE, the vendor offers a solution called Factory Track with over 1,000 customers. It is
fundamentally an automated data collection (ADC) solution that is bundled with its various ERPs. It provides simplified Levels 1 and 2 warehouse capabilities for customers that do not need the depth of capabilities in Infor SCE. Infor SCE is most often used in Level 2 and Level 3 warehouse
operations, but it is making inroads into more complex e-commerce environments in emerging markets.
Strengths
■ Infor has a very large ERP customer base, and Infor SCE is a viable option for a high percentage of the company's ERP customers. It is a good fit for organizations seeking a reasonable WMS provided by a single vendor with global support capabilities. Infor SCE is not limited to Infor's ERP customers — about one-quarter of its new customers are stand-alone WMS buyers.
■ Infor is one of the strongest WMS vendors internationally with deployments in 40 countries.
More than half its business is outside North America. It is particularly strong in Asia, with more than one-third of its customers in that region. It also has a strong global presence of direct and indirect sales, and both centralized and local support, giving it an edge in many emerging market deals.
■ The vendor has delivered on a platform strategy for Infor SCE. It is pursuing an SCE
convergence strategy by moving capabilities (such as transportation management, mobility and event management) onto a common technical platform. Furthermore, the vendor has a
compelling strategic vision for methods for enhancing the extensibility of Infor SCE 10.
■ While nascent, the potential value from the vendor's vision of integrating the execution capabilities of SCE with the networked SCM capabilities of GT Nexus is highly differentiated.
■ Infor SCE exploits Infor's new UI and in-context embedded analytics capabilities. As such, it continues to provide one of the more contemporary user experiences, putting it ahead of the majority of WMS vendors. Furthermore, its new HTML5 mobile UI moves beyond the traditional character-based user interaction, adding some social collaboration (for example, texting) capabilities.
Cautions
■ Infor SCE currently lacks the overall functional breadth and depth of WMS market leaders. It is most competitive in Levels 2 and 3 warehouses but so far has fewer customers in Levels 4 and 5 warehouses. Infor continues to invest in extending Infor SCE, especially exploiting some of its technology investments, such as Infor Ming.le and Homepages, to build a broader SCE suite.
■ While Infor has an intriguing middleware strategy for integrating WMS with its existing ERP solutions, users should still validate and test Infor ERP and WMS integrations. Furthermore, its
multiple offerings, Factory Track for simple operations and Infor SCE for more complex operations, should also be evaluated to ensure the proper solutions are chosen.
■ Infor is aggressively pursuing cloud at the corporate level, but it trails in warehouse
management. The company only recently implemented initial dedicated cloud customers, with plans for multitenancy in the first half of 2017.
■ The majority of the vendor's ERP customer base is SMBs, yet the vendor is striving to move up market to compete in more complex deals. Questions remain about its ability to address the functional and service requirements of the higher-end market extensively. This approach could preclude it from pursuing strategies to lower TCO and time to value, which are more important in the SMB space.
JDA Software
JDA Software is the largest independent SCM suite vendor at around $1 billion in sales. It offers a broad catalog of SCM solution suites that include WMS, transportation management, supply chain planning, merchandizing, workforce management and retail planning solutions. Furthermore, it has a strategic partnership with IBM for distributed order management (DOM) to help it serve customers with multichannel commerce initiatives. Four years after supply chain software and service providers RedPrairie and JDA merged, the now-far-larger combined entity has turned the corner on its
recovery. It is regaining market momentum across its diverse solution portfolio and across geographies. While WMS execution issues had plagued the company — especially in service, support and development — due to resource losses, the vendor has added resources to address these challenges, notably in consulting and support. The significant change in leadership over two years ago drove several changes that better position JDA. JDA had multiple WMSs and, until recently, had two primary offerings — JDA Warehouse Management and JDA Dispatcher WMS.
However, JDA is now pursuing a WMS convergence strategy. It is merging functionality from both products on top of the JDA Warehouse Management technical platform. As a result, we only evaluate the JDA WM offering as part of this research. JDA has 796 customers across its WMS offerings. The company's roots in warehouse management include more than three decades of working in some of the most complex warehouse environments. It continues to focus primarily on the higher end of the WMS market. JDA Warehouse Management is most often used in Levels 3 and 4 warehouse operations, but it can scale from high Level 2 to Level 5 operations.
Strengths
■ Customer references continue to cite the breadth and depth of JDA Warehouse Management as best in class, and the principal reason they selected the vendor's offering. JDA has a large installed base of complex and sophisticated customers. It has historically been out in front of the market delivering advanced and sophisticated functionality. The vendor has a long track record of delivering WMS solutions for some of the most complex warehouse operations. In addition, it has demanding clients.
■ JDA has one of the most diversified WMS customer bases — its 796 customers are spread across 19 vertical industries. The vendor has notable strength in four key vertical industries —
consumer goods, 3PL, retail and pharmaceuticals. It is also growing in other business areas, like wholesale distribution and manufacturing.
■ The vendor offers tools and methodologies (for example, WMS Now) that help facilitate and minimize the complexity and cost of multisite warehouse rollouts and implementations in less complicated (e.g., Level 2) warehouse environments. It also has a compelling strategy for addressing extensibility that protects a customer's support and upgrade path.
■ The vendor has an intriguing innovation lab where it conducts primary research, studies, prototypes and evaluations of emerging trends and technologies; and manages a process of innovation commercialization. While, so far, little specific to WMS has come out of the lab and been commercialized, there are interesting things on the horizon.
■ Of independent WMS vendors, JDA's WMS provides some of the strongest support and integration with manufacturing processes. In addition, it provides embedded support for lightweight manufacturing execution activities. Capabilities include multiline production scheduling, tracking component-level inventory attributes in a multilevel bill of materials, streamlining line setup and execution, and managing raw materials (including backflush and scrap).
■ The vendor offers strong related products, such as workforce (labor) management, traceability and performance management within its WMS portfolio, as well as a broad and deep TMS from its previous acquisitions. It also offers differentiated capabilities in traceability, having recently released its second-generation offering in this area. This will position the company to potentially support evolving e-pedigree requirements in industries such as life sciences and
pharmaceuticals.
Cautions
■ For its size, JDA has a modest, although growing, number of implementation resources when compared with other leading WMS providers. However, the vendor has initiated strategies and processes, and added new management aimed at enhancing its delivery capabilities both directly and through partners.
■ The vendor has an improving partner ecosystem strategy. However, Gartner hears some concerns from customers and partners that the messages from the vendor related to use and the proper roles of partners is inconsistent and sometimes conflicting. This inconsistency occurs at the same time more customers are looking to third-party service providers to support their projects. To address this, the vendor has a newly launched Partner Advantage program.
This means that, for the first time, it will have a formal partner accreditation.
■ The vendor's SMB WMS strategy and offering are to use partners to deliver an SMB-focused iteration of its standard WMS. While this strategy is nascent (launched in 2014), customer growth has been respectable at about 30 new SMB customers.
■ JDA's functionality remains market leading, broad and deep, but it has been playing catch-up with some Magic Quadrant Leaders in certain areas, like UI. However, it has made progress, has sound strategies and is headed in the right direction.
■ The vendor has a compelling SCE convergence strategy, which it refers to as Intelligent
Fulfillment. However, this strategy was hampered by the previous acquisitive nature of JDA and RedPrairie, which made this an integration, not a platform strategy. While not as technically refined as some other vendors' offerings, JDA's Intelligent Fulfillment suite interfaces JDA's WMS, TMS and supply chain planning applications. It adds capabilities that provide unique functionality within each product while utilizing shared data.
■ The vendor has different cloud strategies for existing products, like WMS, and new and emerging products, like Retail.me. For new products, it has a contemporary strategy built around leveraging the Google Cloud platform and tools. For its existing products, its cloud strategy is principally a hosting/managed service approach, which is marginally a true cloud strategy let alone multitenant SaaS.
Made4net
Made4net is a small, approximately 11-year-old vendor of WMS and related SCE solutions, such as transportation and delivery management. It is headquartered in Hackensack, New Jersey, with offices in Herzelia, Israel, and Shanghai, China. It has about 110 employees with three-quarters of these focused on WMS. With more than 400 customers, it grew its customer base by over 30% in the last 12 months. The vendor's solutions are sold direct and by several-dozen resellers, each of which sells and implements around six or more new WMS customers a year. Made4net currently has resellers and customers in over 20 countries, with 67% of its business outside North America.
While its annual WMS revenue was below the inclusion criteria threshold, Made4net qualified because of its strong four-year customer compound annual growth rate (CAGR) of 38% and WMS revenue CAGR of 36%. The vendor's strength is in the SMB WMS marketplace, with 93% of its customers SMBs (i.e., five to 100 users) and 84% on the small end (i.e., five to 50 users).
Consequently, it is most often used in Levels 1, 2 and 3 warehouse operations, although it can scale to Levels 4 and 5.
Strengths
■ Made4net has a primary focus and competency in the SMB (Level 2 and low Level 3) WMS market. The vendor has designed its product, go-to-market and implementation strategies with this focus in mind.
■ It continues to grow rapidly and globally for a vendor of its size, with compound growth close to 40% during the past four years. This also validates its go-to-market strategy and processes for leveraging resellers and partners to sell and implement its solutions.
■ Made4net has a strong Microsoft-centric service-oriented architecture (SOA) technical platform well-suited for SMBs, with built-in services like a rule engine, event management and APIs for integration. The company also has built user-manageable extensibility tools.
■ It has a compelling international sales track record. Two-thirds of its business is international, and it has customers in more than 20 countries. It has SCE convergence for SMBs, with six product categories (WMS, yard management, labor management and three transportation solutions) on a common technical stack.
■ Made4net has a robust, cost-effective and rapid deployment implementation methodology that is well-suited to the needs of SMBs. It is used by both the vendor and its partners. Its system is designed to provide a platform that supports user-personalized deployment with features like screen generators, interface configurators and operational workflows.
Cautions
■ Made4net is a rapidly growing, although small, vendor with approximately 110 employees.
Prospective customers should monitor resource availability. It qualified for inclusion in this Magic Quadrant based on its rapid compound growth and global sales.
■ It sells and implements with its own resources as well as through resellers. Prospective
customers must vet the reseller as much as (if not more than) the vendor. Likewise, customers with multisite rollouts that span the territories of the vendor's resellers should work proactively with the vendor to mitigate any potential sales or implementation channel conflicts.
■ The vendor and its solution are strongest in SMBs but can scale up to larger, more
sophisticated customers. Customers in these markets must be even more diligent in evaluating resources and the vendor's longer-term focus and commitment to the higher end of the market where competition is fiercer.
■ Made4net's WMS primarily has been sold and implemented as an on-premises application (83%). The vendor recently began to offer its WMS as a cloud/SaaS (17%) that allows for dedicated cloud deployment.
■ The vendor has a solid track record supplementing the ERP offerings of megasuite vendors SAP (Business One), Sage and Microsoft Dynamics. Customers of these offerings looking for WMS should consider Made4net, but be sure to perform the proper due diligence around integration and interoperability.
Manhattan Associates
Manhattan Associates offers a broad suite of SCM solutions that includes three different WMSs, transportation management, distributed order management, supply chain planning and supplier enablement. Its open-system platform offers all of the above-mentioned capabilities on a single technical platform. All functional capabilities share a UI, data model and common tools, such as a rule engine, across the suite.
The vendor has very deep roots in WMS that go back more than 25 years. While the vendor is global, the majority of its revenue (around 76% in fiscal year 2015) comes from the U.S. The highest percentage of its international customers use its Supply Chain Architected for Logistics Execution (SCALE) offering, where 52% of customers are outside the U.S. Next is its WMOS offering, with roughly 38% of its customers being international. Its three distinct WMS offerings are targeted at different markets: SCALE, which is based on a Microsoft technical platform and caters to the SMB and 3PL WMS markets; Warehouse Management for IBM i, which caters to customers that prefer the reliability and ease of operation of the IBM i platform; and Warehouse Management for Open Systems (WMOS), which caters to sophisticated warehouse environments.
Manhattan targets SCALE for independent Levels 2 and 3 warehouse environments. At these levels, usability, ease of use, implementation and support — combined with comparatively lower cost of ownership — are critical. Warehouse Management for IBM i is most often used in Levels 3 and 4 warehouse operations, but can scale from high Level 2 to Level 5 operations. WMOS is most often used in Levels 4 and 5 warehouse operations, but can scale from Level 2 through Level 5.
Furthermore, with its store inventory offerings, WMOS can scale from Levels 1 and 2 operations at the store through Levels 3 and 4 for complex, people-centric warehouses, and up to Level 5 for highly automated DCs.
Strengths
■ Manhattan offers three discrete WMSs that uniquely serve the needs of three diverse
warehousing environment markets. In particular, it has higher-end solutions with WMOS and WM for IBM i as well as a solution for SMB with SCALE.
■ WMOS offers industry-leading depth and breadth of both core and extended WMS capabilities that are especially well-suited (but not limited) to high-complexity and sophisticated e-
commerce and multichannel commerce warehouse operations.
■ Manhattan is focused on organic, self-directed innovation. It continues to bring to market self- developed and complementary components, such as distributed order management (DOM), store inventory, store fulfillment and order streaming. It also is leading in releasing a next- generation UI (DM Mobile), and is adding planning logic to warehouse management converging capabilities commonly found in labor management systems and slotting optimization.
■ For its WMOS offering, the company has a compelling vision, with a strong, existing technical platform for next-generation SCE convergence. It is gaining customer traction with its platform strategy, with more than 100 customers now committing to its open-system platform.
■ The vendor has a team of math and science experts that is investigating innovative ways to exploit emerging technologies and decision-making enhancements through the use of
embedded analytics across the platform. For example, its new approach to waveless picking, which the vendor calls order streaming, addresses complex pick sequencing issues found in high-velocity e-commerce warehouses.
■ Manhattan is extremely focused on multichannel retail. It is the largest vendor (and one of the few vendors) that can address multichannel (omnichannel) commerce on a single platform, with strong offerings in logistics (WMS and TMS), DOM and store operations.
Cautions
■ Of all the ISV WMS vendors, Manhattan has by far the largest SCE consulting organization and its service methodologies are robust. However, it remains heavily dependent on service revenue.
This means it needs to staff and manage numerous, large service engagements every year.
Because of this, customers also must diligently manage service engagements.
■ While negotiated license costs are comparable across WMS vendors, customer references state that, in general, Manhattan's total cost of ownership (TCO) is higher than most other vendors in
this WMS Magic Quadrant. However, this is largely related to its higher-end offering, WMOS, that typically carries a higher service composition due to the complex nature of its typical warehouse customer. Its SCALE offering TCO is more in line with competitive offerings. The vendor's cloud strategy has largely been cloud service provider agnostic, which is letting customers dictate the cloud approach best-suited for their organizations. This puts some of the burden on the customer to develop and pursue the appropriate cloud option. The vendor is evolving its strategies, first for its SCALE offering, where it now has a preferred-deployment approach, Microsoft Azure, and by expanding its cloud service offerings.
■ While global, the vendor is strongly focused in the U.S., with 76% of its business in this region.
Its global go-to-market varies by solution. SCALE is sold the most internationally across both direct sales models in some markets and an indirect go-to-market approach in emerging geographies.
■ SCALE is purpose-built for midsize or smaller warehouse operations. Most of the vendor's other offerings, such as TMS and DOM, are targeted at sophisticated and complex environments, and are only available on a different technology platform.
■ The vendor uses partners for sales and implementations in emerging geographies. Prospective users in these markets must validate the partners' capabilities and product considerations during evaluation.
Microlistics
Microlistics, headquartered in Melbourne, Australia, is a small vendor that provides a robust WMS suite, Isis, across a variety of industry sectors. The vendor is a closely held and profitable private company of about 40 people, and has been in business since 1994. The founders have deep, long- term expertise in providing software and consulting services focused on logistics and warehouse management. Isis is built on a strong and flexible technical platform, which has core WMS
capabilities and some extended capabilities. Microlistics is growing and expanding internationally. It is currently one of the emerging WMS offerings focused in Asia and the Middle East, and is
especially well-suited for 3PLs in these regions as well as 3PL and cold storage operations.
Recently, Microlistics opened a U.S. office, and has implemented customer sites in the U.S. and Canada. The vendor did not qualify for the Magic Quadrant based on revenue. However, it did exceed growth criteria with both revenue and customer four-year CAGR of over 30%. Furthermore, it exceeded global sales targets with over 16% of its revenue outside its home geography. The vendor's WMS is best-suited to Level 3 warehouse operations but can scale up to low Level 4 and down to Level 2.
Strengths
■ Microlistics is particularly strong in the Asia/Pacific region, especially Australia and New
Zealand. However, the vendor is expanding into North America and now has a few customers in this region.
■ The vendor has a strong offering for 3PLs. Its activity-based costing 3PL billing engine is flexible and robust. Also notable are its analytics capabilities.
■ The vendor offers four versions of its WMS: Enterprise, Chilled, 3PL and Express.
■ Microlistics offers a version of its WMs specifically aimed at cold storage with capabilities not often seen in this strata of WMS. Examples include catch-weight, variable weight and scan weight as well as temperature capture/product segregation and comprehensive batch/lot/serial management functionality.
■ The vendor's Microlistics WMS Express is a preconfigured version that can be rapidly deployed in as few as 30 days.
Cautions
■ Technical and implementation resources are limited outside Australia with about 40 employees mostly in Australia.
■ While the vendor has been in business for over 20 years and is experienced, it is one of the smaller vendors in this year's WMS Magic Quadrant.
■ For its size and global aspirations, the vendor's partner ecosystem is limited, but growing in the North American market.
■ While the vendor offers a cloud deployment option, it is dedicated cloud (one instance per customer), not a multitenant SaaS WMS. It instead offers an on-demand, single-instance, per- customer cloud delivery model. Gartner finds this delivery model to be preferable for some customers that want the application heavily tailored to their needs, which aligns well with a dedicated-cloud delivery model.
Oracle
Since last year's WMS Magic Quadrant, Oracle has acquired two organizations with cloud WMSs.
The LogFire acquisition was completed 9 December 2016 and the NetSuite acquisition was
completed 7 November 2016. In previous WMS Magic Quadrants, we only evaluated the WMS that was delivered as part of the Oracle E-Business Suite (EBS). However, for this year's Magic Quadrant we are also including LogFire's cloud WMS in addition to the evaluation of EBS WMS. Both are considered fully functional, enterprise-class WMSs. While NetSuite provides further testament to Oracle's aggressive cloud strategy and brings another cloud-based WMS, the acquisition was after the deadline for inclusion in this year's Magic Quadrant. The long-term strategy for this offering is not clear at this time. Of the large vendors, Oracle has been pursuing the most aggressive SCM cloud strategy that includes Oracle Inventory Management Cloud for basic materials management functionality, Oracle Cloud Order Management System (OMS), as well as other cloud solutions for manufacturing, transportation and sales. This strategy now includes multitenant cloud WMS with the LogFire Acquisition. We decided to include LogFire as part of the evaluation for several reasons.
First, while marketwide cloud WMS adoption is modest at around 5% today, buyer intention to consider cloud WMS in the future has grown significantly. Secondly, cloud strategy is an important aspect of WMS vendors' Completeness of Vision, so this acquisition demonstrates Oracle's commitment to cloud.
Oracle EBS WMS is a mature, yet continually evolving offering. Gartner estimates that combining LogFire and EBS WMS, Oracle has around 1,900 WMS customers worldwide, with more than 40%
of those customers international. Oracle EBS WMS is deployed across roughly 20 vertical
industries, and has unique strengths in industrial manufacturing, high technology and life sciences.
The solution offers a choice in its deployment approach. It can be provided as a seamlessly
integrated extension to Oracle EBS for customers seeking an integrated ERP and WMS. It also can be deployed stand-alone in a distributed WMS environment. Oracle EBS WMS is most often used in Level 2 and Level 3 warehouse operations, but can scale to low Level 4 and Level 5 operations.
Furthermore, Oracle EBS can handle Level 1 operational requirements with Oracle Mobile Supply Chain Application (MSCA) alone.
LogFire established itself as a standout in true multitenant SaaS WMS. It was strongest in
multichannel and e-commerce fulfillment in the consumer goods, wholesale, retail, apparel and 3PL industries, although it was not limited to these markets. For its size, the vendor's sales and revenue were well-distributed internationally, with 52% of its revenue from North America, 41% from Latin America and 7% from the rest of the world. Gartner estimates that LogFire had over 150 customers.
LogFire was most often used in Level 3 operations. It could scale from high Level 2 to Level 5 operations, although it lacked the depth in extended WMS of ISV WMS leaders.
Although not part of this research, Oracle also has WMS capabilities in NetSuite, JD Edwards EnterpriseOne and Oracle Retail (formerly Retek). These might be viable alternatives for customers seeking reasonable WMS capabilities seamlessly integrated with a cloud ERP, a strong midmarket ERP system or a suite of retail applications. However, now that it has an independent cloud WMS, the LogFire WMS could be worth consideration by customers using these systems if the provided functionality is inadequate.
Strengths
■ Oracle has a strong global reach with 40% of its EBS WMS offerings and a similar percentage with its cloud offering deployed outside of North America. This is greater than most
independent WMS vendors.
■ The vendor's WMS offerings have broad vertical industry penetration. EBS WMS is especially strong in industries neglected by best-of-class WMS providers. These include industrial
manufacturing, high tech, aerospace and defense, healthcare, natural resources, and the public sector. Gartner estimates these industries compose more than 50% of Oracle's WMS customer base. LogFire adds strength and experience in retail and e-commerce.
■ Oracle has aggressively committed to cloud strategically and operationally across its application portfolio, which is now augmented with LogFire WMS.
■ The vendor's vision for SCE convergence now moves to the cloud. Process integration and orchestration with transportation, global trade, inventory, order management and other functional areas are not seamless and comprehensive at this time.
■ Oracle has a large, experienced and growing ecosystem of implementation partners, which Gartner estimates to be more than 30. Several of these were early participants with LogFire when they were simply Oracle partners.
Cautions
■ The vendor has a compelling SCM cloud vision and strategy; however, it now has a potentially confusing array of WMS offerings that could make it hard for prospective customers to choose where to focus their investments. The initial view would be to use the WMS product that is part of the Oracle ERP/SCM product family used by the customer. However, there are instances where alternatives would be appropriate.
■ More so than other large WMS providers, Oracle has more strongly committed to a cloud-first strategy. Oracle's go-to-market strategies and sales compensation favor cloud, which could make it more difficult for clients favoring legacy solutions.
■ From a WMS product perspective, even with the acquisitions, Oracle is not as functionally broad or deep as WMS specialist vendor Leaders. Now that it has multiple WMS offerings, product investment could be diluted, and customers must scrutinize product roadmaps across multiple products.
■ Historically, a key benefit of Oracle EBS WMS was its seamless integration with EBS ERP.
However, now that it can offer EBS WMS stand-alone on a separate instance from Oracle EBS as well as a stand-alone cloud, WMS, EBS and non-EBS users will be forced to choose
between the alternatives. They must deeply scrutinize interapplication integration issues.
■ The vendor has strong SCE convergence capabilities between EBS WMS and EBS ERP.
However, it does not have similar SCE convergence between WMS and Oracle Transportation Management (OTM), Oracle Global Trade Management (GTM), or its other cloud SCM
components. Integration within Oracle's cloud family of products is similar to EBS, but process integrations between OTM/GTM cloud and WMS cloud (LogFire) are part of the roadmap.
Reply
Reply is a Europe-based company that provides a wide array of IT services. Reply has revenue of
€800 million, with a primary focus on consulting, system integration and digital services. Reply has been in business for 20 years developing, implementing and supporting SCE services and software applications. It offers two WMS solutions — Click Reply and SideUp Reply. Click Reply is a web- based solution that can be deployed on-premises or hosted. SideUp Reply is a multitenant SaaS WMS. Reply also recently released Logistics Execution Architecture (LEA), its new SCE platform intended to power a new generation of Reply SCE Applications. Reply claims to have about 165 WMS customers across Click Reply and SideUp Reply. The majority of the vendor's WMS customers are in Europe (76%), with the remainder in North America (13%), Asia (2%) and Latin America (9%).
Click Reply, the vendor's legacy WMS, is focused on multisite, complex warehouses with high numbers of users that often use materials-handling automation. Click Reply is most often used in Level 3 and Level 4 warehouse operations, and can scale to Level 5 operations.
SideUp Reply, the vendor's contemporary offering, is a partial SCE platform. In addition to WMS capabilities, it has supplier collaboration, lightweight transportation, appointment scheduling, proof
of delivery, and new capabilities like drop-ship and store logistics, on a common technical platform.
SideUp Reply generally caters to less complex, warehouse-centric network environments, and is most often used in Level 2 and Level 3 warehouse operations. With store logistics, however, it can handle some Level 1 capabilities, and can scale up to low Level 4 operations.
Strengths
■ Reply remains strongest in Europe, with three-quarters of its business there; however, it is growing its presence in other geographies. Of the Europe-centric WMS ISVs, it has the largest amount of global revenue, and this portion of its business is growing.
■ Reply is a modest-size WMS application provider. However, it is part of a financially stable business that has grown dramatically during the past 16 years from around €18.6 million to nearly €800 million. WMS is part of the much larger global organization, with strong consulting and system integration capabilities (around 5,700 employees). As such, Reply's solution delivery capabilities and capacity are greater than comparably sized stand-alone WMS providers.
■ The vendor has broad and well-balanced industry coverage in 3PL, automotive, grocery and food, pharmaceuticals, retail, telco, and fashion. It is particularly strong in service parts logistics and automotive production logistics, and has several notable customers. More recently, it has been growing its presence in retail organically, thanks to some of its recent innovations, such as drop-shipping and store inventory.
■ The vendor can offer WMS on-premises, hosted or in a multitenant cloud/SaaS. While several WMS vendors can now also host their on-premises applications as single-instance dedicated cloud solutions, Reply offers this with Click Reply, and it also offers true multitenant cloud with SideUp Reply.
■ The vendor is becoming an innovator, commercializing and delivering new capabilities, such as an integrated warehouse control system (WCS), drop-shipping and store logistics. It is also launching a new SCE platform called Logistics Execution Architecture (LEA) Apps that initially includes four new components. Furthermore, it is experimenting and testing the commercial viability of emerging technologies ahead of market demand (such as augmented reality or the use of drones in a warehouse).
Cautions
■ Reply is primarily focused in Europe, but is demonstrating some expansion into other geographies (notably North America and Latin America).
■ WMS and packaged business applications are not Reply's core business, and this may result in long-term strategic realignment. While there is no indication of this today, Gartner has observed this type of strategic evolution repeatedly in similar situations.
■ The vendor is moving to a new platform called LEA with four components/applets (drop
shipping, hub management, proof of delivery and WMS). However, customers of ClickReply and SideUp Reply must be aware that the vendor is moving to a new platform that will require adoption of new software. LEA Apps will emerge in pieces over the next three years.
■ One of the vendor's strengths is its balanced market penetration across multiple vertical
industries, with no single industry having greater than 15% penetration. However, this suggests that the vendor is not focused on, nor expert in, all industry subsegments, although it does have differentiated expertise in some — such as automotive.
■ The vendor has not demonstrated a comprehensive SCE convergence strategy beyond
warehouse management at this time. However, it has some intriguing and proven convergence capabilities, especially in the areas of automotive production logistics, manufacturing execution and co-managed inventory. LEA Apps' evolution will take this further.
SAP
This research focuses on SAP's SCM Extended Warehouse Management (EWM), even though SAP continues to offer two distinct WMS solutions: EWM and SAP ERP Warehouse Management (ERP WM). This research primarily focuses on SCM EWM, but we do consider other SAP WMS
capabilities in our analysis. In November 2016, with release 16.10, SAP EWM is now also offered as part of SAP S/4HANA. While previously it could use the SAP Hana database, the new offering is built as part of the SAP S/4HANA suite. SCM EWM broadens and deepens the vendor's WMS functionality. SCM EWM is not a new application, since it has been commercially available for nearly 10 years. Gartner estimates it has more than 1,200 live EWM customers, with significantly more live legacy ERP WM customers. SAP continues to aggressively sell and implement SCM EWM, as well as invest in growing its ecosystem of partners.
SAP has strong momentum in the WMS marketplace, annually adding more new and live customers than most other WMS specialist vendors. SAP EWM remains strongest in Europe. Gartner estimates that 56% of its customers are in the EMEA region, just over 20% in North America, 14% in Asia and 9% in Latin America. It has very diversified vertical industry coverage with customers in 24
industries. SAP has particular strengths in consumer goods, wholesale distribution, retail,
automotive and service parts (which, combined, represent about 66% of its customer base). SAP EWM is most often used in Level 2 and Level 3 warehouse operations, but it can scale up to Level 5 operations.
Strengths
■ SAP SCM EWM remains one of the fastest-growing WMS in terms of net-new customers over the past 10 years. It has grown a new product to around 1,200 live customers during that time frame.
■ While EWM does not deliver best-of-breed-level functionally for more complex warehouses, it does offer good enough functionality for a high percentage of SAP's installed base of
customers.
■ SAP SCM EWM includes a native warehouse control system (WCS), Material Flow System (MFS), which allows SCM EWM to directly connect to programmable logic controllers used in automated warehouses.
■ SAP has a compelling platform strategy for addressing SCE convergence. SCM EWM offers strong integration with SAP Business Suite and other components, such as Transportation Management; trade compliance; and environmental, health and safety.
■ SAP has a substantial global presence, as well as global go-to-market and deployment
capabilities. Currently, it has EWM customers in 44 countries. Furthermore, SAP has a large and growing global ecosystem of implementation and consulting partners.
■ SCM EWM is used across 24 vertical industries, with no single industry representing more than 20% of the total customer base.
Cautions
■ SAP SCM EWM remains best-suited to companies fully committed to using SAP ERP as a platform (e.g., Enterprise Central Component [ECC] and S/4HANA). It is not a strong candidate, however, for a stand-alone WMS implementation or integrations with non-SAP ERP systems.
Some other ISV WMS offerings are better-designed and better-suited to integration with third- party vendor ERP applications.
■ For complex deployments, the TCO remains higher than equivalent ISV WMSs, principally due to implementation costs. For less complex deployments, SAP utilizes Rapid Deployment Solutions (RDSs), which are fixed-price, fixed-scope and fixed-timeline service offerings.
Typically, however, these are not appropriate for moderately complex implementations, where the TCO remains high.
■ While SAP moved EWM onto S/4HANA with release 16.10, this now adds significant complexity to customer decision-making processes. Customers now need to sort through numerous
deployment options. Existing customers of SAP ERP WM and current users of EWM will have to convert to S/4HANA by 2025 or pay premium support. Customers will have to relicense WMS, although there will be some license credits for previously owned products. SAP EWM is now also available on S/4HANA. Given the time it can take for customers to do multisite WMS rollouts, eight years is not a long time.
■ The vendor's EWM cloud strategy is immature and ambiguous compared with many of its competitors. Today, it has some customers running private and dedicated cloud deployments, but it does not have a pure subscription-based pricing approach or deliver true multitenant SaaS WMS.
■ SAP EWM has four different UI offerings, each of which could potentially have a place in the WMS implementation. They are SAP Console, ITS Mobile, Inventory Manager (which it inherited with the acquisition of Syclo) and its newest though incomplete UI platform, Fiori. Fiori is the strategic direction for SAP, but EWM use cases are limited. Because of this, choosing which UI to use can be confusing, which demands that customers and their implementation partners do the proper due diligence early in the implementation process.
■ SAP uses a pricing methodology based on WMS transaction (delivery items) volume
throughput, which is combined with its traditional user-based licenses. Delivery items include inbound and outbound items. Smaller operations actually may benefit from this pricing
methodology, while large operations might initially see disproportionately high prices. The vendor has introduced tiered pricing to address this.
Softeon
In business for more than 10 years, Softeon is a small, privately owned vendor of SCE solutions.
While close, it did not meet the inclusion criteria for revenue. However, it did exceed the inclusion requirements for customer growth with 22% CAGR over the past three years. It has a compelling value proposition that combines leading-edge SOA technology with rich WMS functionality, an SCE convergence platform and customer intimacy. It also has a rapid development environment that allows the vendor to add new capabilities at a faster pace than many of its larger competitors. While its roots are in warehousing, the vendor has a noteworthy SCE convergence vision and portfolio today. Capabilities include distributed order management, as well as some transportation, direct store delivery and planning on a common technical platform. Softeon is one of the more innovative and partner-oriented vendors in this market. This is evidenced by the work it did to adapt
warehouse management concepts and its WMS to the unique needs of digital media (for example, music and video) distribution for one of its customers. Several other companies are now considering or adopting this capability. The vendor is based in North America, but now about 25% of its revenue is international with roughly 10% of revenue in Europe and 10% in Latin America. The vendor has approximately 80 customers, some of which have very large WMS implementations (Level 5) and others, especially some of its cloud users, are quite small (Level 2). Softeon is most often used in Level 3 and Level 4 warehouse operations, but it can scale from high Level 2 to Level 5 operations.
Strengths
■ Softeon offers a broad suite of SCE capabilities centered on its strength and depth in WMS, including core and extended WMS capabilities. On the same platform, it also supports
functional areas like distributed order management, returns management, SCP and direct store delivery. While the vendor is particularly strong in 3PL, which represents about a third of its customers, it is growing in other industries like retail.
■ The vendor's WMS is built on a strong and flexible SOA, which has allowed it to rapidly introduce new capabilities. Although the product is not yet a truly zero-modification
environment, the company offers tools, such as a strong rule engine, that allow for user tailoring without modification.
■ For its size, the vendor has a strong and well-organized offshore development and service organization.
■ Softeon has taken a unique approach to cloud by offering the same solution on-premises and in various cloud deployment models, including dedicated cloud and multitenant SaaS. It has a unified data model/foundation for its WMS cloud offering for SMBs and its enterprise version.
This unified data model/foundation eliminates expensive data migration and facilitates the incorporation of additional complex functionality as business growth demands.
■ It is pursuing a somewhat unique SCE convergence strategy, moving areas such as vendor- managed inventory, distributed order management and SCP onto the same platform as its WMS.
■ Softeon is one of the few WMS vendors that offers fixed-price implementations, and its service rates are well below average in the WMS market. Furthermore, customers continue to be complimentary of the vendor and its services, particularly its structured solution delivery methodology, which Softeon calls Iterative Solution Realization.
Cautions
■ The vendor has a strong offering, and clients note better-than-average intimacy. However, the vendor continues to grow total and recurring revenue very slowly. Since it is small and has a strong product, it remains a takeover candidate.
■ Softeon's strengths have been, and continue to be, in engineering, consulting and product development, not marketing and sales, and this constrains its growth. However, it continues to increase investments in marketing and business development, and, recently, it has modestly begun to show up in more new deals.
■ The vendor remains largely a North-American-centric organization, with 75% of its revenue in this region. However, it is growing internationally, with about 20% of its new business in Europe and Latin America. It also continues to support some global rollouts for its large global
customers.
■ Customer intimacy, service and consulting resources have historically been praised by clients;
however, this level of intimacy is hard to scale. With its growth in terms of numbers of net-new customers and the size and scope of some of its recent deployments, service capacity and availability could be stretched. A few clients have told us they have had some, but not significant, resource constraints.
■ For its small size, Softeon's SCE convergence strategy is compelling, and it has been pursuing aggressive product expansion. With a growing number of solutions in its SCE suite, Softeon will have to make tough choices. It will need to choose which products it aggressively takes to market beyond the core WMS, and which products it only opportunistically sells as add-ons in WMS deals.
Synergy Logistics
Synergy Logistics, formed in 1972, is a U.K.-headquartered software company focused on WMS.
Clients range from SMBs to global organizations. Snapfulfil is the most recent cloud WMS offering from the vendor. It is one of the smaller vendors in this Magic Quadrant. It did not meet the inclusion criteria for revenue, but it did exceed the requirements for growth (with 22% CAGR over the past three years). The vendor has about 65 employees, most in the U.K. and North America.
In 2006, Synergy Logistics built Snapfulfil from the ground up using web-native technologies and deployment methodologies. While it can be considered an on-demand cloud WMS, it is not multitenant SaaS. The vendor added 34 new customers during the past 12 months for a total of
