While cloud computing has received growing exposure in the last several years, its relevance to the material handling industry has vaulted over other trends to become huge on a scale comparable to the arrival of the World Wide Web. But, despite the fodder, many still are confused about what cloud (or “third-party”) computing actually is. When a third party, such as Google, MapQuest or Amazon, hosts an Internet service and those parties allow customers access to it online, that access to the shared space is known as a cloud. Clouds allow for reduced hard drive space on personal computers and instant access to countless programs. The implementation of third-party computing in the material handling industry has developed in the form of warehouse management software.
With third-party computing, all actions are performed through the Internet on the host’s website and then saved to the third-party’s massive hard drive, rather than the user’s personal computer memory. This is beneficial because the data can be accessed from any Internet compatible device like laptops, desktops, smart phones or tablets. This makes the office truly mobile, allowing colleagues – in other states or away on business – immediate access to any shared file.
The pros and cons of cloud computing are still at a unique balance. Clouds offer clients lower operating costs and increased availability of programs that may have been previously too costly. By outsourcing the program and its storage, IT costs, and the cost to store and run the programs in-house, are drastically decreased. This can be beneficial to both small companies and larger Fortune 500 ones because fixed hardware solutions would be eliminated, and IT resources would be allocated towards other avenues. Cloud networks are also advantageous to those small companies who can’t afford an IT team or those whose IT departments are overloaded. Companies like Rack Space offer servers featuring Linux and Windows through the cloud for as little as 1.5 cents per hour.
Before cloud computing, if users wanted access to a program or application, they would have to purchase it along with its licensing. This process became more complicated when that program or application was networked through an office or an entire company. To license 50 desktops loaded with Microsoft Office, it would have cost a business roughly $18,000. While the licensing cost is comparable with third-party computing, programs within the cloud are on-demand. Businesses receive all the updates and latest versions of the program for free because they are on a subscription basis, or they can choose a scaled version of the application or software, lowering costs dramatically. This subscription basis cuts down on future upgrades and IT costs because an IT department doesn’t need to install the new firmware updates; the host of the program performs all troubleshooting and upgrading.
There are also serious risks customers will need to weigh before adopting third-party computing into their business. The lack of privacy remains the biggest deterrent for customers weighing the pros and cons of cloud computing. A client no longer has direct physical access to the hardware on which their programs or data are stored. Since the programs are hosted through a third party, the connection is thus bridged through a server. So, if the software or server malfunctions, the third party host troubleshoots the problem rather than the client’s IT personnel. The time delay could possibly be significant and, in turn, cost money. The question of data ownership within the cloud remains a largely unchallenged sticking point. Many companies (and cloud owners) have vague or undetermined policies regarding ownership. If a client does not have direct access, the argument has been made that they also do not have the rights to it either. If a subscription isn’t paid, service can be terminated. For companies that operate their entire business through third-party computing, this could be crippling. If cloud storage is outsourced to private companies overseas, public domain material may no longer be free, as some users may not subscribe to the particular company’s service – the private cloud company now has control of that specific information hosted in its storage space. Subscribers need to read the fine print before engaging in any form of third-party computing. Some services have written policies stating that they will use the data stored on their servers however they please. Other services will charge a fee to transfer subscriber data to another company, the same way a bank might charge an ATM user a fee for pulling money from an account that does not belong to that machine’s bank. A cloud services user is likely to accumulate and use more data storage the longer they remain a subscriber. Today, to transfer 30GB of data at $10 per GB may seem reasonable. But, in 10 years, when a database has grown to one terabyte, paying $10,000 for one’s own information seems rather absurd when that data could have been permanently stored in-house for far less.
With home use, Internet service provider’s bandwidth caps also need to be taken into consideration. ISPs are increasingly capping monthly data usage or slowing bandwidths when they become exceedingly high. Having to constantly stream data back and forth between the cloud, this cap potentially may be met easily. If this occurs, Internet connection speed could be throttled back, and access to the information might not be as easily accessible as if servers were saved to an in-house hard drive. Certain companies charge for going over a set bandwidth, and these extra charges need to be taken into consideration when deciding to use cloud services, especially if mobile cloud computing is the primary vehicle. Companies can charge as much as a dollar for every gigabyte used past one’s predetermined limit, which for heavy home Internet users, these overages can become quite costly, given that streaming a standard definition video consumes roughly half a gigabyte.
Information theft hangs like a cloud over companies considering adoption of such technology and illustrates that no infrastructure is entirely threat-proof. IBM researcher Scott Lunsford proved this when he hacked his way into a nuclear power station, which the plant’s owners claimed was not only improbable but virtually impossible. “It turned out to be one of the easiest penetration tests I’d ever done,” Lunsford told reporters. “By the first day, we had penetrated the network. Within a week, we were controlling a nuclear power plant. I thought, ‘Gosh. This is a big problem.’”
The truly frightening aspect of what Lunsford and his team had done was expose the relative ease with which important information can be accessed and warped when stored externally. The nuclear plant was powered by Supervisory Control and Data Acquisition software (SCADA), which controls infrastructures throughout the U.S., such as water distribution systems, oil pipelines and even subways. French securities team VUPEN did a similar move when they discovered a way to exploit Google’s Chrome browser. The U.S. Federal Bureau of Engraving and Printing’s cloud was hacked in early 2010 with programming that costs under $1,000, affecting the Bureau’s four websites and causing them to shut down for several days. “I am not going to say this will scare users away from cloud computing,” says Thomas Krafft, director of marketing at database management solutions company, Objectivity Inc., “but it definitely brings into clear focus the issues surrounding security in the cloud.”
When Amazon Web Service had an abrupt outage in April 2011, Netflix, whose service is hosted on Amazon’s Elastic Compute Cloud (EC2), weathered the storm and stayed functional. Cleverly, their system was constructed with integrated redundancy and has its infrastructure distributed broadly and backed with components like fallback and stateless service, safeguarding the site against catastrophe. While Netflix has deep pockets, companies considering implementing cloud solutions should still take a lesson here and implement their own IT security defenses by installing programs that break up data and monitor cloud traffic.
For those apprehensive about diving head-first into third party computing and moving all their data out of house, there are still options that allow scaled universal accessibility. Software as a Service (SaaS) allows users access to a specific program via the Web, but their entire system is not web-based. For example, a subscription to a word processing program could be acquired, so work can be done anywhere through an Internet connection. But a document like a spreadsheet, for example, can be stored in-house, still only accessible from a single computer or server. This form of use is also ideal for a company to promote their program, considering they can offer a free trial version for a period of time, allowing users to see the added benefits of SaaS before purchasing. EWON is a Belgium-based business that connects and synchronizes industrial machinery using the Internet. “As soon as your web browser is up, you can use [a SaaS],” Francis Vander Ghinst, the company’s sales manager in Brussels says. “The footprint is zero, so you don’t have to manage physical hardware. You can use it anywhere.”
Similarly, Interlake Mecalux offers a subset version of its EasyWMS, EasyWMS Autoinstall as a SaaS, which is a lightweight product for small and medium warehouses managed by paper or radio frequency. This would allow multiple warehouses to have a centralized point of connectivity and data storage, which gives the client the ability to access data from multiple warehouses, rather than simply the warehouse they are in. The increased efficiency and lowered time for logistical coordination offers unprecedented savings to warehouse management systems. This service allows a warehouse manager to know the quantity and location of a given product in another warehouse thousands of miles away, decreasing a possible glitch in communication. Further benefits of utilizing EasyWMS is the ability to scale the program to best suit individual warehouse needs without losing the option of scalable growth. SaaS offers aspects of the cloud that are very beneficial, such as on-demand access to programs or storage; though, it will not fully replace in-house storage. Rather, SaaS functions are ideal for those who want to access only a specific program from anywhere.
In Gartner’s report, “Significant Benefits Realized with Supply Chain Management in the Cloud,” he states, “the advantages of cloud computing seem to far outweigh the negatives in most consumers’ minds.” The report also concluded that out of 130 companies surveyed, 124 of them were using or considering cloud computing, citing the enticing prospect of reduced overhead and customizable storage space as the main compulsion for their interest in third-party computing. IDC estimates the cloud computing market take in $55 billion worldwide by 2014. Companies ranging from the retail industry and the high-tech sector to manufacturing are embracing this new form of communication. This shift in the weather towards third-party computing has grown out of companies’ needs to handle their ever-growing amount of information and desire to find a streamlined avenue to access data and applications cost-effectively. Its low-cost advantage gives organizations the agility to scale their needs quickly through top-tier infrastructures. Though, if warehouse owners are struggling with moving their entire operation to a third-party, they could still utilize an outsourced server for backup purposes.
It remains debatable whether third-party computing will entirely eliminate other in-house data storage. Security levels for clouds need to be tightened, deadbolted and triple-checked. With the notion of complete accessibility to data from virtually anywhere and with the spread of Internet accessibility in remote areas, there seems to be a silver lining for the future of cloud computing.
Emerging Warehouse Trends
Small and mid-sized companies are purchasing WMS at a greater frequency than their larger counterparts, according to Chicago Consulting. This move towards investing in warehouse management software by small and mid-sized companies is believed to have been spurred by the slow resurrection of the U.S. economy. The consulting firm also noted that larger companies are likely to follow within six to 12 months.
Smaller operations outgrowing their current management system are looking to upgrade, and many are doing so through cloud computing with their WMS. This option lets them avoid the cost of IT, while still staying competitive with much larger businesses. A trend also with companies using WMS is a closer scrutiny of their labor management to increase their warehouse efficiency. Many more companies are allowing operators to govern workers more for increased productivity.