 Cliff Holste, Materials Handling Editor
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 On-demand LMS might change sales channel dynamics, as on-demand LMS providers can more readily partner with engineering and other consulting firms, which can implement the software without having to get into the specifics of integration and other technology issues for which they are often not well equipped.
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As SCDigest has noted many times, the “on-demand” movement is coming rapidly to the supply chain software world, regardless of what term is used (hosted, on-demand, Software as a Service, etc.).
Labor Management Systems (LMS) are no exception. LMS, which provides individual productivity performance reporting for distribution center workers (generally against engineered or “discrete” standards) plus a growing number of labor planning and other functionality, has been somewhat late to the party, with a relatively small number of “hosted” deployments to date. Probably even fewer than that have been deployed based on the subscription-type pricing model that generally characterizes a classic on-demand software offering.
That is starting to change, say several industry watchers – a move that can make the LMS value prop even more attractive for many companies and which may change sales and channel dynamics for companies looking to acquire Labor Management software.
“It’s taken a long while for on-demand to really reach the LMS market,” says Brian Lindenmeyer, a consultant at Peach State Technologies who does a lot of LMS system work. “But we are now seeing it come on strong.”
“Labor Management can deliver a lot of value and reduce distribution costs substantially, but often the projects get caught up in a lot of IT issues,” he told SCDigest. “Those can take away from the amount of time the team can devote to focus specifically on people, process and coaching, which is where it should be.”
The subscription based nature of on-demand LMS pricing adds an important dynamic that potential adopters should consider, Lindenmeyer noted.
He said that with many if not most LMS implementations, a company starts seeing real productivity improvements virtually from day 1 of an LMS go-live. That provides a rapid return on investment even with traditional upfront software licensing, but with the low upfront costs using a subscription pricing model, it means “an accelerated window for when you start achieving positive cash flow from the LMS investment.”
 He also noted that the subscription pricing model could deliver another cost savings to users – enabling them to scale the costs to the number of associates working at a time.
“If you start with 100 workers, and think through the productivity gains plus natural attrition you can get to 80, why pay for the full 100 in the upfront license?” he said. “With the on-demand subscription model, you only pay for the number of associates using the system for the subscription period.”
The same would hold true for temporary or seasonal workers, he added.
Pure On-Demand LMS Solutions Arriving to Market
Lindenmeyer said he is pleased to see the arrival of pure on-demand LMS solutions to market that now offer strong levels of traditional LMS capabilities.
“Some the on-demand LMS solutions now provide the equivalent functionality to what you would see out of the traditional best-of-breed LMS vendors,” he said.
One of the newer on-demand LMS providers is Next View Software, a developer of supply chain execution software which in May at the annual Warehouse Education and Research Council (WERC) conference announced a new LMS offering that was built from the ground up as an on-demand solution.
“We think that on-demand LMS right now is a very untapped niche,” says Steve Simmerman, Vice President of Business Development at Next View. “In addition to the usual benefits that come from any on-demand solution in terms of lower upfront costs, faster deployment, etc., we think on-demand just removes one more barrier from why almost any company would want to take a strong look at LMS.”
Next View COO Bob Rosales says the company is currently deploying an on-demand LMS for a large health care products corporation at a distribution center near Memphis that has over 100 operators, with a scheduled roll-out to a second DC that employs more than 250 workers.
Rosales and Lindenmeyer also noted on-demand may be the perfect way to implement a “light” LMS deployment that might initially start without a lot of engineered standards work, and instead begin using “reasonable expectancies” or “key volume indicators” (KVIs).
“You can start there and get something in and some benefits very quickly, and then add in standards as a phase 2,” Lindenmeyer said.
Changing Channel Dynamics
Most LMS implementations today have two components: the LMS software itself, and the engineering services required to support the labor initiative.
Some of the large LMS software providers have their own engineering organizations, and often control the related engineering services as an integrated offering.
(Distribution Article - Continued Below)
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