What You Didn’t Know About The VMS Cloud Vs. Server Debate

March 1, 2016

Vending management software, or VMS, is an extremely profitable tool for vending operators. It allows them to eliminate time-wasting procedures, analyze sales data to better understand customer buying habits and adjust service schedules to maximize the returns. Currently, VMS is available in a cloud-based solution and what is commonly thought of as a server-based solution. With the server-based VMS, an operator can buy a license to a particular software and purchase servers to house the data at their headquarters. With a cloud-based VMS, users access the system via a Web browser and data is stored in the cloud. There is nothing physical to buy; the operator instead pays a monthly fee. In order to decide which system is best, operators should consider the advantages and disadvantages of each along with what questions to ask of the technology provider.

Server vs. cloud

Brendan Kehoe, vice president, general manager of Streamware, Crane Merchandising Systems, explains that all VMS systems are basically made up of two parts. First there is the client application, or what the users actually use. The second part is the database, this is what receives, stores, processes and sends data. In the past, users used a computer in the office to run the client application which connected to the database, which ran on a server physically on location and owned by the operator.

The use of the server is why many people call it a server-based VMS, although Kehoe indicates the term client-server based VMS is more accurate. VendMAX is an example of a client-server VMS that can be deployed in whatever manner best meets the customer’s needs. The server can be physically owned and operated by the vending operator (on premise), hosted by a third party value-added service provider such as Tech 2 Success, or, if desired, deployed via the cloud. “We believe in offering flexibility and choice as one size does not fit all,” said Kehoe. “Regardless of the deployment method, VendMAX is always powered by Streamware Connect, our cloud data gateway, connecting to mobile apps, micro markets, cashless processors and telemeters,” Kehoe added.

A fully cloud-based VMS system, however, operates differently. Operators are able to use the client application on a broader number of computers and mobile devices — not a specific computer at the office. “It gives operators access to information anytime or anywhere there is an Internet connection on any computer,” said Alan Munson, co-founder and CCO of Parlevel Systems. This might be advantageous for many reasons. For example, if an issue arises at night or on the weekend, the operator can access the information and see what’s going on whether he or she is at home or at a child’s basketball game. “This is huge for operators,” said Munson.

Control & security considerations

“What many people are calling cloud-based VMS is really just a Software as a Service (SaaS) solution,” said Kehoe. “It can be a quick and simple way to get your business up and running but there are usually limitations to this approach.” The SaaS model, while simple, has some shortcomings when it comes to security, availability and control, explains Kehoe. He presents a security example. “SaaS leverages a shared infrastructure to minimize costs — often putting the data of multiple clients in a single database — called a multi-tenant database. If there’s a security flaw, a customer might be able to see another customer’s data,” said Kehoe. This seems an unlikely occurrence, but Kehoe cites the recent scandal that happened in politics with the Bernie Sanders and Hillary Clinton campaigns. Staffers from the Sanders campaign allegedly took advantage of a software error to access voter information collected by the Clinton campaign.

There is also the danger of an operator suddenly being without access to their information. “Even if a software provider has very strong redundancies built into their systems, they can’t control the operator’s ability to access the Internet,” warns Kehoe.

Finally, a SaaS solution can make it difficult to be in control over data. Integrating with other software applications, such as accounting software, is easier when the operator has full access to the database. Developing custom reports or integrating with analytics software can also be a challenge.

On-premise systems allow the operator a great level of control over data, backups and redundancy systems, further argues Kehoe, instead of relying on the service provider to do it and being forced to accept their choices. Large companies likely already have these in place to protect other data and software, so it is less of a cost or issue for these companies. The IT to deliver the support is already in house. Other operators will find they must weigh the cost of adding IT staff, power generators, backup servers and security technology. For those without the need for that infrastructure, Kehoe suggests using a third party hosting solution to get the best of both worlds — full access and control without the complexity of a big IT organization.

Cloud security

Proponents of the cloud-based VMS systems believe that it is secure just by its sheer massive use and big names with security know-how. “In a cloud-system, the customers’ data is copied in multiple servers throughout the U.S. The data is protected from natural disasters, is less expensive and virtually unlimited since we lease space from well-known providers like Google,” said Munson. He says most cloud VMS providers use third parties to house the servers/data accessed via the cloud, so a vending operator’s data is housed with data from large corporations using server space from Amazon, Google or Rackspace. Those large technology companies have tight security against hackers, who would likely be after the large corporation data anyway, Munson reasons. More importantly, those companies are experts in creating and supporting ways to keep the data safe as well as insured.

With a server-based VMS, there are limits to the amount of data each server can handle. Data from 5,000 vending machines takes up a lot more space than 500 machines, which means the operator would need to purchase more servers as well as the backup systems and support for each, as he or she brought more machines into the system. In many cloud-based VMS systems, the operator won’t pay more for additional vending machines. By using the cloud, an operator can save money and anxiety, including worries about lost data. Munson tells the story of a recent customer with nearly 4,000 vending machines who used a server system that went down. Unfortunately so did the backup system and the operation lost six months’ worth of data. “You’re only as good as your system,” said Munson.

Tiered options

John Hickey, consultant with IT/Operations firm Tech 2 Success LLC, believes the decision often comes down to the size of the operation. “Large companies may still want to have a licensed or server-based VMS if they have an IT department to support the security and integration with other programs,” said Hickey. “SaaS [used by cloud-based VMS] allows a login through a Web browser and reduces the need for an IT department.”

Even if companies already have servers and an IT department, Hickey recommends they consider a cloud hosted solution in the future. The need to provide security, protection from ever prevalent viruses and hacking as well as redundancies for powering servers, cooling systems, etc. and backup servers with data, can become overwhelming and costly, he argues. “At the enterprise level of IT, items such as security and redundancy are all at a shared cost when hosting database and other business applications in the cloud,” said Hickey. That makes it less expensive for the operator to have superior support for their data. “For IT to build all that in the office, it can cost more than $100,000.” Tech 2 Success has experience offering a hybrid solution to both large and small operators. It hosts the data in the cloud for vending operators who own a VMS software license. In effect, the cloud has replaced their physical servers.

The financial lure

Justin Grant, vice president of products for Cantaloupe Systems, sees mid-size to small vending companies, who don’t plan to hire IT staff, as really liking the cloud-based VMS systems. “When you are a smaller size, you don’t have many other server-based systems,” commented Grant. He argues that these operators are already using other cloud-based storage or business programs such as Dropbox and Salesforce, ultimately making them very comfortable with the cloud.

According to Grant, cloud-based systems are at less risk of getting a computer virus or needing the additional costs of backups, monitoring tools, labor cost of the IT person, hardware updates, etc. All of that exists, but in a monthly fee that is shared by all the customers of the service provider. “You have to look at the labor, power, time and risk,” said Grant. “Cloud systems take some of the costs that are hard to see and unpredictable in a client server and license VMS, and makes them so they can be seen and planned for in the future.”

Additionally, when an operator is searching for a cloud-based VMS, he or she must really consider the working relationship and trust in the VMS provider. “This is even more important with the cloud as it’s a long-term partnership,” said Grant. The cloud VMS should meet the needs of the operation today, including getting data out easily and in a usable format, such as an Excel spreadsheet.

Features are important

An operator should decide on a VMS on the basis of what he or she would like it to do urges IT consultant Hickey. “When choosing a system, you have to have a goal,” he said. “It might be to increase revenues, to decrease routes or route efficiency or to improve food product offerings.”
Each company that Hickey has worked with has been a bit different and their preferences are different, but he reminds them that the VMS is a tool and should be chosen for its performance. This also provides evidence of return-on-investment for purchasing the VMS, rather than trying to make it pay for itself after installation, concludes Hickey.
Some features Hickey suggests operators consider are: is cashless offered by the provider; is there the ability to integrate with existing programs like accounting systems or logistic systems; does it work with handhelds and/or mobile devices; what sort of reporting features does it have and does it match what the operator wants; does it have commissary management, warehouse inventorying, dynamic scheduling, etc.; will it integrate or offer integration with OCS and micro market management programs? “In the end, it’s not the cloud that makes software better, because you can put any software in the cloud. It’s the features and integrations that make the difference,” said Hickey.

Take away

There is a lot more to the cloud versus server debate. There are layers of advantages to each that an operator must weigh carefully when making a decision. Looking at all the features and support a technology provider offers with the VMS is another important consideration. Adding a VMS is expensive, but with the right research and preparation, it will allow the operator to reap greater rewards.