First Thoughts
  By Dan Gilmore - Editor-in-Chief  
     
   
  May 29, 2008  
     
 

Supply Chain Software is Getting Better

 
 

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Gilmore Says:
My challenge now to the vendors is to do a better job of articulating how “1+1 = 3” – in other words, get beyond the technical/transactional integration, and articulate how that integration leads to better decisions and business results.

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May is perennially the busiest travel month for me, and I am finally done with a slew of conferences and events.

That includes in rapid succession trips and speaking engagements at the user conferences of i2, JDA Software, and Manhattan Associates, plus several other industry events, including a very interesting day at the relatively new Medical Devices Supply Chain Council meeting, the Georgia Tech Supply Chain Executive Forum, a private presentation to one company’s global supply chain meeting, and more.

I know the supply chain software industry well, which means both the good and the bad, and we’ve have frequently commented on both here at SCDigest. But after visiting at these and other events and talking to many users, sometimes over cocktails where I can really draw out the best comments, I think there are some very positive and interesting trends overall.

As Vendors Mature, They Are (Finally) More Focused on Implementation Success: Why so many vendors for so long didn’t really put the effort and focus on making their implementations better, less painful, and less expensive remains a mystery to me. I could cite a number of factors: loss of talent in implementation teams, disconnects in the delivery process, resources spread too thin, too much emphasis on product development, etc., but clearly this has been a big issue for many years.

In past conferences across many vendors, I have perennially heard promises and commitments to make things better – often with little real result.

But I really do believe we’ve turned a something of a corner here. My sense is that as the software market itself continues to mature, and with that in part a realization that a good chunk of the business will come from existing customers, vendors understand that problems in implementing one product or phase will have a big impact on selling the next product or phase. I also believe buyers/users have become a lot more knowledgeable and sophisticated, and are increasingly unwilling to put up with implementation snafus having already been around the block a few times.

I really like, for example, a new program JDA is offering in which the first few customers for new products or major new releases of existing products in effect get the “gold glove” treatment – testing at JDA with the customer’s own data, a high profile/priority for the project internally, rapid response to issues, and other services.

My friend Joe Broderick, a former executive at Manugistics (later acquired by JDA), RedPrairie, and other software companies once said, “Every new software product has a “beta” customer – the only question is whether they know it or not.”

While the issues aren’t and never will be totally behind us, I see a number of positive trends that should make software deployments increasingly less painful.

Lower Cost Implementations: Related to the point above, most supply chain software companies have been using lower cost development resources for some time. Now, many are considering or starting to use them for implementations as well.

That doesn’t mean there won’t be on-site/domestic resources, but it does mean that much of the configuration, customization and other services that were done domestically can be done offshore – at much lower internal cost.

Whether you like that idea or not from a macro perspective, it likely will in fact bring down professional services costs for many software deployments and upgrades.

Integration across Suites Moving from Powerpoint to Reality: Let’s face it, the messaging about “integrated” supply chain suites was always well ahead of the reality. But my sense is that in the last two years the suite vendors have put some real effort into harmonizing different technologies (often the result of acquisitions) and building real integration and work flows among suite components.

The powerpoints are probably still a bit ahead of the reality, but the gap is narrowing substantially.

My challenge now to the vendors is to do a better job of articulating how “1+1 = 3” – in other words, get beyond the technical/transactional integration, and articulate how that integration leads to better decisions and business results.

Same Company, Multiple Conferences: It was also interesting for me to see many of the same companies at multiple conferences.

I swear I saw one large specialty retailer at all three of the most recent events I attended, and I know I saw probably several dozen companies at two of them.  This is a good thing, I think. It keeps the different vendors on their toes, because when the next project starts for demand planning, transportation management, or whatever might be on the table, it means there will be two or more incumbents in the mix, as well as any new vendors that may be considered.

Less “Go, Go,” More “Show, Show”: Again as the industry matures, there is less pressure in a sense to keep racing ahead to beat the next guy to releasing the newest module, and more attention towards proving and substantiating value.

It actually is difficult to do both – be really driving the innovation and development horse hard, and to simultaneously focus deeply on understanding and delivering value and results. The software companies can and must continue to innovate, but they are now morphing the focus (really, not just in words) more back to partnering to achieve results.

“Customization,” of a Sort, is Back In: From both many vendors themselves, as well as conversations with users, there is a growing attraction for more “custom” solutions. That doesn’t mean “custom” as in the old days, but it does mean companies have unique needs, strategies, or opportunities for innovation, and want the software to enable that – which may not come in the “package.”

This is where SOA (Service Oriented Architecture), which generally puts supply chain managers to sleep, really does matter, and is something you should really pay attention to. It offers the opportunity, to some extent still being proven, to empower those customizations with a lot less pain, cost and rigidity than the old style of customizations brought.

Those are my thoughts on supply chain software trends. I will drill down on a couple of these in more detail in future columns. Would love to hear your reaction.

Do you see positive trends from a maturing supply chain software industry? Do you expect better, lower cost deployments? Or are you less positive on the trends? Let us know your thoughts at the Feedback button below.

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