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  First Thoughts

    Dan Gilmore

    Editor

    Supply Chain Digest



 
Sept. 22, 2016

Supply Chain Software in the Cloud and Other Key Trends

Excellent New Report from SCDigest Covers Wide Range of Supply Chain Software Issues

Is supply chain software deployments in the Cloud about set to take off?

I believe - and have believed - the answer to that is Yes.

This change will have huge ramifications for both supply chain software users and providers, undoubtedly changing the software vendor landscape in the end, and opening up whole new ways in how supply chain software will be delivered and consumed.

Gilmore Says....

I've just scratch the surface of the interesting data in the excellent report. Take a look. Is Cloud-based supply chain software simply where it is all headed?

What do you say?

Click here to send us your comments
 

For all the discussion about Cloud-based software, following somewhat related concepts such as Software as a Service (SaaS) and "on-demand" software before that, the reality is we are early in the journey towards the coming age of Cloud software.

Currently, Cloud-based software represents a small percentage of total deployments, but that number will change dramatically over the next three to five years.

In 2012, I predicted that by the end of 2015, Cloud-based deployments would be the majority of new supply chain software implementations. That prediction may have been a little off in terms of timing, but not in direction, as Cloud momentum continues to build.

Already there is significant traction in areas such as Transportation Management Systems (TMS), Global Trade Management (GTM) solutions, and supply chain visibility, but progressing along nicely in every category of supply chain software as well.

Cloud, however, is not the only trend that will create an inflection point in supply chain software. So too will advanced analytics, and relatedly the concept of "machine learning."

Advanced analytics, in some but not all cases connected to "big data," offers new approaches to supply chain decision support, potentially upending, for example, traditional methods use for forecasting, and ushering in a supply chain world where companies will increasingly be able to predict potential problems or opportunities before they occur.

Machine learning is just what it sounds like, the ability of the software to learn from its successes and past errors - in areas such as forecasting - and improve its approach to drive continuous improvement.

The reality is that in many ways the move towards Cloud will be an enabler of advanced analytics, as it allows data to flow from more sources.

After many years of steady but somewhat incremental progress in supply chain software capabilities and paradigms, these two trends - Cloud-based solutions and advanced analytics - promise to truly shift the status quo in exciting, if not yet fully understood, ways.

So with that as a backdrop, SCDigest recently conducted a survey and subsequent report on supply chain software issues and opportunities, with a special focus supply chain software in the Cloud. The full report is very good - you can download it here: Supply Chain Software Trends and Opportunities Benchmark Report 2016.

Here are some highlights.

As we often do in these surveys, we started by asking respondents to rate their company's level of maturity in both supply chain processes and technology.

We converted a 1 to 7 scale for both questions, with 1 being the least mature and 7 the most mature, into categories, with a 1 score converted to "very low," 2-3 low, 4 average, 5-6 high, and 7 very high, with the results as presented below.

 

As is always the case, respondents ranked their level of supply chain process maturity ahead of how they viewed their supply chain technology capabilities, though not dramatically so. For example, 43.1% rated their process capabilities as high, versus 33.4% who felt this way about their supply chain technology.

Similarly, the average score for process maturity was 4.1, just above the mid-point of 4.0, versus 3.7 - below the mid-point - for technology.

Another view is that 26.1% of respondents rated their process capabilities as low or extremely low, versus 31.7% that placed their technology capabilities in the lower scores.

We also asked respondents to rate a list of barriers to supply chain performance, on a similar 1 to 7 scale, with 1 being the least barrier, 7 the most.

As can be seen below, the lack of ability to design/execute end-to-end processes came out on top, with an average score of 4.5, just ahead of overall level of supply chain technology support. A lack of internal collaboration across functions, a barrier that is in a sense similar to challenges with designing end-to-end processes, came in as the third ranked obstacle, with a score of 4.4.

 

Only "limitations in current supply chain design" fell below the mid-point in our list, and that just barely, with a score of 3.9.

It is interesting to note that respondents saw lack of internal collaboration as a greater barrier to improved performance than they did a lack of external collaboration with trading partners. We were also surprised that "overall skill levels" didn't rank more highly, given all the press of late around a "talent crisis" in supply chain. There were a number interesting comments on this question that you will find in the full report.

Ok, let's turn now to a couple of data points related to the Cloud sub-theme.

We asked for each respondents' general view on deploying supply chain applications in the Cloud. As seen below, more than one-third of respondents said that Cloud will be "the future direction for all/almost all of our supply chain software," a percentage much higher than we would have seen just two years ago.

What's more, another 37.6% indicated Cloud would be the "future direction for some but not all of our supply chain applications."

Just over one quarter of respondents said that Cloud-based software would be adopted for only a small portion of total supply chain applications or not at all - and I bet they will turn out to be wrong..


 

Those providing Cloud-based supply chain software solutions promote many benefits from this approach. We wanted to see what respondents thought about these potential advantages, rating a series of benefits on our 1 to 7 scale, with 1 the least benefit and 7 the most.

As can be seen in the chart below, faster deployments topped the list, with a very strong average score of 5.4. That was just ahead the directly related benefit of "faster time to value," with a score of 5.3.



But several other benefits in the list also had strong scores of 5.0 or higher, including ease of upgrades, total cost of ownership, lower IT support costs, and lower upfront costs.  Only offering a "pay as you go" pricing model fell below the 5.0 mark, and even that was still well above the mid-point, with a score of 4.6.

I've just scratch the surface of the interesting data in the excellent report. Take a look. Is Cloud-based supply chain software simply where it is all headed? Again, I say Yes.


What's your reaction to these data points? Do you believe supply chain software in the Cloud will soon dominate? Why or why not? Let us know your thoughts at the Feedback section below.


Your Comments/Feedback

 
 
 
 

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