MAY 2, 2011
A recent report, “ IT Survey on Cloud Computing, Virtualization, and IT Financial Services ," provides new insight into how CIOs and other IT decision-makers at large enterprise organizations are evaluating and implementing cloud technologies, with a focus on the specific financial metrics they use to rationalize their investment. The cloud (be it software-as-a-service or hosted, multi/single tenant) has been the buzzword du jour, well actually for a few years, and Gartner now predicts the cloud market to reach $150.1 billion by 2013. The question on the mind of many supply chain leaders is if moving to the cloud make sense? The answer is, well, a bit cloudy. The cloud makes two things possible – a predictable operating expense, and less need or reliance on internal IT resources. These are the reasons we see small and midsize businesses (SMBs) readily moving to this model for many of their application needs. Beyond SMBs, technologies such as sales force automation and CRM have empowered sales and customer service teams to understand prospects and customers better, improve the efficiency of their jobs and deliver higher levels of service. So, what about the supply chain you ask? In the supply chain, there is increasing interest as we move from an internal focus on systems and processes to one that incorporates a growing, global supply chain – markets and suppliers – and how we connect them all together, seamlessly. Moving online makes logical sense for this, especially in supply chain execution. In the past couple of years I have seen an increase in adoption of transportation management systems (TMS) in both hosted and SaaS environments. This makes sense and for three key reasons. The way users interact with the system. Users tend to work with a light-weight interface tightly integrated to order management. TMS can be positioned as a community system, one where multiple parties access the information in a private exchange of shipment details, tender and delivery information. A hosted solution with the payment flexibility of SaaS provides the perfect combination of flexibility with the security and dedication of a traditional deployment. In the area of supply chain planning there is market interest for moving to the cloud. Speaking with supply chain executives I find that many are just not ready to relinquish control of their vital planning processes. They also note the hurdle of the additional financial investment required to ensure seamless interaction of multiple planning systems. In the end it is all about the return on investment (ROI). Where a solution can stand on its own, SaaS can provide a quick deployment and an expense-based model vs. a capital investment. However, the financial case for SaaS typically will not go past 3 years as, at that point, you tend to hit the acquisition costs of an on premise solution. As more of our lives moves online it only seems reasonable to see our business applications move their as well. Related Content. White Paper: Transportation Planning and Management for Operational and Bottom-line Benefits. Case Study: Potlatch Corporation. Case Study: Ste. Michelle Wine Estates. Karin Bursa is Vice President at Logility. She can be reached at email@example.com.