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2011

The current economic recession and business concerns for supporting the future business needs along with the increased capabilities of cloud services is bringing together a perfect storm of influences and pressures to replace legacy applications and especially in the Supply Chain.  Businesses must be very careful in their evaluation and selection of a strategy and direction.  The results of a failed implementation or a delayed, or bad, decision within the Supply Chain can result in severe and even fatal impact on the business.

 

In many enterprises the Supply Chain applications have been modified and enhanced  to support the specific needs relating to the operation configuration, utilization, culture and work force in such a manner that now the applications fit like a glove.  However, these applications also contain shortfalls and sometimes significant manual requirements to support new and additional business requirements.  While everyone likes a shiny new tool, you must also evaluate the benefits against the risks when making these decisions.  In many cases the best decision for the enterprise may be a program of stabilization and enhancements to support the incremental strategy delivery rather than a program to replace the applications.

 

Many SMB retailers have delayed spending on SCM solutions for years due to cost constraints and a focus on other priorities perceived to be more important to the business.  This is exacerbated by the stovepipe and inflexible nature of the legacy applications. The Supply Chain operation has become extremely resourceful in developing work around and one-off solutions.

 

Flexibility is a key decision factor, and a the lack of flexibility is a barrier to the efficient and cost effective ability to get timely data.  The implementation of new applications does not improve the flexibility and ability to deliver.  Many organizations are placing greater importance on delivery of flexibility and the ability to deliver what is promised and when it is promised with a minimal risk to the business.  This objective leads to the decision to stabilize the applications and incremental delivery of strategic improvements; most enterprises are not willing now to take on the additional risk to the business that replacing critical business applications raise.  The Enterprise Add-On software approach recognizes that on-going, sustainable improvements in performance, functionality and flexibility are only possible if there is an alternative to the high cost of modification or replacement of legacy systems.  This will be a significant factor in the acceptance and utilization of cloud services and soltuions.  These cloud services can be added to the suite of business application to support critical new capabilities quickly and cost effectively

 

The Supply Chain can provide significant benefits from even simple improvements.  Studies have determined that Supply Chain operations can provide significant benefits as shown below:

·         The Supply Chain generally accounts for between 60% and 90% of all company costs!

       A 2% improvement in process efficiency for Supply Chain processes has 3000% - 5000% the impact of a 2% improvement in efficiency for IT, HR, Finance or Sales

 

These studies suggest that you don’t need to make significant and wholesale changes to deliver significant benefits to the business and Supply Chain!  In fact, following a strategy of preparation and incremental improvements rather than wholesale replacement of applications and business process modifications is the more risk adverse strategy that can still provide significant benefits.  These benefits could be used to fund other strategic business improvements!  It is important to ensure these benefits are delivered while controlling the risk to the business.

 

The critical objective of this challenge is to develop a strategy that can deliver cost effective and beneficial improvements in a timely manner with the lowest risk to the business.  You must utilize all the tools at your disposal to best deliver the improvements with the lowest risk to the business.  In many cases the best decision and strategy is to provide incremental improvements while stabilizing the environment to support efficient operations.

 

I look forward to your comments!

 

Tom

The Cloud, Business Relationships and Dinosaurs -

 

I'm sure you're wondering what the title, and dinosaurs for that matter, have to do with the cloud and business relationships.  There are two answers to that question.  A wise person advised me to use catchy headlines to interest the readers in my post.  When you've been around for a long time you recognize cycles and similarities in business and technology practices, in other words, the more things change the more they remain the same.

 

Since this is my first post, please bear with me while I provide some personal background....  I started my career at Sears in Chicago, in the Sears Tower (when it was still officially called the Sears Tower).  My first programming language was Assembler/BAL using IMS for communication interface (IMS is similar to CICS in ancient times!).  I'm providing this background to help you understand where I come from and why I use this little toss-off phrase when conversing with younger colleagues 'When I started in IT dinosaurs roamed the world!'

 

I'm sure you're still wondering what this has to do with the cloud and business relationships!  Well, all the hot cloud papers and research are discussing the benefits that the cloud will bring to the business, the simplification of delivery, the reduced cost of subscribed services and the ability to easily and quickly ramp up resource availability based on actual growth in utilization, and to top it all off, the business can realize many of these goals without the support of the IT organization!  The business is excited because they are not held back by limitted IT resource availability and the cost of automating and supporting functional capabilities can be greatly reduced from a similar function supported by the IT organization.  IT organizations are beginning to be concerned about this trend expanding out of control (rightly so) and their ability to manage the expanded variations. 

 

This is where the challenge comes into play - the business feels that IT is holding them back and that they are control freaks, IT is concerned about security, compliance, business function stability and integration.  (I know, I know, I over simplified to make a point!)  This challenge can go in a couple of directions; a classic power struggle within the organization, or, a chance to develop a more productive relationship.

 

Now this is where my career longevity comes into play (and the dinosaurs!)....  I have bee thinking about this lately and realized that we've been through this struggle within an organization before.  In a time long ago... with the PC came a set of office productivity tools, MS Office is the leading survivor now, and the business embraced these tools for what they could provide them.  They provided a means to develop tools based on their own requirements that would help them perform their day-to-day tasks more efficiently and they did not have to involve or wait for IT to provide these tools.  In very short order, these personally developed tools became critical to operating business teams, especially spread sheets for finance and accounting.  Well it didn't take too much time to pass for problems to crop up with these new business critical tools that were not developed or maintained by IT. 

 

I remember this vividly because I was involved in resolving some of these serious problems that were occuring and dramatically impacting the business.  Way back then many in IT viewed this as a business problem, in other words the business developed these tools on their own without involving IT, so let them resolve them on their own (sounds kind of petty when you read it).  That was when I had a conversation with a business person regarding the challenges and she helped me to a more enlightened perspective - The business was given these powerful tools to enhance their efficiencies and reduce costs, they took advantage of these tools to develop efficiency improvements that the business came to depend on, it should be ITs obligation to ensure that these new business critical applications were properly supported as a requirement to supporting the business needs.  In other words, we all wanted the same thing - a successful company!  This view helped me to build strong relationships and partnerhsips with the business partners and has served me well throughout my career.

 

I hope that you too can see the similarities between the cloud services discussions we are having now and the introduction of the office productivity tools.  So I offer this story as advice from a 'dinosaur' to IT - get involved in the discussions and utilization of cloud services by your business partners early and discuss why you have concerns by all means offer to help them in selections.  This will help you build a stronger partnership and also reduce the risk of implementing cloud services!

 

I'm very interested in your thoughts and comments and look forward to continuing this conversation.