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!